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CIMA Fundamentals of Financial Accounting Sample Questions:

1. A company uses the straight line method of depreciation.
Which TWO of the following are a possible explanation for a profit on disposal?

A) The estimated residual value was lower than actual
B) The actual useful life was more than estimated
C) The estimated residual value was higher than actual
D) The actual useful life was less than estimated

2. An invoice for stationery has been debited and credited to the correct accounts but has been duplicated.
This would result in:

A) An overstatement of profit and an overstatement of current liabilities
B) An understatement of profit and an overstatement of current liabilities
C) An understatement of profit and an understatement of current liabilities
D) An overstatement of profit and an understatement of current liabilities

3. A trial balance is extracted from the ledger accounts at the end of each accounting period.
Which of the following will a trial balance do?

A) Prove the ledger account balances are correct
B) Highlight errors of principle
C) Highlight any errors of omission
D) Show that debit and credit balances agreed

4. A company has a year end of 31 December. Rent of $12,000 was paid on 1 October in year 1 to cover the period to 30 September year 2 and on 1 October year 2 $16,000 was paid for the following year The figure for rent payable that should be shown in the income statement for the year 2 will be

5. Refer to the Exhibit.

A company operates a FIFO system of inventory valuation. The following information is available for the month of April:
The closing value of inventory at the end of the month of April is

Solutions: