Free ACCA Mock Test 139 — 20 Questions + Full Answers
Association of Chartered Certified Accountants · Accountancy students · Exams: Mar, Jun, Sep, Dec
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Applaa ACCA Mock Test 139
applaa-acca-mock-139.pdf · 20 questions
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8 of 20 shownCorrect answers highlighted in green. Full explanations included.
A retail store, Beacon Logistics LLP, purchased inventories for a gross total of £7,200 inclusive of standard-rate VAT at 20%. What are the net purchase cost and the input VAT amount recoverable by Beacon Logistics LLP?
- A.Net Cost: £6,000, VAT Recoverable: £1,200
- B.Net Cost: £7,200, VAT Recoverable: £1,440
- C.Net Cost: £5,760, VAT Recoverable: £1,440
- D.Net Cost: £6,000, VAT Recoverable: £0 (VAT is non-recoverable on inventories)
✓ Worked Explanation
Core Concept: Extracting VAT from a VAT-Inclusive (Gross) Price When a price is VAT-inclusive, you must use the VAT fraction to extract the tax element. You cannot simply multiply the gross price by 20% - that would over-calculate the VAT because you would be applying the rate to an amount that already contains VAT. Step-by-Step Resolution: 1. Identify the Problem: The gross (VAT-inclusive) price is £7,200. Standard rate VAT = 20%. 2. Apply the VAT Fraction: Net = Gross ÷ (1 + VAT rate) = £7,20
An entity purchased a machine on 1 January Year 1 for £48,000. The residual value of the machine is estimated to be £4,800 with an estimated useful life of 4 years. The entity uses the straight-line method of depreciation. What is the carrying value (net book value) of the machine on 31 December Year 2?
- A.£37,200
- B.£26,400
- C.£21,600
- D.£32,400
✓ Worked Explanation
Core Concept: Straight-Line Depreciation The straight-line method spreads the depreciable amount (Cost Residual Value) equally over the asset's useful life. The same charge is recognised in *every* period. After 2 complete years, two annual depreciation charges are deducted from the original cost. Step-by-Step Resolution: 1. Calculate Annual Depreciation: (Cost Residual Value) ÷ Useful Life = (£48,000 £4,800) ÷ 4 years = £10,800 per year 2. Calculate Accumulated Depreciation at 31 Dec
A grocery distributor, Zephyr Services LLP, recorded net sales of £9,600 for standard-rate products (20% VAT) and £4,800 for zero-rated food products. What is the total output VAT generated on these sales?
- A.£1,920
- B.£2,880
- C.£960
- 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 (£9,600): Output VAT = £9,600 × 20% = £1,920 2. Zero-Rate Sales (£4,800): Output VAT = £4,800 × 0% = £0 3. Total Output VAT = £1,920 + £0 = £1,920 Common Mistakes to Avoid
A retail store, Falcon Engineering Ltd, purchased inventories for a gross total of £14,000 inclusive of standard-rate VAT at 20%. What are the net purchase cost and the input VAT amount recoverable by Falcon Engineering Ltd?
- A.Net Cost: £11,666, VAT Recoverable: £2,334
- B.Net Cost: £14,000, VAT Recoverable: £2,800
- C.Net Cost: £11,200, VAT Recoverable: £2,800
- D.Net Cost: £11,666, VAT Recoverable: £0 (VAT is non-recoverable on inventories)
✓ Worked Explanation
Core Concept: Extracting VAT from a VAT-Inclusive (Gross) Price When a price is VAT-inclusive, you must use the VAT fraction to extract the tax element. You cannot simply multiply the gross price by 20% - that would over-calculate the VAT because you would be applying the rate to an amount that already contains VAT. Step-by-Step Resolution: 1. Identify the Problem: The gross (VAT-inclusive) price is £14,000. Standard rate VAT = 20%. 2. Apply the VAT Fraction: Net = Gross ÷ (1 + VAT rate) = £14,
A grocery distributor, Apex Trading Ltd, recorded net sales of £6,400 for standard-rate products (20% VAT) and £3,200 for zero-rated food products. What is the total output VAT generated on these sales?
- A.£1,280
- B.£1,920
- C.£640
- 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 (£6,400): Output VAT = £6,400 × 20% = £1,280 2. Zero-Rate Sales (£3,200): Output VAT = £3,200 × 0% = £0 3. Total Output VAT = £1,280 + £0 = £1,280 Common Mistakes to Avoid
For the year ended 31 December, Pinnacle Consulting Ltd paid rent of £75,000. At the year-end, the company had an outstanding electricity invoice of £6,250 which has not yet been paid. What are the adjusting entries required at the year-end to record this accrual?
- A.Debit Accruals £6,250, Credit Electricity Expense £6,250
- B.Debit Electricity Expense £6,250, Credit Accruals (Liabilities) £6,250
- C.Debit Cash £6,250, Credit Electricity Expense £6,250
- D.Debit Electricity Expense £6,250, Credit Prepayments (Assets) £6,250
✓ 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 £6,250 was incurred during the accounting year but remains unpaid at year-end. 2. Apply the Accruals Concept: The expense belongs to this ye
A grocery distributor, Nexus Media plc, recorded net sales of £14,400 for standard-rate products (20% VAT) and £7,200 for zero-rated food products. What is the total output VAT generated on these sales?
- A.£2,880
- B.£4,320
- C.£1,440
- 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 (£14,400): Output VAT = £14,400 × 20% = £2,880 2. Zero-Rate Sales (£7,200): Output VAT = £7,200 × 0% = £0 3. Total Output VAT = £2,880 + £0 = £2,880 Common Mistakes to Avo
A retail store, Aura Goods Ltd, purchased inventories for a gross total of £2,400 inclusive of standard-rate VAT at 20%. What are the net purchase cost and the input VAT amount recoverable by Aura Goods Ltd?
- A.Net Cost: £2,000, VAT Recoverable: £400
- B.Net Cost: £2,400, VAT Recoverable: £480
- C.Net Cost: £1,920, VAT Recoverable: £480
- D.Net Cost: £2,000, VAT Recoverable: £0 (VAT is non-recoverable on inventories)
✓ Worked Explanation
Core Concept: Extracting VAT from a VAT-Inclusive (Gross) Price When a price is VAT-inclusive, you must use the VAT fraction to extract the tax element. You cannot simply multiply the gross price by 20% - that would over-calculate the VAT because you would be applying the rate to an amount that already contains VAT. Step-by-Step Resolution: 1. Identify the Problem: The gross (VAT-inclusive) price is £2,400. Standard rate VAT = 20%. 2. Apply the VAT Fraction: Net = Gross ÷ (1 + VAT rate) = £2,40
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Paper Info
- Exam
- ACCA
- Mock number
- 139 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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