Free ACCA Mock Test 4 — 20 Questions + Full Answers
Association of Chartered Certified Accountants · Accountancy students · Exams: Mar, Jun, Sep, Dec
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Applaa ACCA Mock Test 4
applaa-acca-mock-4.pdf · 20 questions
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8 of 20 shownCorrect answers highlighted in green. Full explanations included.
A retail store, Crown Paper Ltd, purchased inventories for a gross total of £15,000 inclusive of standard-rate VAT at 20%. What are the net purchase cost and the input VAT amount recoverable by Crown Paper Ltd?
- A.Net Cost: £12,500, VAT Recoverable: £2,500
- B.Net Cost: £15,000, VAT Recoverable: £3,000
- C.Net Cost: £12,000, VAT Recoverable: £3,000
- D.Net Cost: £12,500, 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 £15,000. Standard rate VAT = 20%. 2. Apply the VAT Fraction: Net = Gross ÷ (1 + VAT rate) = £15,
For the year ended 31 December, Pinnacle Consulting Ltd paid rent of £45,000. At the year-end, the company had an outstanding electricity invoice of £3,750 which has not yet been paid. What are the adjusting entries required at the year-end to record this accrual?
- A.Debit Accruals £3,750, Credit Electricity Expense £3,750
- B.Debit Electricity Expense £3,750, Credit Accruals (Liabilities) £3,750
- C.Debit Cash £3,750, Credit Electricity Expense £3,750
- D.Debit Electricity Expense £3,750, Credit Prepayments (Assets) £3,750
✓ 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 £3,750 was incurred during the accounting year but remains unpaid at year-end. 2. Apply the Accruals Concept: The expense belongs to this ye
An entity purchased a machine on 1 January Year 1 for £27,000. The residual value of the machine is estimated to be £2,700 with an estimated useful life of 8 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.£23,963
- B.£20,926
- C.£18,226
- D.£21,263
✓ 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 = (£27,000 £2,700) ÷ 8 years = £3,037 per year 2. Calculate Accumulated Depreciation at 31 Dec Y
A bookkeeper at Alpha Properties Ltd prepared a trial balance which failed to agree, with the credit side exceeding the debit side by £900. A suspense account was opened. Which of the following errors, when corrected, could explain this difference?
- A.A purchase invoice for £450 was completely omitted from the books.
- B.A cash payment of £450 to a supplier was debited to the purchases account but not credited to the cash account.
- C.Sales of £450 were recorded by debiting Receivables Control and debiting Sales Account.
- D.A purchase return of £450 was debited to the Purchase Returns account and credited to Receivables Control.
✓ Worked Explanation
Core Concept: Trial Balance Errors and the Suspense Account A trial balance fails to agree when a transaction is posted with unequal debits and credits. The difference is placed in a suspense account until the error is found and corrected. Errors that cause the trial balance to fail include: single-sided entries, casting errors, and transposition errors on one side only. Step-by-Step Resolution: 1. Analyse the Symptom: Credits exceed debits by £900. This means the debit side is £900 *too small*
The sole trader of Swift Logistics Ltd took goods costing £9,000 from the business for personal use. These goods had a selling price of £13,500. What is the correct double entry to record this transaction?
- A.Debit Drawings £9,000, Credit Purchases £9,000
- B.Debit Drawings £13,500, Credit Revenue £13,500
- C.Debit Purchases £9,000, Credit Drawings £9,000
- D.Debit Inventory £9,000, Credit Drawings £9,000
✓ 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 £9,000 (cost) for personal use. This is a capital withdrawal. 2. Choose the Correct Value: Goods are recorded at cost (£9,000),
For the year ended 31 December, Falcon Engineering Ltd paid rent of £2,400. At the year-end, the company had an outstanding electricity invoice of £200 which has not yet been paid. What are the adjusting entries required at the year-end to record this accrual?
- A.Debit Accruals £200, Credit Electricity Expense £200
- B.Debit Electricity Expense £200, Credit Accruals (Liabilities) £200
- C.Debit Cash £200, Credit Electricity Expense £200
- D.Debit Electricity Expense £200, Credit Prepayments (Assets) £200
✓ 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 £200 was incurred during the accounting year but remains unpaid at year-end. 2. Apply the Accruals Concept: The expense belongs to this year
A suspense account was opened with a debit balance of £6,000. It was discovered that a cash receipt of £6,000 from a credit customer was credited to the cash account and credited to Receivables Control. What is the correcting journal entry to clear the suspense account?
- A.Debit Cash £12,000, Credit Suspense Account £12,000
- B.Debit Receivables Control £6,000, Credit Suspense £6,000
- C.Debit Suspense £12,000, Credit Cash £12,000
- D.Debit Cash £6,000, Credit Receivables Control £6,000
✓ Worked Explanation
Core Concept: Correcting Journal Entries via the Suspense Account When an error is identified, the correcting entry must: (1) reverse what was posted *incorrectly*, and (2) post what *should have been* posted. The suspense account is used to hold an unexplained balance while the error is investigated. Step-by-Step Resolution: 1. Understand the Original Error: Cash receipt of £6,000 from a customer was posted as: - Credit Cash £6,000 *(wrong - cash was RECEIVED, so it should be DEBITED)* -
The trial balance of Meridian Distributors Ltd balanced perfectly. However, it was later discovered that a purchase of equipment costing £9,600 was entered into the repairs and maintenance account. What type of error has occurred?
- A.Error of Omission
- B.Error of Commission
- C.Error of Principle
- D.Error of Reversal
✓ Worked Explanation
Core Concept: The Six Types of Accounting Errors There are six classic types of bookkeeping errors. Some cause the trial balance to disagree; others do not. This question tests recognition of errors that *hide* behind a balanced trial balance - meaning both sides are still equal, but the accounting treatment is fundamentally wrong. Step-by-Step Resolution: 1. Analyse the Error: Equipment (a non-current asset / capital expenditure) was posted to Repairs & Maintenance (a revenue expense accou
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Paper Info
- Exam
- ACCA
- Mock number
- 4 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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