CIMA
CERTIFICATE IN BUSINESS ACCOUNTING
PAPER C2
FUNDAMENTALS OF FINANCIAL ACCOUNTING
COURSE TEST 1
QUESTION PAPER
Answer all questions
CMC2CT10(N) CT1 Questions
CC210 C2 CT (1)
CMC2CT10(N) CT1 Questions
You must attempt all questions.
Each correct answer will score two marks. No deduction will be made for wrong answers.
An answer sheet is provided on the last page of this test. You must indicate your answer in the box provided.
No workings should be submitted on the answer sheet
1
The net assets of Walter's business decreased by $11,025 over the year to 31 October 20X8. During that
year he had paid in additional capital of $14,000, drawn $875 in cash each month and, on one occasion,
taken goods costing $2,625 for his own use.
The
made by the business for the year ended 31 October 20X8 was profit/loss
$
2
The following are all current assets; trade receivables, inventories, prepaid expenses and bank deposit
account.
If they are placed in order of decreasing liquidity, their order will be:
inventories, trade receivables, prepaid expenses, bank deposit account
trade receivables, bank deposit account, prepaid expenses, inventories
bank deposit account, prepaid expenses, trade receivables, inventories
prepaid expenses, bank deposit account, trade receivables, inventories
Which of the following best explains the imprest system of petty cash control?
A
Each month an equal amount of cash is transferred into petty cash
the petty cash total must never fall below the imprest amount
Petty cash must be kept under lock and key
The exact amount of expenditure is reimbursed at intervals to maintain a fixed float
A business has net assets of $286,400 on 31 January 2009 and had net assets of $266,800 on 31
January 2008. During the year the proprietor of the business
(1)
took goods for his own use which cost $10,000 and had a market value of $14,000
(2)
introduced capital of $50,000
(3)
withdrew $30,000 as salary.
The profit for the year was $
5
Which of the following would not be classified as a current asset?
A
Cash
Prepayments
Land
Receivables
CMC2CT10(N) CT1 Questions
Which of the following statements is incorrect?
A
If the trial balance does not balance an error must have been made
The closing inventories balance is included in the trial balance
Proprietors drawings are shown on the trial balance
The opening inventories balance is included in the trial balance
The purpose of a balance sheet is to show:
A
a clear and definite estimate of what a business is really worth
the amount the business could be sold for in liquidation
the amount the business could be sold for as a going concern
the assets of the business and the claims against those assets
True or false?
A van for sale on a motor dealer's forecourt is shown as a non-current asset in the motor dealer's balance
sheet.
True
False
10
What transaction is represented by the entries: debit rent, credit landlord?
A
The receipt of rental income by the business
The issue of an invoice for rent to a tenant
The payment of rent by the business
The receipt of a bill for rent payable by the business
The accounting equation can be rewritten as:
A
Assets + profits drawings liabilities = closing capital
Assets liabilities drawings = opening capital + profit
Assets liabilities opening capital + drawings = profit
Opening capital + profit drawings liabilities = assets
CMC2CT10(N) CT1 Questions
FUNDAMENTALS OF FINANCIAL ACCOUNTING COURSE
TEST 1
Answer Sheet
Name: ..........................................................................
Student number: ....................................................
was
Profit/loss
2
3
4
5
6
7
8
9
10
CMC2CT10(N) CT1 Questions
Date: ..........................................................................
CMC2CT10(N) CT1 Questions
BPP House, Aldine Place, London W12 8AA
Tel: 0845 0751 100 (for orders within the UK)
Tel: +44 (0)20 8740 2211
Fax: +44 (0)20 8740 1184
www.bpp.com/learningmedia
CIMA
CERTIFICATE IN BUSINESS ACCOUNTING
PAPER C2
FUNDAMENTALS OF FINANCIAL ACCOUNTING
COURSE TEST 1
SOLUTIONS
CMC2CT10(N) CT1 Solutions
CC210 C2 CT (1)
CMC2CT10(N) CT1 Solutions
SOLUTIONS TO COURSE TEST 1
1
Loss was $11,900
$9,600
False
10
CMC2CT10(N) CT1 Solutions
WORKINGS
1
$11,900 loss
Change in net assets
change in capital + profit - drawings
-11,025
-11,025
-11,900
=
=
=
14,000 + profit (875 X 12) 2,625
875 + profit
profit
Change in net assets
change in capital + profit - drawings
286,400 - 266,800
19,600
19,600 10,000
Profit
=
=
=
=
50,000 + profit 10,000 30,000
10,000 + profit
profit
9,600
ie a loss of 11,900
2
$9,600
False It would be shown as a current asset ie inventory.
10
The balance sheet contains assets at historic cost (e.g. non current assets) and assets at less
than market value (e.g. inventory) together with all known liabilities at a certain date. It will not
reflect, therefore, the real worth of the business or what it would realise on sale. The going
concern concept implies that, unless explicitly stated to the contrary, the business will continue for
the foreseeable future. No account need be taken, therefore, of a sale in liquidation.
Rent is an expense, therefore a debit to rent indicates an increase in the expense.
BPP House, Aldine Place, London W12 8AA
Tel: 0845 0751 100 (for orders within the UK)
Tel: +44 (0)20 8740 2211
Fax: +44 (0)20 8740 1184
4
www.bpp.com/learningmedia
TEST 1
