Free ACCA Mock Test 243 — 20 Questions + Full Answers
Association of Chartered Certified Accountants · Accountancy students · Exams: Mar, Jun, Sep, Dec
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Applaa ACCA Mock Test 243
applaa-acca-mock-243.pdf · 20 questions
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8 of 20 shownCorrect answers highlighted in green. Full explanations included.
A retail store, Aura Goods 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 Aura Goods 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, Atlas Transport Ltd, recorded net sales of £57,600 for standard-rate products (20% VAT) and £28,800 for zero-rated food products. What is the total output VAT generated on these sales?
- A.£11,520
- B.£17,280
- C.£5,760
- 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 (£57,600): Output VAT = £57,600 × 20% = £11,520 2. Zero-Rate Sales (£28,800): Output VAT = £28,800 × 0% = £0 3. Total Output VAT = £11,520 + £0 = £11,520 Common Mistakes t
Before correcting the year-end errors, the draft profit of Beacon Logistics LLP was £120,000. An error was discovered: Closing inventory was overstated by £4,800. What is the revised profit after correcting this error?
- A.£124,800
- B.£115,200
- C.£120,000 (no effect on profit)
- D.£110,400
✓ 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
For the last quarter, Swift Logistics Ltd had net credit sales of £42,000 (excluding VAT). Gross purchases inclusive of 20% VAT were £25,200. What is the net VAT amount payable to (or reclaimable from) the tax authority?
- A.£4,200 Payable
- B.£4,200 Reclaimable
- C.£8,400 Payable
- D.£3,360 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): £42,000 × 20% = £8,400 2. Calculate Input VAT (tax paid to suppliers on purchases): - Purchases are GROSS (inc. VAT): use VAT fraction
The sole trader of Meridian Distributors Ltd took goods costing £6,250 from the business for personal use. These goods had a selling price of £9,375. What is the correct double entry to record this transaction?
- A.Debit Drawings £6,250, Credit Purchases £6,250
- B.Debit Drawings £9,375, Credit Revenue £9,375
- C.Debit Purchases £6,250, Credit Drawings £6,250
- D.Debit Inventory £6,250, Credit Drawings £6,250
✓ 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 £6,250 (cost) for personal use. This is a capital withdrawal. 2. Choose the Correct Value: Goods are recorded at cost (£6,250),
The Receivables Ledger Control Account of Omega Foodstuffs plc is shown in the diagram. Credit sales of £14,000 were recorded, and cash of £11,200 was received from credit customers. What is the correct closing balance (balance c/f) of the account?
- A.£9,800 Debit closing balance
- B.£9,800 Credit closing balance
- C.£21,000 Debit closing balance
- D.£11,200 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 £7,000 - money already owed by customers. 2. Credit Sales (+): New credit sales of £14,000 increase the amount owed,
For the year ended 31 December, Beacon Logistics LLP paid rent of £21,600. At the year-end, the company had an outstanding electricity invoice of £1,800 which has not yet been paid. What are the adjusting entries required at the year-end to record this accrual?
- A.Debit Accruals £1,800, Credit Electricity Expense £1,800
- B.Debit Electricity Expense £1,800, Credit Accruals (Liabilities) £1,800
- C.Debit Cash £1,800, Credit Electricity Expense £1,800
- D.Debit Electricity Expense £1,800, Credit Prepayments (Assets) £1,800
✓ 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 £1,800 was incurred during the accounting year but remains unpaid at year-end. 2. Apply the Accruals Concept: The expense belongs to this ye
For the year ended 31 December, Nexus Media plc paid rent of £7,200. At the year-end, the company had an outstanding electricity invoice of £600 which has not yet been paid. What are the adjusting entries required at the year-end to record this accrual?
- A.Debit Accruals £600, Credit Electricity Expense £600
- B.Debit Electricity Expense £600, Credit Accruals (Liabilities) £600
- C.Debit Cash £600, Credit Electricity Expense £600
- D.Debit Electricity Expense £600, Credit Prepayments (Assets) £600
✓ 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 £600 was incurred during the accounting year but remains unpaid at year-end. 2. Apply the Accruals Concept: The expense belongs to this year
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Paper Info
- Exam
- ACCA
- Mock number
- 243 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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