Exercise

1.1 Which of the following is the correct formula for cost of sales？ （ ）

A．Opening inventory － purchases ＋ closing inventory

B．Purchases － closing inventory ＋ sales

C．Opening inventory ＋ closing inventory － purchases

D．Opening inventory － closing inventory ＋ purchases

1.2 If an owner takes goods out of inventory for their own use， how is this dealt with？（）

A．Credited to drawings at cost

B．Credited to drawings at selling price

C．Debited to drawings at cost

D．Debited to drawings at selling price

1.3 A business starts trading on 1 September 20 × 0.During the year， it has sales of￡ 500，000， purchases of ￡ 250，000 and closing inventory of ￡ 75，000.What is the gross profit for the year？ （）

A．￡ 175，000

B．￡ 250，000

C．￡ 325，000

D．￡ 675，000

1.4 Using the information in Question 1.3 above， what is the figure for total assets？（）

A．￡ 179，000

B．￡ 169，000

C．￡ 129，000

D．￡ 5，000

1.5 In a period， sales are ￡ 140，000， purchases ￡ 75，000 and other expenses ￡ 25，000.What is the figure for net profit to be transferred to the capital account？ （）

A．￡ 40，000

B．￡ 65，000

C．￡ 75，000

D．￡ 140，000

1.6 The balance on an expense account will go to the P ／ L account． However， the balance on a liability account is written off to capital．

Is this statement correct？ （）

A．Yes

B．No

1.7 Net assets at the beginning of 20×7 were￡ 101，700.The proprietor injected new capital of ￡ 8，000 during the year and took drawings of ￡ 2，200.Net assets at the end of 20×7 were ￡ 180，000.

What was the profit earned by the business in 20×7？（）

A．￡ 72，500 profit

B．￡ 88，300 profit

C．￡ 84，300 profit

D．￡ （84，100） loss

1.8 Mr Harmon does not keep full accounting records， but the following information is available in respect of his accounting year ended 31 December 20×9.

In his trading account for 20×9， what will be Harmon's figure for purchases？ （）

A．￡ 31，500

B．￡ 31，750

C．￡ 27，850

D．￡ 33，440

1.9 Anchor is preparing his financial statements． After transferring the balances on all the income and expense ledger accounts to the profit and loss ledger account， the total credits in the profit and loss ledger account exceed the total debits by￡ 4，000.

Which two of the following statements about Anchor Ltd are correct？ （）

A．Anchor Ltd has made a loss for the year of ￡ 4，000.

B．Anchor Ltd has made a profit for the year of ￡ 4，000.

C．To begin to calculate the closing capital account balance， Anchor Ltd should credit the capital account and debit the profit and loss ledger account with ￡ 4，000.

D．The opening balance on the profit and loss ledger account for the next reporting period is ￡ 4，000 credit．

E．The closing balance on the profit and loss ledger account of ￡ 4，000 should be deducted from the capital account to give the profit for the year．

1.10 Which of the following statements concerning preparation of financial statements is true？ （）

A．The balances on income and expense accounts are brought down at the end of the accounting period to be carried forward to the next accounting period．

B．The balances on asset and liability accounts are summarized in an additional ledger account known as the statement of financial position ledger account．

C． The statement of profit or loss is a list of all the balances extracted from the business's accounts．

D．Loss for the year is a credit entry in the statement of profit or loss．

1.11 At 31 December 20×6 Richard's total assets are ￡ 20，376 and his non-current liabilities are ￡ 10，000.If his current liabilities are ￡ 6，290 then his capital balance at 31 December 20×6 must be （）．

A．￡ 4，086

B．￡ 16，666

C．￡ 24，086

D．￡ 36，666

1.12 Jude's profit and loss ledger account shows total entries on the debit side of ￡ 57，390 and total entries on the credit side of ￡ 84，928.What entry would Jude make in the profit and loss ledger account to transfer the profit or loss for the period to capital？ （）

A．Credit the profit and loss ledger account by ￡ 27，538 and credit the capital account by the same amount

B．Credit the profit and loss ledger account by ￡ 27，538 and debit the capital account by the same amount

C．Debit the profit and loss ledger account by ￡ 27，538 and debit the capital account by the same amount

D．Debit the profit and loss ledger account by ￡ 27，538 and credit the capital account by the same amount

1.13 A business has opening payables of ￡ 75，000 and closing payables of ￡ 65，000.Cash paid to suppliers was ￡ 65，000 and discounts received were ￡ 3，000.What is the figure for purchases？ （）

A．￡ 58，000

B．￡ 78，000

C．￡ 52，000

D．￡ 55，000

1.14 A business has net assets of ￡ 70，000 at the beginning of the year and ￡ 80，000 at the end of the year． Drawings were ￡ 25，000 and a lottery win of ￡ 5，000 was paid into the business during the year． What was the profit for the year？ （）

A．￡ 10，000 loss

B．￡ 30，000 profit

C．￡ 10，000 profit

D．￡ 30，000 loss

1.15 A sole trader who does not keep full accounting records wishes to calculate her sales revenue for the year． The information available is：

1 Opening inventory ￡ 17，000

2 Closing inventory ￡ 24，000

3 Purchases ￡ 91，000

4 Standard gross profit percentage on sales revenue 40％.

Which of the following is the sales figure for the year calculated from these figures？ （）

A．￡ 117，600

B．￡ 108，000

C．￡ 210，000

D．￡ 140，000

1.16 A business has compiled the following information for the year ended 31 October 20×2：

The gross profit as a percentage of sales is always 40％．

Based on these figures， what is the sales revenue for the year？ （）

A．￡ 1，333，500

B．￡ 1，587，500

C．￡ 2，381，250

D．The sales revenue figure cannot be calculated from this information

1.17 From the following details of Lucy Chan （Exhibit 1.8）， draw up her trading and profit and loss account for the year ended 31 December 20 × 0， this being her first year of trading：

Note ：At 31 December 20×0， the inventory was valued （at cost） at ￡ 15，085.

1.18 From the following trial balance of I． Lamb （Exhibit 1.9）， extracted after one year's trading， prepare a statement of profit or loss for the year ending 31 October 20×6.

Inventory at 31 October 20×6 was ￡ 15，600.（Retain your answer—it will be used later in Exercise 2.18）．

1.19 From the following trial balance of E． David （Exhibit 1.10）， extracted after one year's trading， prepare the statement of profit or loss for the year ended 31 December 20×1.

Inventory at 31 December 20×1 was valued at ￡ 10，192.（Retain your answer—it will be used later in Exercise 2.19）．

1.20*From the following trial balance of G． Foot （Exhibit 1.11） after his first year's trading， you are required to draw up a statement of profit or loss for the year ending 30 June 20×7.

Inventory at 30 June 20×7 was ￡ 18，000.（Retain your answer—it will be used later in Exercise 2.20）．

1.21*From the following trial balance of F． Dover （Exhibit 1.12） drawn-up on conclusion of his first year in business， draw up a statement of profit or loss for the year ending 31 May 20×7.

Inventory at 31 May 20×7 was ￡ 28，972.（Retain your answer—it will be used later in Exercise 2.21）．

1.22*Extract a statement of profit or loss for the year ending 30 June 20×8 for G． Graham． The trial balance as at 30 June 20 × 8 after his first year of trading was shown in Exhibit 1.13：

Inventory at 30 June 20×8 was ￡ 29，304.（Retain your answer—it will be used later in Exercise 2.22）．

1.23*On 1 June 20×5， Jock Heiss commenced trading as an ice cream salesman， using a van． He borrowed ￡ 2，000 from his bank， and the interest cost of the loan was ￡ 25 per month．

（1） He rented the van for ￡ 1，000 for three months． Running expenses for the van averaged ￡ 300 per month．

（2） He hired an assistant for ￡ 100 per month．

（3） His main business was to sell ice cream to customers in the street， but he also did special catering for business customers， supplying ice creams for office parties． Sales to these customers were usually on credit．

（4） For the three months to 31 August 20×5， his total sales were as follows．

·Cash sales ￡ 8，900

·Credit sales ￡ 1，100

（5） He purchased his ice cream from a local manufacturer， Floors Co． The purchase cost in the three months to 31 August 20×5 was ￡ 6，200， and at 31 August he had sold every item．He still owed ￡ 700 to Floors Co for unpaid purchases on credit．

（6） He paid telephone fee ￡ 250 for three months in cash．

（7） He used his own home for his office work． Postage expenses for the three months to 31 August were ￡ 150， which he paid in cash．

（8） During the period he paid himself ￡ 300 per month．

Requirement

Prepare a statement of profit or loss for the year ended 31 August 20×5.

Reference

1.Alan Sangster，Frank Wood's Business Accounting Volume 1（2019）， Pearson．

2.Andrew Thomas and Anne Marie Ward． Introduction to Financial Accounting （2019），McGraw-Hill Education．

3.ACCA FA Financial Accounting／ FIA FFA Interactive Text 2020， BPP Learning Media．

4.ACCA FA Financial Accounting／ FIA FFA Practice ＆ Revision Kit 2020， BPP Learning Media．

5.Accounting （Study Manual 2020）， The Institute of Chartered Accountants in England and Wales．

6.Accounting （Question Bank 2020）， The Institute of Chartered Accountants in England and Wales． Gq6g9AZpt5hN+YDQG/othxc4zDjUxaiCvhp7tcUdGeQfUZrPEaaMioFLkHMG6paz