ACA Accounting exam

Question 1

How should an increase in receivables be treated in a cash flow statement?

Answer 1

Bad impact on cash - so put in brackets.

Question 2

How should an increase in payables be treated in a cash flow statement?

Answer 2

Good impact on cash - no brackets.

Question 3

How should a decrease in borrowings be treated in a cash flow statement?

Answer 3

Bad impact on cash - so put in brackets.

Question 4

How should a decrease in inventory be treated in a cash flow statement?

Answer 4

Good impact on cash - no brackets.

Question 5

How should an increase in provisions be treated in a cash flow statement?

Answer 5

Good impact on cash - no brackets.

Question 6

How should a decrease in receivables be treated in a cash flow statement?

Answer 6

Good impact on cash - no brackets.

Question 7

How should a decrease in borrowings be treated in a cash flow statement?

Answer 7

Bad impact on cash - so put in brackets.

Question 8

What is the calculation for wage expense?

Answer 8

cash paid to employees + PAYE +NI employees + NI employers

Question 9

What is the calculation for net pay?

Answer 9

gross pay - income tax - NI employers

Question 10

what is the calculation for wage cost to the business?

Answer 10

gross pay + NI employers

Question 11

What is the calculation for gross wages?

Answer 11

Net wages + PAYE + NI employees

Question 12

What is an error of omission?

Answer 12

failing to record a transaction at all

Question 13

what is an error of principle?

Answer 13

A double entry is made in the correct accounts but the accounting entry breaks the rules of an accounting principle.

Question 14

what is an error of comission?

Answer 14

An error of commission can occur when an item is entered to the correct type of account but the wrong account. For example is cash received of 3,000 from Customer A is credited to the account of Customer B the correcting entry would be.

Question 15

What are compensating errors?

Answer 15

errors which are equal and opposite to each other and cancel each other out.

Question 16

What is a transposition error?

Answer 16

when two digits on an amount are recorded in the wrong way round.

Question 17

What are the fundemental characteristics in the conceptual framework

Answer 17

Relevance

Faithful representation

Question 18

What are the enhancing characteristics in the conceptual framework

Answer 18

Comparability
Verifiability
Timeliness
Understandability

Question 19

What is in the IESBA Code of Ethics

Answer 19

Integrity
Objectivity
Professional Competence and due care
Confidentiality
Professional behaviour

Question 20

What is the straight line method of depreciation calculation

Answer 20

cost of asset - residual value / useful life of the asset

Question 21

Cost of sales equation

Answer 21

opening inventory + purchase + delivery inwards - closing inventory

Question 22

What goes into the tax paid t account

Answer 22

b/f income tax payable, income tax,,c/f income tax payable, calculate tax paid.

Question 23

What goes into the interest paid t account

Answer 23

b/f interest payable, finance costs, c/f interest payable, interest paid.

Question 24

What elements of financial statements are identified by the conceptual framework

Answer 24

Assets, liabilities, equity, income, expenses, cash flow

Question 25

How should an increase in prepayments be treated in a cash flow statement?

Answer 25

Bad impact on cash - so put in brackets.

Question 26

How should an increase in accruals be treated in a cash flow statement?

Answer 26

Good impact on cash - so no brackets.

Question 27

How should a decrease in provisions be treated in a cash flow statement?

Answer 27

Bad impact on cash - so put in brackets.