PREPARING FOR THE COMPUTER-BASED ASSESSMENTS (CBAs)
567
FUNDAMENTALS OF FINANCIAL ACCOUNTING
The main reason for this difference in treatment between the two items is because:
(A) treatments of the two items must be consistent with treatment in previous years.
(B) items of plant last for several years, whereas hand-held stapling machines last
only for months.
(C) hand-held stapling machines are not regarded as material items.
(D) items of plant are revalued from time to time, whereas hand-held stapling
machines are recorded at historical cost.
3.2 Which of the following best explains what is meant by ‘ capital expenditure ’ ?
Capital expenditure is expenditure:
(A) on non-current assets, including repairs and maintenance.
(B) on expensive assets.
(C) relating to the issue of share capital.
(D) relating to the acquisition or improvement of non-current assets.
3.3 On 1 July 20X7, your non-current asset register showed a carrying amount of
$47,500. The ledger accounts showed non-current assets at cost of $60,000 and
accumulated depreciation of $15,000. It was discovered that the disposal of an asset
for $4,000, giving rise to a loss on disposal of $1,500 had not been recorded in the
non-current asset register.
After correcting this omission, the non-current asset register would show a balance
that was:
(A) $3,000 lower than the ledger accounts.
(B) $1,500 lower than the ledger accounts.
(C) equal to the ledger accounts.
(D) $1,000 higher than the ledger accounts.
3.4 The bank statement at 31 October 20X7 showed an overdraft of $800. On reconcil-
ing the bank statement, it was discovered that a cheque drawn for $80 had not been
presented for payment, and that a cheque for $130 from a customer had been dishon-
oured on 30 October 20X7, but that this had not been notifi ed to you by the bank.
The correct bank balance to be shown in the statement of fi nancial position at 31
October 20X7 is:
Overdrawn $………
3.5 A credit entry of $450 on X’s account in the books of Y could have arisen by:
(A) X buying goods on credit from Y.
(B) Y paying X $450.
(C) Y returning goods to X.
(D) X returning goods to Y.
3.6 The main purpose of an audit is to:
(A) detect errors and fraud.
(B) ensure that the fi nancial statements are accurate.
(C) determine that the fi nancial statements show a fair presentation (or true and fair
view) of the fi nancial state of the organisation.
(D) ensure that all transactions have been recorded in the books of accounts.