Free ACCA Mock Test 6 — 20 Questions + Full Answers
Association of Chartered Certified Accountants · Accountancy students · Exams: Mar, Jun, Sep, Dec
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Applaa ACCA Mock Test 6
applaa-acca-mock-6.pdf · 20 questions
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8 of 20 shownCorrect answers highlighted in green. Full explanations included.
A company purchased a manufacturing plant for £125,000 on 1 January Year 1. The company uses the reducing balance method of depreciation at 20% per annum. What is the depreciation charge for Year 2, and what is the carrying value at 31 December Year 2?
- A.Depreciation: £25,000, Carrying Value: £100,000
- B.Depreciation: £20,000, Carrying Value: £80,000
- C.Depreciation: £20,000, Carrying Value: £105,000
- D.Depreciation: £25,000, Carrying Value: £75,000
✓ Worked Explanation
Core Concept: Reducing Balance Depreciation The reducing balance method applies the depreciation percentage to the net book value at the start of each year (not to the original cost). This means depreciation charges decrease each year, reflecting higher economic benefit in earlier years. Step-by-Step Resolution: 1. Year 1 Depreciation: Original cost × Rate = £125,000 × 20% = £25,000 - Net Book Value at end of Year 1 = £125,000 £25,000 = £100,000 2. Year 2 Depreciation: NBV at start of Year
For the last quarter, Zephyr Services LLP had net credit sales of £36,000 (excluding VAT). Gross purchases inclusive of 20% VAT were £21,600. What is the net VAT amount payable to (or reclaimable from) the tax authority?
- A.£3,600 Payable
- B.£3,600 Reclaimable
- C.£7,200 Payable
- D.£2,880 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): £36,000 × 20% = £7,200 2. Calculate Input VAT (tax paid to suppliers on purchases): - Purchases are GROSS (inc. VAT): use VAT fraction
For the year ended 31 December, Alpha Properties Ltd paid rent of £10,800. At the year-end, the company had an outstanding electricity invoice of £900 which has not yet been paid. What are the adjusting entries required at the year-end to record this accrual?
- A.Debit Accruals £900, Credit Electricity Expense £900
- B.Debit Electricity Expense £900, Credit Accruals (Liabilities) £900
- C.Debit Cash £900, Credit Electricity Expense £900
- D.Debit Electricity Expense £900, Credit Prepayments (Assets) £900
✓ 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 £900 was incurred during the accounting year but remains unpaid at year-end. 2. Apply the Accruals Concept: The expense belongs to this year
For the year ended 31 December, Meridian Distributors 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
A company purchased a manufacturing plant for £42,000 on 1 January Year 1. The company uses the reducing balance method of depreciation at 20% per annum. What is the depreciation charge for Year 2, and what is the carrying value at 31 December Year 2?
- A.Depreciation: £8,400, Carrying Value: £33,600
- B.Depreciation: £6,720, Carrying Value: £26,880
- C.Depreciation: £6,720, Carrying Value: £35,280
- D.Depreciation: £8,400, Carrying Value: £25,200
✓ Worked Explanation
Core Concept: Reducing Balance Depreciation The reducing balance method applies the depreciation percentage to the net book value at the start of each year (not to the original cost). This means depreciation charges decrease each year, reflecting higher economic benefit in earlier years. Step-by-Step Resolution: 1. Year 1 Depreciation: Original cost × Rate = £42,000 × 20% = £8,400 - Net Book Value at end of Year 1 = £42,000 £8,400 = £33,600 2. Year 2 Depreciation: NBV at start of Year 2 ×
For the year ended 31 December, Genesis Enterprises Ltd 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
A grocery distributor, Swift Logistics Ltd, recorded net sales of £33,600 for standard-rate products (20% VAT) and £16,800 for zero-rated food products. What is the total output VAT generated on these sales?
- A.£6,720
- B.£10,080
- C.£3,360
- 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 (£33,600): Output VAT = £33,600 × 20% = £6,720 2. Zero-Rate Sales (£16,800): Output VAT = £16,800 × 0% = £0 3. Total Output VAT = £6,720 + £0 = £6,720 Common Mistakes to A
Apex Trading Ltd completed two projects during the year: 1) Purchased and installed a new warehouse conveyor belt system for £48,000, and 2) Had the exterior of the existing office block repainted for £4,800. How should these expenditures be classified?
- A.Both projects are Capital Expenditure.
- B.Warehouse system: Capital Expenditure (£48,000), Repainting: Revenue Expenditure (£4,800)
- C.Warehouse system: Revenue Expenditure (£48,000), Repainting: Capital Expenditure (£4,800)
- 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 (£48,000): - This is a *new* asset installed to generate future economic benefits. I
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Paper Info
- Exam
- ACCA
- Mock number
- 6 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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