Best Quality CIMA BA3 Exam Questions SurePassExams Realistic Practice Exams [2021]
Critical Information To Fundamentals of Financial Accounting Pass the First Time
NEW QUESTION 49
Which one of the following best describes the purpose of an external audit of financial statements?
- A. The auditor advises on the use of International Financial Reporting Standards.
- B. The auditor expresses an opinion on the truth and fairness of the financial statements.
- C. The auditor checks the statements for evidence of fraud.
- D. The auditor expresses an opinion on corporate governance issues.
Answer: B
NEW QUESTION 50
A business had a balance at the bank of $1500 at the start of the month.
During the following month, it paid for materials of $1000, less trade discount of 20% and cash discount of 10%. It received a cheque from a trade receivable in respect of an invoice for $200, subject to cash discount of 5%.
The balance at the bank at the end of the month was
Give your answer to 2 decimal places.
Answer:
Explanation:
$969.90
NEW QUESTION 51
Which one of the following would not be considered one of the roles of a Financial Accountant?
- A. Preparation of statement of cash flows
- B. Preparation of annual budgets
- C. Reconciliation of ledger accounts
- D. Recording of financial transactions
Answer: B
NEW QUESTION 52
Company A has a receivables turnover ratio of six times, while Company B, which operates in the same market sector, has a receivables turnover ratio of five times.
This suggests that
- A. Company A has a lower level of receivables than Company B and is, therefore, more efficient than Company B.
- B. Company A has a higher level of receivables than Company B and is, therefore, less efficient than Company B.
- C. Company A has a lower level of receivables than Company B and is, therefore, less efficient than Company B.
- D. Company A has a higher level of receivables than Company B and is, therefore, more efficient than Company B.
Answer: A
NEW QUESTION 53
Refer to the exhibit.
Both internal and external audits can be performed on the financial statements of a company. The results of the audits have different purposes and different reporting lines.
Which of the following combinations is correct?
- A. D
- B. B
- C. A
- D. C
Answer: D
NEW QUESTION 54
A business has come to you for advice. There are about to start trading and want to ensure that they keep appropriate accounting records that will grow with their business, save time and produce useful information.
They have already established books of prime entry.
Which of the following would you also suggest they use?
- A. Same staff for all books of prime entry
- B. Cash transactions only
- C. Accounting codes
- D. Letterhead stationary
Answer: C
NEW QUESTION 55
Comany D recently purchased an intangible asset from CompanyJFY, which was priced at £150,500, which Company D paid, along a goodwill amount that totalled 25% of the asking price.
Company D has estimated that the purchased entity will have a useful life of 35 years. Company D has decided to amortise the cost of the new asset using the straight line method.
What will the amortisation figure per annum be for Company D's new entity?
- A. £5,500
- B. £4,300
- C. £5,375
- D. £1,075
Answer: C
NEW QUESTION 56
The concept of stewardship refers to which ONE of the following?
- A. An accountant's responsibility to remain optimistic in the presenting financial information
- B. An accountant's responsibility to properly advise management on financial information
- C. An accountant's responsibility to properly look after and present financial information
- D. An accountant's responsibility to make sure all financial information is correct
Answer: C
NEW QUESTION 57
A company has a year end of 31 December. Rent of $12,000 was paid on 1 October in year 1 to cover the period to 30 September year 2 and on 1 October year 2 $16,000 was paid for the following year The figure for rent payable that should be shown in the income statement for the year 2 will be
Answer:
Explanation:
$13000
NEW QUESTION 58
The external auditor seeks to provide an opinion on whether the accounts show a true and fair view What is the international term for 'true and fair view'?
- A. Fair presentation
- B. Going concern
- C. Prudence
- D. Completeness
Answer: A
NEW QUESTION 59
A company which is VAT-registered receives an invoice for goods purchased for resale totaling $2,585 from a supplier that is not VAT-registered. VAT is at the rate of 17.5%.
The correct entry to record the invoice is:
A)
B)
C)
D)
- A. Exhibit C
- B. Exhibit A
- C. Exhibit D
- D. Exhibit B
Answer: B
NEW QUESTION 60
What will be the effect on the financial statements if the closing inventory figure is decreased?
- A. An increase in cost of sales, an increase in gross profit and a decrease in the inventory figure in the statement of financial position.
- B. An increase in cost of sales, a decrease in gross profit and a decrease in the inventory figure in the statement of financial position.
- C. A decrease in cost of sales, a decrease in gross profit and a decrease in the inventory figure in the statement of financial position.
- D. A decrease in cost of sales, an increase in gross profit and a decrease in the inventory figure in the statement of financial position.
Answer: B
NEW QUESTION 61
FY owns bakery T.
Which of the following are examples of FY's liabilities?
- A. Business loan
- B. Regular bread order fulfilled for local school
- C. Shop building itself
- D. Mortgage on bakery shop
- E. Standing order with flour supplier
- F. Ovens
Answer: A,D,E
NEW QUESTION 62
An error of commission occurs where.
- A. One side of a transaction has been recorded in the wrong account, and that account is of the same class to the correct account
- B. The debit and credit entries of a transaction have been reversed
- C. A transaction has been recorded using the wrong amount
- D. A transaction has not been recorded
Answer: A
NEW QUESTION 63
Which TWO of the following are features of a private limited company?
- A. Usually a small number of owners
- B. Listed on the stock exchange
- C. Usually a large number of owners
- D. Recognised as a 'person' in the eyes of the law
Answer: A,D
NEW QUESTION 64
An accounting system should provide an audit trail for all its transactions Which of the following describes an audit trail?
- A. Provision of a complete history of any given financial transaction
- B. A review of the audit process completed
- C. The planned audit process
- D. A timetable of deadlines of the audit
Answer: A
NEW QUESTION 65
An invoice to Sammy has been entered in the sales day book as $85 instead of $58.
To correct the position, which of the following procedures should be adopted?
- A. Debit Sales $27, Credit Receivables $27 and decrease the balance owing by Sammy
- B. Debit Sales $27, Credit Receivables $27 and increase the balance owing by Sammy
- C. Debit Receivables $27, Credit Sales $27 and decrease the balance owing by Sammy
- D. Debit Receivables $27, Credit Sales $27 and increase the balance owing by Sammy
Answer: A
NEW QUESTION 66
Which of the following is not a book of prime entry?
- A. Journal
- B. Sales ledger
- C. Purchases daybook
- D. Cash book
Answer: B
NEW QUESTION 67
Which of the following explains the concept of capital maintenance?
- A. the cost of replacing an entity's non-current assets
- B. the raising of new capital by the issue of shares
- C. retaining sufficient profits to ensure that closing net assets are at least equal in value to net assets at the beginning of the period
- D. the cost of maintaining an entity's non-current assets in good working condition
Answer: C
NEW QUESTION 68
In internal auditing, detection of fraud is an important objective. The auditors will best be able to detect frauds if they are knowledgeable in the most common methods of fraud.
Which THREE of the following are common methods of fraud?
- A. Taking stationary home
- B. Collusion with external parties
- C. Using a company car for personal use
- D. Using company phones for private calls
- E. Teeming and lading
- F. Ghost employees
Answer: D,E,F
NEW QUESTION 69
The issue of a company's shares for more than their normal value results in the creation of a
- A. Suspense account.
- B. Share premium account.
- C. Goodwill account.
- D. General reserve.
Answer: B
NEW QUESTION 70
Refer to the exhibit.
The following is an extract from the trial balance of a business for its most recent year:
Net profit before tax has already been calculated as being £27m. Income tax of £5m is to be provided, and a final dividend of 30p per share is declared.
Using some or all of the figures above, the correct figure of retained profit for the year is
Answer:
Explanation:
£12 million
NEW QUESTION 71
Goodwill is calculated as being:
- A. The increase in the value of non-current assets as a result of revaluation
- B. The excess of the purchase price of an acquired business over the net book value of its separable net assets
- C. The excess of the true value of a business over the net book value of its separable net assets
- D. The excess of the purchase price of an acquired business over the fair value of its separable net assets
Answer: D
NEW QUESTION 72
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