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Session 1 (Phần 2) sẽ ôn lại 6 dạng bài tập quan trọng môn Maintaining Financial Records (FA2) với chủ đề Recording transactions and events.
I. Tổng quan
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Topic |
Question types |
Question index |
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MCQ |
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Recording transactions and events |
1. Preparation of journal entries |
10 |
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2. Recording sales and purchases |
11,12 |
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3. Current & non-current assets |
13 - 16 |
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4. Accruals & Prepayments |
17 |
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5. Irrecoverable debts and Allowance for receivables |
18,19 |
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6. Inventory |
20 - 22 |
II. Dạng bài tập chi tiết
1. Topic 3: Recording transactions and events
1.1. Type 1: Preparation of journal entries
Ref: Tóm tắt kiến thức Type 1: Preparation of journal entries
Importance: Average
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Question 10: David runs his own business. He already has $8,000 of capital invested. He decides on 23 March to invest a further $2,000. How should the transaction on 23 March be recorded?
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Guidance:
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Step 1 |
Determine the economic substance of the transactions |
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Step 2 |
Classify and record the transactions in the accounts of the financial statements → Make sure the accounting equation is equal |
Note: The question asks to determine how to record the transaction. In other words, student should focus on the amount of the transaction rather than the account balance which may relate to the transactions.
Answer: A
Analyze the transaction:
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$2,000 invested in the business |
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Step 1 |
The transaction increases $2,000 in bank balance |
The transaction increases $2,000 in business’s capital/equity |
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Step 2 |
→ Record $2,000 debit in Bank account |
→ Record $2,000 credit in Capital/equity account |
1.2. Type 2: Recording sales and purchases
Ref: Tóm tắt kiến thức Type 2: Recording sales and purchases
Importance: High
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Question 11: Valerie runs a business that is registered for sales tax. On 28 September, the business purchases goods on credit for $9,400, inclusive of tax at 20%. How would this purchase be recorded in the accounts? A. Debit Purchases $7,520, Debit Sales Tax $1,880, Credit Payables $9,400 B. Debit Purchases $7,520, Debit Sales Tax $1,880, Credit Cash $9,400 C. Debit Purchases $7,833, Debit Sales Tax $1,567, Credit Cash $9,400 D. Debit Purchases $7,833, Debit Sales Tax $1,567, Credit Payables $9,400 |
Guidance:
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Step 1 |
Determine the economic substance of the transactions |
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Step 2 |
Classify and record the transactions in the accounts of the financial statements → Make sure the accounting equation is equal |
Note: Remind that the sales tax of 20% is included in the payments, therefore students should eliminate the sales tax to calculate the number of goods to be recorded.
Answer: D
Analyze the transaction:
$9,400 goods purchased on credit, inclusive of 20% tax
- Goods on credit = $9,400/120% x 100% = $7,833
- Sales tax = $9,400/120% x 20% = $1,567
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$9,400 goods purchased on credit, inclusive of 20% tax |
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Step 1 |
The transaction:
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The transaction increases $9,400 in trade payables |
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Step 2 |
→ Record:
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→ Record $9,400 credit in Payables account |
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Question 12: Your business sells goods to a customer. There are two alternative terms on offer, EITHER pay $2,000 on 60 days’ credit OR pay in full in cash on delivery and receive a discount of 5%. The customer is expected to take up the discount offer and subsequently pays the correct amount immediately. How should the sale be recorded in the accounts? A. Debit Receivables $1,900, Credit Sales $1,900 B. Debit Bank $1,900, Debit discounts allowed $100, Credit Sales $2,000 C. Debit Bank $1,900, Credit Sales $1,900 D. Debit Bank $2,000, Credit Discounts allowed $100, Credit Sales $1,900 |
Guidance:
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Step 1 |
Determine the economic substance of the transactions |
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Step 2 |
Classify and record the transactions in the accounts of the financial statements → Make sure the accounting equation is equal |
Note: When an entity enters into a sale with a customer and a prompt payment discount has been offered, the amount of revenue to be recognized initially will need to be estimated taking into account the probability of the discount being accepted. When the entity expects that the customer will accept the discount, revenue should be recorded at the discounted amount.
Answer: C
The sale has been agreed at $1,900 (= $2,000 x 95%) because the customer is expected to take up the discount offer, therefore the business should record the sale at the discounted amount.
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$1,900 goods sold and paid by cash/bank |
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Step 1 |
The transaction increases $1,900 in cash/bank balance |
The transaction increases $1,900 in Sales figure |
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Step 2 |
→ Record $1,900 debit in Cash/bank account |
→ Record $1,900 credit in Sales |
Type 3: Current & non-current assets
Ref: Tóm tắt kiến thức Type 3: Current & non-current assets
Importance: High
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Question 13: Y Elizabeth is entering an invoice in the purchase day book. The invoice shows the following costs:
What is the total value of capital expenditure on the invoice? A. $55,700 B. $57,200 C. $62,770 D. $75,324 |
Guidance:
Step 1: Students should focus on the objectives of the incurred expenses to identify what that expenses are used for:
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Revenue expenditure |
Capital expenditure |
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Objectives |
Maintaining daily business operations |
Improving revenue generation capacity |
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Effects on the related asset |
Keep the asset in working order |
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Step 2: Exclude the revenue expenditures when summing all capital expenditures.
Answer: B
Step 1: Notice that the maintenance cost and sales tax cannot be capitalized. This is a post-purchased expense that is used for fixing problems occurred in daily operations or maintaining the asset.
The rest are costs incurred when the asset is being installed, which qualified to be capitalized for the plant in Y Elizabeth’s accounting records.
Step 2: Calculate total value of the asset
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$ |
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Plant and equipment |
55,700 |
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Delivery |
1,500 |
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––––––– |
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Total |
57,200 |
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Question 14: Andrew’s business has the following equipment:
Andrew depreciates his equipment over six years by the straight-line method. What will be the charge for depreciation in the statement of profit or loss for the year 31 December? A. $14,000 B. $10,000 C. $4,000 D. None of these |
Guidance:
Remember these formulas:
- Carrying amount = Cost – Depreciation
- Annual Depreciation (straight-line method) = (Cost – Residual value)/Useful life
Answer: A
Annual Depreciation (straight-line method) = (Cost – Residual value)/Useful life
Annual Depreciation (straight-line method) = ($84,000 – 0)/6
Annual Depreciation (straight-line method) = $14,000
Depreciation charged full of 12 months in the year to 31 December, then the amount should be $14,000.
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Question 15: Andrew’s business also has the following motor vehicles:
Andrew depreciates his motor vehicles at 20% on a reducing balance basis. What will be the charge for depreciation in the statement of profit or loss for the year to 31 December? A. $20,000 B. $11,000 C. $9,000 D. None of these |
Guidance:
Remember: using the reducing balance basis is to apply the same depreciation rate each year.
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Depreciation charged (Reducing balance) = Carrying amount x Depreciation rate |
Answer: B
Depreciation charged (reducing balance) = Carrying amount x Depreciation rate
Depreciation charged (reducing balance) = $55,000 x 20%
Depreciation charged (reducing balance) = $11,000
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Question 16: Tom has a motor vehicle that cost $15,000 three years ago. The accumulated depreciation on the vehicle is $9,000. Tom sells the vehicle for $10,000. What profit or loss on disposal will be recorded in the accounts? A. Loss of $5,000 B. Loss of $4,000 C. Profit of $1,000 D. Profit of $4,000 |
Guidance:
Remember: On asset disposal:
- Proceeds > Carrying amount → Gain on disposal
- Proceeds < Carrying amount → Loss on disposal
With Proceeds represents the sale price minus any cost to sell.
Answer: D
The profit is the sale price of $10,000 minus the carrying value ($15,000 – $9,000 = $6,000) at the date of disposal.
1.4. Type 4: Accruals & Prepayments
Ref: Tóm tắt kiến thức Type 4: Accruals & Prepayments
Importance: Average
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Question 17: Alan has an accounting year that ends on 30 June. He has paid rent of $4,500 for the three months to 31 August. What accrual or prepayment is required when preparing accounts for the year ended 30 June? A. Accrual of $1,500 B. Accrual of $3,000 C. Prepayment of $1,500 D. Prepayment of $3,000 |
Guidance:
Remember:
- Accrual: an item of expense that has been incurred during the accounting period but has not been paid at the period end. Increases expenses in the statement of profit or loss and are shown as a liability in the statement of financial position.
- Prepayment: an item of expense that has been paid during the current accounting period but will not be incurred until the next accounting period. Decreases expenses in the statement of profit or loss and are shown as an asset in the statement of financial position.
Answer: D
Rent for July and August is prepaid.
Therefore, the prepayments to be recorded is $4,500 x 2/3 = $3,000.
1.5. Type 5: Irrecoverable debts and Allowance for receivables
Importance: Average
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Question 18: During the year, Cathy wrote off $1,400 of receivables as irrecoverable. At the end of the year, she decides to reduce the receivables allowance from $3,000 to $2,700. What is the total statement of profit or loss charge in respect of irrecoverable debts? A. $300 B. $1,100 C. $1,400 D. $1,700 |
Guidance:
Remember:
In respect of irrecoverable debts, there are 2 ways to affect this account:
- Written off an irrecoverable debt. The amount will be charged to the statement of profit or loss.
- Increase/Decrease the allowance for receivables: The allowance amount will increase/decrease the irrecoverable debt expense.
Answer: B
The irrecoverable debts are written off (which increases the irrecoverable debt expense) minus the decrease in the receivables allowance (which decreases the irrecoverable debt expense).
⇒ Total charge = $1,400 - $300 = $1,100|
Question 19: On 1 January, Helena had a balance on her receivables allowance account of $7,900. During the year, she wrote off irrecoverable debts of $3,600. At the end of the year, she decides to increase the receivables allowance by $1,500. What accounting entries are needed to increase the allowance? A. Debit Irrecoverable debts $1,500, Credit Allowance for receivables $1,500 B. Debit Irrecoverable debts $5,100, Credit Allowance for receivables $5,100 C. Debit Allowance for receivables $1,500, Credit Irrecoverable debts $1,500 D. Debit Allowance for receivables $5,100, Credit Irrecoverable debts $5,100 |
Guidance:
Remember:
When Increase/Decrease the allowance for receivables, the allowance amount will increase/decrease the irrecoverable debt expense.
Answer: A
The increase in the allowance is $1,500, although the full cost of irrecoverable and doubtful debts charged to the statement of profit or loss for the year will be $3,600 + $1,500 = $5,100.
1.6. Type 6: Inventory
Ref: Tóm tắt kiến thức Type 6: Inventory
Importance: High
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Question 20: A firm has the following transactions with its product R.
The firm uses periodic weighted average cost (AVCO) to value its inventory. What is the inventory value at the end of the year? (Give your answer to 2 decimal places)
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Guidance:
Remember:
AVCO method: Values inventory at the weighted average cost of all purchases. The average cost is calculated each time inventory is issued.
Answer: $2,057.12
Price per unit under periodic weighted average cost (AVCO):
= Total costs/(opening quantity + total quantity received)
= ($300 x 10) + ($250 x 12) + ($200 x 6)/(0 + 10 + 12 + 6)
= $257.14 per unit.
Valuation of closing inventory of 8 units = (10 + 12 – 8 + 6 – 12) x $257.14 = $2,057.12
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Question 21: During May 20X7, Sarah's purchases were $126,500, and her sales were $150,000. Sarah's gross profit was 20% of sales. The value of her inventory on 1 May 20X7 was $12,500. What was the value of Sarah's inventory on 31 May 20X7? A. $6,000 B. $11,000 C. $14,000 D. $19,000 |
Guidance:
Remember:
- Opening inventory + Purchases – Cost of goods sold (COGS) = Closing inventory
- Gross profit = Revenue - COGS
Answer: D
Gross profit = 20% x Revenue
=> COGS = Revenue – Gross profit
=> COGS = Revenue – 20% x Revenue
=> COGS = 80% x Revenue
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$ |
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Opening inventory |
12,500 |
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Purchases |
126,500 |
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––––––– |
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139,000 |
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Less: COGS (80% of Revenue) |
(120,000) |
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––––––– |
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Closing inventory |
19,000 |
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––––––– |
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Question 22: On 30 June 20X2 Dilip's inventory was valued at its cost of $45,400. This included items costing $2,600 which have since been superseded by an updated design. Dilip will be able to sell these items through an agent for $1,400. The agent's commission will be 10% of the selling price. What was the correct value of closing inventory on 30 June 20X2? A. $45,400 B. $44,200 C. $44,060 D. $42,800 |
Guidance:
Remember: Inventory should be measured at the lower of Cost and NRV (Net Realizable Value)
- Cost = Cost of purchase + Conversion cost + Other costs
- NRV = Estimated selling price – Estimated completion cost – Estimated selling cost
Answer: C
- Cost = $2,600
- NRV = $1,400 (Selling price) - 10% x $1,400 (Selling cost)
= $1,260
⇒ NRV < Cost⇒ The items should be recorded at NRV instead of their costs. Therefore, the closing inventory should replace the cost amount with the NRV amount
The correct closing inventory at 30 June 20X2 is: $45,400 - $2,600 + $1,260 = $44,060.