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CIMA: BA3 > Wrong Answers > Flashcards

Wrong Answers Flashcards

1
Q

What is capital maintenance important for?

A

The measurement of profit.

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2
Q

What accounting convention governs the below statement?

“Sales revenue should be recognised only when goods and services have been supplied? “

A

The realisation convention

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3
Q

What accounting convention requires that NCA are valued at cost less depreciation rather than sale able value?

A

Going Concern convention.

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4
Q

What are elements of the stewardship function?

A

Safeguard assets
Ensure adequate controls exist to prevent fraud
Prepare financial accounts

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5
Q

Can you capitalise training costs or Testing costs?

A

Training costs; NO

Testing Costs: YES

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6
Q

When is the reducing balance method of dep’n more appropriate than straight line?

A

When it better reflects the pattern of the consumption of economic benefits derived from the asset.

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7
Q

Why is it important to produce an opening TB prior to preparing the financial statements?

A

It shows that the ledger accounts contain debit and credit entries of an equal value.

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8
Q

What is a cash discount?

A

A cash discount is a discount for early settlement or prompt payment of an invoice.

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9
Q

What is a trade discount?

A

A discount given to encourage customers to purchase bigger quantities and bulk buy.

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10
Q

Does discount received affect gross or net profit?

A

Net profit.

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11
Q

Can capital reserves be distributed as dividends & give an example of capital re services?

A

NO - Share premium account.

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12
Q

Do you include storage costs in inventory valuation?

A

No

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13
Q

How to calculate periodic WACO?

A

Step 1: Calculate weighted cost per unit

(Sum of purchases x cost per unit / sum of purchases)

Step 2: Calculate closing inventory in units.

Step 3: Closing inventory = closing units * weighted av cost per unit

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14
Q

Periodic vs Continous weighted average?

A

Periodic: Average cost per unit is calculated based on cost of opening inventory plus all purchases made

Continuous: Average cost per unit is calculated following each purchase of goods.

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15
Q

Are declared dividends included in current liabilities?

A

Yes

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16
Q

How to calculate cash cycle?

A

Inventory days + receivable days - payable days

17
Q

What does limited mean in an entity’s name?

A

The members liability is limited to the total amount paid or payable on the shares held by them

18
Q

Do we deduct the costs incurred in selling inventories when calculating NRV?

A

Yes

19
Q

What is the difference between SPL and income and expediture statement?

A

SPL is prepared for a business entity and I&E for a non-profit

20
Q

Are the issue of loan notes a cash inflow from financing activities?

A

Yes

21
Q

Out of revaluation surplus, dep’n and loss on disposals. Which is included in other comprehensive income?

A

Revaluation surplus only

22
Q

Is sales tax included in the figures of the cash book?

A

Yes include sales tax.

23
Q

Are all items of PPE depreciated?

A

Not necessarily.

24
Q

How to calculate net profit with incomplete records?

A

Closing net assets + Drawings - Capital Introduced - Opening Net Assets = Net Profit/

25
Q

What are the objectives of financial statements according to IAS 1?

A

The show the results of the mana nets stewardship of the resources entrusted to it.

The provide information about the financial performance and cash flows of an entity.

26
Q

Where does revaluation surplus appear on a statement of financial position?

A

It appears under the equity heading.

27
Q

What is the double entry for sales & purchase returns?

A

Sales Returns:
DEBIT: Sales Returns
CREDIT: Receivables

Purchase returns:
DEBIT: Payables
CREDIT: Purchase Returns

28
Q

What is the proforma for dividends?

A

———————— |————————-
| Dividends b/d x
Dividends Paid x| SPL x
|
Balance C/D x |

29
Q

How to calculate total cost of assets acquired?

A

Increase in YOY NCA Cost + Cost of sold assets = Total Cost of Assets acquired.

30
Q

How to calculate inventory turnover?

A

COS / Inventory

31
Q

What is the proforma for Cash flows from operating activities?

A

PBT X
+ Finance Cost X
+ Dep’n X
- Profit on disposal NCA (X)
+/- Increase/Decrease in Inventory
+/- Increase/Decrease in Receivables
+/- Increase/Decrease in Payables

32
Q

What is the main role of the IASB?

A

To formulate IFRS

33
Q

How to calculate impairment charge>

A

Carrying amount -Recoverable Amount of Asset = Impairment charge

34
Q

Which book of prime entry are irrecoverable debts and contras entered into?

A

The journal

35
Q

The recoverable amount of an asset is?

A

The higher of value in use and fair value less costs to sell

36
Q

What is the double entry for part ex?

A

Debit: NCA Cost
Credit: Disposal

CIMA: BA3 (2 decks)

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