Free ACCA Mock Test 7 — 20 Questions + Full Answers
Association of Chartered Certified Accountants · Accountancy students · Exams: Mar, Jun, Sep, Dec
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Applaa ACCA Mock Test 7
applaa-acca-mock-7.pdf · 20 questions
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8 of 20 shownCorrect answers highlighted in green. Full explanations included.
A bookkeeper at Pinnacle Consulting Ltd prepared a trial balance which failed to agree, with the credit side exceeding the debit side by £360. A suspense account was opened. Which of the following errors, when corrected, could explain this difference?
- A.A purchase invoice for £180 was completely omitted from the books.
- B.A cash payment of £180 to a supplier was debited to the purchases account but not credited to the cash account.
- C.Sales of £180 were recorded by debiting Receivables Control and debiting Sales Account.
- D.A purchase return of £180 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 £360. This means the debit side is £360 *too small*
A company purchased a manufacturing plant for £24,000 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: £4,800, Carrying Value: £19,200
- B.Depreciation: £3,840, Carrying Value: £15,360
- C.Depreciation: £3,840, Carrying Value: £20,160
- D.Depreciation: £4,800, Carrying Value: £14,400
✓ 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 = £24,000 × 20% = £4,800 - Net Book Value at end of Year 1 = £24,000 £4,800 = £19,200 2. Year 2 Depreciation: NBV at start of Year 2 ×
Genesis Enterprises Ltd purchased a motor car for £125,000 inclusive of VAT, for use by a director. The car is used 60% for business travel and 40% for private travel. What is the input VAT recovery rule regarding this vehicle?
- A.Input VAT can be recovered in full (100%).
- B.Input VAT can be recovered at 60% representing the business use portion.
- C.No input VAT can be recovered because input VAT is generally blocked on passenger motor cars unless used exclusively for business (0% recovery).
- D.Input VAT can be recovered in full if the car is leased rather than purchased.
✓ Worked Explanation
Core Concept: Input VAT Block on Passenger Motor Cars Under HMRC VAT rules, input VAT on the purchase of a passenger motor car is subject to a 100% block - meaning it is entirely irrecoverable - unless the car is used *exclusively* for business purposes with no possibility of private use. Step-by-Step Resolution: 1. Identify the Asset: This is a passenger motor car (not a commercial vehicle like a van or lorry). 2. Apply the VAT Block Rule: If the car is available for any private use, input VAT
The trial balance of Falcon Engineering Ltd balanced perfectly. However, it was later discovered that a purchase of equipment costing £5,400 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
A retail store, Genesis Enterprises Ltd, 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 Genesis Enterprises Ltd?
- 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
Apex Trading Ltd disposed of a delivery vehicle for £25,920. The vehicle had originally cost £43,200 and had accumulated depreciation of £21,600 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 £4,320
- B.Loss on disposal of £4,320
- C.Gain on disposal of £-17,280
- D.Loss on disposal of £21,600
✓ 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 = £43,200 £21,600 = £21,600 2. Compare to Disposal Proceeds: £25,920 (recei
Swift Logistics Ltd disposed of a delivery vehicle for £28,800. The vehicle had originally cost £48,000 and had accumulated depreciation of £24,000 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 £4,800
- B.Loss on disposal of £4,800
- C.Gain on disposal of £-19,200
- D.Loss on disposal of £24,000
✓ 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 = £48,000 £24,000 = £24,000 2. Compare to Disposal Proceeds: £28,800 (recei
A bookkeeper at Beacon Logistics LLP prepared a trial balance which failed to agree, with the credit side exceeding the debit side by £450. A suspense account was opened. Which of the following errors, when corrected, could explain this difference?
- A.A purchase invoice for £225 was completely omitted from the books.
- B.A cash payment of £225 to a supplier was debited to the purchases account but not credited to the cash account.
- C.Sales of £225 were recorded by debiting Receivables Control and debiting Sales Account.
- D.A purchase return of £225 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 £450. This means the debit side is £450 *too small*
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Paper Info
- Exam
- ACCA
- Mock number
- 7 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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