A2 Revision questions

Gene’s business has the following balances at 30 November:

Gene’s business has an overdraft limit of £14 000. Half of the amount payable to HMRC has been owed for almost two months.

Prepare a statement of financial position for Gene’s business at 30 November

Comment on the cash position of the business

• Deirdre’s business has non-current assets of £30 000, current assets of £17 500 and current liabilities of £3 600. There are no long-term liabilities. Deirdre’s capital is?

  1. £51 100
  2. £16 100
  3. £43 900
  4. £8 900

• The following figures has been provided by Jennifer for her catering business. Sales £8,200, Opening inventory £1,300, closing inventory £900, Purchases £6,400, Carriage inwards £200. Calculate Jennifer’s cost of goods sold

  1. £6,800
  2. £1,200
  3. £7,000
  4. £6,200
• TB Wallis started trading on I January 2019, he has the following figures for the first year of trading: Carriage inwards£3,470, Returns outwards£1,390, Return inwards£7,470, Sales £249,000, Purchases £168,300 and Inventory as at 31December 2019£25,630. Calculate his gross profit for the first year of trading:
  1. £104,250
  2. £100,250
  3. £96,780
  4. £116,380

• A motor vehicle which cost £30,000 is depreciated at 20% per annum using the reducing balance method. The depreciation charge for the second year would be:

  1. £13,800
  2. £8,000
  3. £4,800
  4. £7,200

• If a business’ rent for the year is £38,000 but it had only paid £32,000, this means:

  1. The total rent incurred during the year should be £32,000
  2. There is an accrual of £32,000 for the year
  3. The total rent incurred during the year should be £38,000
  4. There is a rent accrual of £6,000 for the year to bemade in the accounts

• A business buys equipment costing £28,000 and depreciates it using the reducing balance method at 20% per annum. Three years later it was sold for £15,000. The profit or loss on the transaction was:

  1. Neither a profit or a loss
  2. A profit of £8,784
  3. A profit of £664
  4. A loss of £664

• A motor vehicle which cost £30,000 is depreciated at 20% per annum using Straight line method. The depreciation charge for the second year would be:

  1. £12,000
  2. £6,000
  3. £3,000
  4. £4,800

• Which of the following three statements about marginal costing are correct?

  1. Marginal costing:
  2. is an approach to costing that excludes fixed costs?
  3. provides a sounder basis for decision making than absorption costing
  4. is only useful in respect of businesses that incur variable costs

• Which of the following three statements about marginal costing are correct?

  1. Marginal costing:
  2. is an approach to costing that excludes fixed costs?
  3. provides a sounder basis for decision making than absorption costing
  4. is only useful in respect of businesses that incur variable costs

• A business makes 2,000 units of a particular product. It spent £24,000 on material and it paid its operatives £40,000. Other costs of running the factory were £50,000. The sales force was also paid £18,000 and the head office costs were £100,000. In order to break even the selling price per unit will have to be:

  1. £84
  2. £116
  3. £32
  4. £66

• A company currently sells 10,000 units of a product at £9.00 per unit and makes £20,000 profit. Variable costs currently stand at £6.00 per unit. By how much would variable costs have to increase before the company makes neither a profit nor a loss?

  1. £2.00
  2. £3.00
  3. £4.00
  4. £1.00

• Prate’s business makes an operating profit of £29 975 in the year ended 31 December 2018, after deducting £7668 for depreciation. At 31 December 2018 her statement of financial position showed inventory of £33 250, receivables and prepayments of £26 772 and payables of £35 556. On 31 December 2019 the corresponding figures were: inventory £34 490, receivables and prepayments £22 894 and payables £29 493. What is the net cash inflow from operating activities to be included in Prate’s statement of cash flows for the year ended 31 December 2019?

  1. £33 400
  2. £34 218
  3. £38 588
  4. £41 068

• he breakeven point in units is represented by the equation:

  1. (Sales revenue - Fixed costs)/ Contribution per unit
  2. Fixed costs / selling price per unit
  3. Fixed costs / Contribution per unit
  4. Fixed costs / Variable costs

• Bakersfield Limited purchases some of its goods on credit and some for cash. On average, in any given month, the company would expect 20% of its purchases of goods to be paid for in cash. 60% of the purchases on credit would be paid for in the next following month, and 40% in the month after that.

  1. September £126 000
  2. October £135 000
  3. November £128 500
  4. December £121 500

• Bertrand sells goods entirely on credit. In respect of sales in any given month, he expects 50% to be paid for in the next following month, 40% in the month after that, and 10% in the month after that. (So, for example, 50% of sales made on credit in January would be received in February, 40% in March and 10% in April).

  1. May 352 000
  2. June £53 500
  3. July £57 800
  4. August £56 000

• Grimsby Ltd is specialist in bath products. They are about to introduce a new product into the market. The estimated selling price is £1,452, the variable cost is £353 unit and the fixed cost is £94,325. The directors will like to know many baths they have to sell to achieve a profit of £50,000.

  1. £124
  2. £144
  3. £131
  4. £136

1. Which of the following transactions increases or decreases the net cash flow from operating activities?

   1. Sale of a non-current asset
   2. Purchase of inventory for resale
   3. Payment of interest on a loan
   4. Drawings

2. A business has trade payables at its year end of £206,460. Purchases for the year are £1, 952,278 of which 90% were made on credit. What is the trade payable turnover?

   1. 42.9 days
   2. 38.6 days
   3. 34.7 days
   4. 11.7days
3. 

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