1)Freeway Ltd began the financial year with rates payable owing of 200. During the year, the business paid 3,100 in rates and at the end of the year the business had paid 1000 rates in advance. What was the rent payable expense for the year to be shown in the income statement (profit and loss account)?

3,900

1,900

3,300

2,300

2)At the beginning of the financial year, a trader had an equity balance of 45,600 and by the end of the year this had risen to 53,500. During the year, she withdrew 18,400 in cash for her personal expenses and introduced her car into the business, which was valued at 7,300.

What was the profit or loss for the financial year?

A. 3,200(loss)

B. 7,900(profit)

C. 19,000(profit)

D. 26,300(profit)

3)Consider the following statements concerning depreciation:

1. The reducing-balance method of depreciation results in higher charges to the income statement than the straight-line method of depreciation over the life of the asset.

2. The purpose of depreciation is to derive the current market value (at each statement of financial position date) of the asset that is being depreciated.

Which one of the following combinations concerning the above statements (true or false) is correct?

Statement

1 2

A. True True

B. True False

C. False True

D. False False

4)Below is a selection of financial events, and their possible effect on profit and cash. Which TWO are correct?

		Effect on:
		Profit	Cash
1	Repayment of loan	decrease	decrease
2	Selling inventories on credit	increase	none
3	Issuing new shares	increase	increase
4	Depreciating a non-current asset	decrease	none

a)1 and 2

b)2 and 4

c)2 and 3

d)1 and 4