Free ACCA Mock Test 235 — 20 Questions + Full Answers
Association of Chartered Certified Accountants · Accountancy students · Exams: Mar, Jun, Sep, Dec
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Applaa ACCA Mock Test 235
applaa-acca-mock-235.pdf · 20 questions
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8 of 20 shownCorrect answers highlighted in green. Full explanations included.
The Receivables Ledger Control Account of Vanguard Retail Ltd is shown in the diagram. Credit sales of £11,000 were recorded, and cash of £8,800 was received from credit customers. What is the correct closing balance (balance c/f) of the account?
- A.£7,700 Debit closing balance
- B.£7,700 Credit closing balance
- C.£16,500 Debit closing balance
- D.£8,800 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 £5,500 - money already owed by customers. 2. Credit Sales (+): New credit sales of £11,000 increase the amount owed,
For the last quarter, Aura Goods Ltd had net credit sales of £84,000 (excluding VAT). Gross purchases inclusive of 20% VAT were £50,400. What is the net VAT amount payable to (or reclaimable from) the tax authority?
- A.£8,400 Payable
- B.£8,400 Reclaimable
- C.£16,800 Payable
- D.£6,720 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): £84,000 × 20% = £16,800 2. Calculate Input VAT (tax paid to suppliers on purchases): - Purchases are GROSS (inc. VAT): use VAT fractio
A retail store, Apex Trading Ltd, purchased inventories for a gross total of £3,600 inclusive of standard-rate VAT at 20%. What are the net purchase cost and the input VAT amount recoverable by Apex Trading Ltd?
- A.Net Cost: £3,000, VAT Recoverable: £600
- B.Net Cost: £3,600, VAT Recoverable: £720
- C.Net Cost: £2,880, VAT Recoverable: £720
- D.Net Cost: £3,000, 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 £3,600. Standard rate VAT = 20%. 2. Apply the VAT Fraction: Net = Gross ÷ (1 + VAT rate) = £3,60
Before correcting the year-end errors, the draft profit of Alpha Properties Ltd was £120,000. An error was discovered: Closing inventory was overstated by £22,000. What is the revised profit after correcting this error?
- A.£142,000
- B.£98,000
- C.£120,000 (no effect on profit)
- D.£76,000
✓ Worked Explanation
Core Concept: Impact of Inventory Errors on Profit The relationship between inventory and profit is one of the most important concepts in financial accounting. Closing inventory is deducted from Cost of Sales. If closing inventory is overstated, Cost of Sales is *understated*, which means Gross Profit is *overstated*. Correcting the overstatement increases COGS and reduces profit. Step-by-Step Resolution: 1. Recall the COGS Formula: Cost of Sales = Opening Inventory + Purchases Closing Invent
A grocery distributor, Vanguard Retail Ltd, recorded net sales of £48,000 for standard-rate products (20% VAT) and £24,000 for zero-rated food products. What is the total output VAT generated on these sales?
- A.£9,600
- B.£14,400
- C.£4,800
- 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 (£48,000): Output VAT = £48,000 × 20% = £9,600 2. Zero-Rate Sales (£24,000): Output VAT = £24,000 × 0% = £0 3. Total Output VAT = £9,600 + £0 = £9,600 Common Mistakes to A
A grocery distributor, Falcon Engineering Ltd, recorded net sales of £48,000 for standard-rate products (20% VAT) and £24,000 for zero-rated food products. What is the total output VAT generated on these sales?
- A.£9,600
- B.£14,400
- C.£4,800
- 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 (£48,000): Output VAT = £48,000 × 20% = £9,600 2. Zero-Rate Sales (£24,000): Output VAT = £24,000 × 0% = £0 3. Total Output VAT = £9,600 + £0 = £9,600 Common Mistakes to A
Atlas Transport Ltd disposed of a delivery vehicle for £72,000. The vehicle had originally cost £120,000 and had accumulated depreciation of £60,000 at the date of disposal. What is the gain or loss on disposal to be recorded in profit or loss?
- A.Gain on disposal of £12,000
- B.Loss on disposal of £12,000
- C.Gain on disposal of £-48,000
- D.Loss on disposal of £60,000
✓ Worked Explanation
Core Concept: Profit or Loss on Disposal of a Non-Current Asset When a non-current asset is sold, the gain or loss is measured as Disposal Proceeds minus the Carrying Value (Net Book Value). It is *not* compared to the original cost. Only the written-down value at the disposal date is relevant. Step-by-Step Resolution: 1. Find the Carrying Value (NBV) at disposal date: NBV = Original Cost Accumulated Depreciation = £120,000 £60,000 = £60,000 2. Compare to Disposal Proceeds: £72,000 (rece
At 31 March, the bank statement of Pinnacle Consulting Ltd 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 Pinnacle Consulting Ltd'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 Pinnacle Co
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Paper Info
- Exam
- ACCA
- Mock number
- 235 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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