Free ACCA Mock Test 118 — 20 Questions + Full Answers
Association of Chartered Certified Accountants · Accountancy students · Exams: Mar, Jun, Sep, Dec
Sections: Financial Accounting · Applaa proprietary paper — free to download and print
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Applaa ACCA Mock Test 118
applaa-acca-mock-118.pdf · 20 questions
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8 of 20 shownCorrect answers highlighted in green. Full explanations included.
At 31 March, the bank statement of Titan Steel plc shows a credit balance of £56,000. Unpresented checks total £14,000, and outstanding uncleared lodgements total £7,000. What is the reconciled balance that should appear in Titan Steel plc's cash book?
- A.£49,000
- B.£63,000
- C.£77,000
- D.£35,000
✓ Worked Explanation
Core Concept: Bank Reconciliation Statement A bank reconciliation explains the difference between the *cash book balance* (company's records) and the *bank statement balance* (bank's records). Timing differences - unpresented cheques and uncleared lodgements - cause these differences. Step-by-Step Resolution: 1. Start with Bank Statement Balance: £56,000 (credit balance, meaning the bank shows this as a positive balance for the company). 2. Add Uncleared Lodgements: Deposits sent by Titan Steel
Alpha Properties Ltd completed two projects during the year: 1) Purchased and installed a new warehouse conveyor belt system for £110,000, and 2) Had the exterior of the existing office block repainted for £11,000. How should these expenditures be classified?
- A.Both projects are Capital Expenditure.
- B.Warehouse system: Capital Expenditure (£110,000), Repainting: Revenue Expenditure (£11,000)
- C.Warehouse system: Revenue Expenditure (£110,000), Repainting: Capital Expenditure (£11,000)
- D.Both projects are Revenue Expenditure.
✓ Worked Explanation
Core Concept: Capital Expenditure vs. Revenue Expenditure Capital Expenditure (CapEx) creates or enhances a long-term non-current asset and is capitalised on the balance sheet, then depreciated over its useful life. Revenue Expenditure (RevEx) relates to day-to-day operations, maintenance, or restoration and is expensed immediately in profit or loss. Step-by-Step Resolution: 1. Warehouse Conveyor Belt System (£110,000): - This is a *new* asset installed to generate future economic benefits.
The Receivables Ledger Control Account of Pinnacle Consulting Ltd is shown in the diagram. Credit sales of £12,500 were recorded, and cash of £10,000 was received from credit customers. What is the correct closing balance (balance c/f) of the account?
- A.£8,750 Debit closing balance
- B.£8,750 Credit closing balance
- C.£18,750 Debit closing balance
- D.£10,000 Credit closing balance
✓ Worked Explanation
Core Concept: Receivables Ledger Control Account The Receivables Ledger Control Account is an asset account that tracks money owed to the business by credit customers. As an asset, it follows the fundamental debit rule: increases are recorded on the debit side and decreases on the credit side. Step-by-Step Resolution: 1. Opening Balance: The account opens with a debit balance of £6,250 - money already owed by customers. 2. Credit Sales (+): New credit sales of £12,500 increase the amount owed,
The Receivables Ledger Control Account of Solar Energy plc is shown in the diagram. Credit sales of £22,000 were recorded, and cash of £17,600 was received from credit customers. What is the correct closing balance (balance c/f) of the account?
- A.£15,400 Debit closing balance
- B.£15,400 Credit closing balance
- C.£33,000 Debit closing balance
- D.£17,600 Credit closing balance
✓ Worked Explanation
Core Concept: Receivables Ledger Control Account The Receivables Ledger Control Account is an asset account that tracks money owed to the business by credit customers. As an asset, it follows the fundamental debit rule: increases are recorded on the debit side and decreases on the credit side. Step-by-Step Resolution: 1. Opening Balance: The account opens with a debit balance of £11,000 - money already owed by customers. 2. Credit Sales (+): New credit sales of £22,000 increase the amount owed,
For the year ended 31 December, Summit Manufacturing Ltd paid rent of £54,000. At the year-end, the company had an outstanding electricity invoice of £4,500 which has not yet been paid. What are the adjusting entries required at the year-end to record this accrual?
- A.Debit Accruals £4,500, Credit Electricity Expense £4,500
- B.Debit Electricity Expense £4,500, Credit Accruals (Liabilities) £4,500
- C.Debit Cash £4,500, Credit Electricity Expense £4,500
- D.Debit Electricity Expense £4,500, Credit Prepayments (Assets) £4,500
✓ Worked Explanation
Core Concept: Accruals (Expenses Incurred but Not Yet Paid) Under the accruals concept (IAS 1), expenses must be recognised in the period they are *incurred*, not when they are *paid*. An accrual is a current liability - the business owes this amount but hasn't yet paid the invoice. Step-by-Step Resolution: 1. Identify the Issue: The electricity expense of £4,500 was incurred during the accounting year but remains unpaid at year-end. 2. Apply the Accruals Concept: The expense belongs to this ye
The sole trader of Omega Foodstuffs plc took goods costing £12,500 from the business for personal use. These goods had a selling price of £18,750. What is the correct double entry to record this transaction?
- A.Debit Drawings £12,500, Credit Purchases £12,500
- B.Debit Drawings £18,750, Credit Revenue £18,750
- C.Debit Purchases £12,500, Credit Drawings £12,500
- D.Debit Inventory £12,500, Credit Drawings £12,500
✓ Worked Explanation
Core Concept: Owner's Drawings of Inventory at Cost When a sole trader takes goods from the business for personal use, this is treated as drawings - a withdrawal of capital by the owner. The key rule is that drawings of goods are always valued at cost price, never at selling price. Step-by-Step Resolution: 1. Identify the Economic Event: The owner has taken goods worth £12,500 (cost) for personal use. This is a capital withdrawal. 2. Choose the Correct Value: Goods are recorded at cost (£12,500
A grocery distributor, Vanguard Retail Ltd, recorded net sales of £76,800 for standard-rate products (20% VAT) and £38,400 for zero-rated food products. What is the total output VAT generated on these sales?
- A.£15,360
- B.£23,040
- C.£7,680
- D.£0 (all food products are exempt from output VAT)
✓ Worked Explanation
Core Concept: Zero-Rated vs. Standard-Rated VAT Supplies In UK VAT, there are multiple categories of supply: standard-rated (20%), zero-rated (0%), reduced-rated (5%), and exempt. Both standard-rated and zero-rated are *taxable* supplies, but zero-rated generates £0 output VAT. Step-by-Step Resolution: 1. Standard-Rate Sales (£76,800): Output VAT = £76,800 × 20% = £15,360 2. Zero-Rate Sales (£38,400): Output VAT = £38,400 × 0% = £0 3. Total Output VAT = £15,360 + £0 = £15,360 Common Mistakes t
For the last quarter, Beacon Logistics LLP had net credit sales of £12,000 (excluding VAT). Gross purchases inclusive of 20% VAT were £7,200. What is the net VAT amount payable to (or reclaimable from) the tax authority?
- A.£1,200 Payable
- B.£1,200 Reclaimable
- C.£2,400 Payable
- D.£960 Payable
✓ Worked Explanation
Core Concept: VAT Return - Output VAT vs. Input VAT A VAT-registered business acts as a tax collector for HMRC. It charges Output VAT on sales and reclaims Input VAT on purchases. The *net VAT payable* is the difference: Output VAT Input VAT. Step-by-Step Resolution: 1. Calculate Output VAT (tax charged to customers on sales): - Sales are NET (exc. VAT): £12,000 × 20% = £2,400 2. Calculate Input VAT (tax paid to suppliers on purchases): - Purchases are GROSS (inc. VAT): use VAT fraction
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Paper Info
- Exam
- ACCA
- Mock number
- 118 of 250
- Questions
- 20
- Format
- Multiple Choice (MCQ)
- Sections
- 1
- Audience
- Accountancy students
- Timing
- Exams: Mar, Jun, Sep, Dec
- Copyright
- Applaa Proprietary
Sections Covered
- Financial Accounting
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