➡️QUESTION⬅️

A trader did not keep full accounting records. The following information was available for 2015.

trade payables on 1 January: $32785
trade payables on 31 December: $43630
payments to suppliers during the year : $72830
discounts received during the year: $3450

What was the value of purchases?
A $58 535
B $65 435
C $80 225
D $87 125

Answer: D

Purchases = Payments ($72830) +Closing Payables ($43630) + Discount ($3450) - Opening Payables ($32785)

➡️QUESTION⬅️

Why does a trader account for accrued income?

Aso that current liabilities are not overstated
Bso that current liabilities are not understated
C so that profit is not overstated
D so that profit is not understated

Answer: D

Accrued income is included as income in income statement that increases profit, so if not included profit
would be understated.


➡️QUESTION⬅️

A trader sends his staff on a training course costing $100 per person. 10 staff attended in April and 4 in May. Half the total cost had to be paid at the start of April and the balance at the end of May.

Which entry for training was made in the statement of financial position on 30 April?

A $300 accrual
B $400 accrual
C $600 prepayment
D $700 prepayment

Answer: A

Total training cost (14 x $100) = $1400
Half paid in April ($1400 + 2) = $700
Training expense for April (10 X $100) = $1,000
Amount payable at the end of April i.e. accrued
expense ($1,000 — $700) = $300


➡️QUESTION⬅️

A business paid $10 000 for motor expenses in the year.

The opening prepayment was $1500 and the closing accrual was $2000.

What was the charge for motor expenses for the year?

A $6500
B $9500
C $10500
D $13500

Answer: D

Opening prepayment is payment made in last year for expense of current year, closing accruals are exbenses of current year still payable. Both are expenses of current year.

Expense/charge for the year = $10,000 + $1,500 + $2,000



➡️QUESTION⬅️


At 1 January 2014 a business had prepaid rent of $700. In July it paid an invoice for $9300 and on
31 December it transferred an expense of $9000 to the income statement.

Which value appeared in the statement of financial position at 31 December 2014?

A $400 other payables
B $400 ‘other receivables
C $1000 other payables
D $1000 other receivables

Answer: D