Question-

Sleeping cat purchased equipment of 300000, no residual value and useful life was 5 years. On 30 June 2023, the company recorded the annual depreciation and revalued the equipment to reflect its fair value of $260,000 The journal entry for equipment revaluation on 30 June 2023 would include:

1. Cr Revaluation surplus $20000,

2. Dr Equpment $26000,

3. Dr loss on revaluation $40000,

4. Cr equipment $30000

Question 2-

For accounting purposes, the Statement of Financial Position shows:

Accounts Receivable

= $80,000;

Allowance for Bad Debts = $5,000.

For tax purposes, tax deduction is allowed only when bad debts are written off. The tax rate is 30%.

This company has

O a tax base of $75,000 for Accounts Receivable.

O a deductible temporary difference of $5,000.

O a taxable temporary difference of $5,000.

O a taxable temporary difference of $1,500.

Question 28

Adjusting entries are prepared annually at the end of the financial year (30 June).

in the Unadjusted Trial Balance as at 30 June, 2023, the Allowance for Bad Debts account has a Dr balance of $5,000, The ageing schedule indicates that $20,000 of accounts receivable will be uncollectable.

The adjusting entry for bad debts will include:

Cr Allowance for Bad Debt

$5,000.

Cr Allowance for Bad Debts

$25,000.

O Dr Uncollectable Accounts

$20,000.

O Dr Bad Debt Expense

$15,000.

Question 29

As at 30 June 2023, a truck (cost = $100,000; depreciation expense = $10,000 per annum) has been used for 3 full years

The value in use of the truck is $60,000 and the impairment loss associated with this truck is $5,000.

Based on the information given above, as at 30 June 2023, which of the following must be TRUE?

The fair value less costs to sell of this truck is $65,000.

None of the answers given is true.

O The net realisable value of this truck is $95,000.

O The tax base for this truck is $105,000.

Question 30

Original balance in the Cash at Bank account = $10,000.

Service charges

= $100.

Unpresented cheques = $2,000.

Rent collection via EFT = $800.

Outstanding deposit

= $3,000.

Interest revenue

= $200.

Calculate the Adjusted Cash at Bank account balance in the bank reconciliation statement.

Question 31

1 points

Adjusting entries are prepared annually at the end of financial year (30 June).

The interest rate is stated per annum.

On 1 July 2023, Lender Ltd lends $30,000 on a 4-month, 6% note to Borrower Ltd.

On 1 November 2023 (the maturity date), the journal entry for Lender Ltd to record the cash collection from this note includes

O Cr Interest Revenue

$600.

O Cr Notes Receivable $30,600.

O Cr interest Revenue

$1,800.

On 1 July 2021, the company purchases equipment for $100,000.

Question 32

For accounting purposes, the equipment is depreciated using the straight-line method with the useful life of 10 years and no residual value.

For tax purposes, the equipment is depreciated using the straight-line method with the allowed useful life of 8 years and no residual value. The tax rate was 30%

On 30 June 2023, because of the equipment, the company has:

O a taxable temporary difference of $2,500.

O a permanent difference of $12,500.

O a deductible temporary difference of $2,500.

O a deferred tax liability of $1,500.

Question 33

A company has estabished a petty cash fund, $500.

When replenishing the fund:

the company had the following receipts:

• $170 for supplies,
• $180 for postages, and
• $120 for taxi fares;

the cash remaining in the fund is $25.

The journal entry to replenish the fund includes:

Cr Over and Short Cash

$5.

Dr Over and Short Cash

$25.

O Cr Over and Short Cash $25.

Dr Over and Short Cash

$5.

Question 34:

On 1 July 2021, the company purchases land for $300,000.

On 30 June 2022, land is revalued to reflect its fair values of $290,000.

On 30 June 2023, land is revalued again to reflect the fair value of $310,000.

The journal entry for land revaluation on 30 June 2023 would include:

Cr Gain on Revaluation

$10,000.

O Cr Gain on Revaluation

$20,000.

O Cr Revaluation Surplus

$20,000.

O Dr Land

$310,000.

Question 35

Accounting profit before tax = $10,000.

For tax purposes, the company incurs a tax loss of $9,000.

The tax rate is 30%. This company should:

O Cr Deferred Tax Liability $2,700.

O Dr Deferred Tax Asset

$2,700.

O Dr Current Tax Liabilities $2,700.

O Cr Current Tax Liability

$3,000.

Question 36

interest rate is stated per annum.

On 1 April 2023, Borrower Ltd borrows $50,000 from Lender Co, on a 6-month, 4% note.

Adjusting entries are prepared annually at the end of the financial year (30 June).

On 1 October 2023 (the maturity date), the journal entry for Borrower Ltd. to record the cash payment on this note includes:

O Cr Cash

$50,500.

Dr Notes Receivable

$51,000.

O Dr Interest Payable

$500.

O Dr interest Expense

$1,000.

Question 37

In compliance with the Conceptual Framework and relevant accounting standards, a company does NOT recognise an uncertain liability of $10,000.

Which of the following can be a valid reason for NOT recognising this uncertain liability?

• The uncertain liability can be recorded and shown in the statement of financial position as a contingent liability.
• The uncertain liability should be classified as a provision.
• The recognition will not result in relevant information because the probability of future outflows is remote.

O All answers given can be a valid reason.

Question 38

On July 1, 2020, Lessee Ltd leases a truck from Lessor Co. for 5 years.

The fair value of the truck (and the amount of lease liability) is $50,000 on that date.

The total lease payment of $57,743.70 will be paid in five annual payments of $11,548.74 each, starting from 30 Jun 2021.

The implicit interest rate in the lease is 5%.

Lessee Ltd must record which of the following journal entries on 30 June 2023 (the end of the third year of lease)?

O Dr Right-of-use Asset

$50,000; Cr Lease Liability

$50,000.

O Dr Lease Liability

$9,094.63; Dr Interest Expense

$2,454.11; Cr Cash

$11,548.74.

O Dr Lease Liability

$9,976.24; Dr Interest Expense

$1,572.50; Cr Cash $11,548.74.

O Dr Lease Liability

$9,501.18; Dr Interest Expense

$2,047.56; Cr Cash $11,548.74.

Question 39

(No MCQ in this question)

Accounting profit before tax = $50,000.

For accounting purposes, all of the following items have been included (added or subtracted) in the calculation of accounting profit:

• depreciation expense = $10,000;
• bad debt expense = $5,000;

* government grants= $8,000;

impairment losses= $3,000.

For tax purposes,

• tax-deductible depreciation = $20,000;
• actual bad debt write-off

= $9,000;

* government grants are not taxable;

impairment losses are not deductible.

Calculate the Taxable Profit.

Question 40:

For accounting purposes, at the end of the financial year,

the adjusted balance of Prepald Insurance account = $5,000;

the adjusted balance of Insurance Expense account = $18,000.

For tax purposes, insurance premiums are deductible when paid, i.e., the cash basis is used to account for insurance expense

The tax rate is 30%

The company has:

O a deductible temporaty difference of $13,000.

O a deferred tax liability of $5,400.

O a taxable temporary difference of $13,000.

O a deferred tax liability of $1,500.

Question 41:

Employer Co. paid cash for wages, $5,000,

The accountant made a mistake in the company's books; she recorded this payment as follows:

Dr Wages Expense

$50,000;

Cr Wages Payable

$50,000.

On the bank reconciliation statement, which of the following is TRUE?

$5,000 should be deducted from the Balance as per Bank Statement.

O $45,000 should be added to the Original balance of Cash at Bank account.

O $5,000 should be deducted from the Original balance of Cash at Bank account.

O $45,000 should be deducted from the Original balance of Cash at Bank account.

Question 42:

Speedy Cat Delivery Ltd purchased a new truck by trading in old equipment with the cost of $30,000 and accumulated depreciation of $28,000.

A new truck was normally sold to customers for $25,000.

A trade-in allowance of $3,000 was granted for the old equipment, and cash of $22,000 was paid to the truck seller.

The journal entry to record this transaction would include:

Cr Trade-in Allowance

$3,000.

O Dr Truck

$22,000.

O Or Loss on Disposal of Non-current Assets

$5,000.

O Cr Gain on Disposal of Non-current Assets $1,000.

Question 43:

For accounting purposes, the Statement of Financial Position shows Unearned Revenue = $30,000.

For tax purposes, cash collected in advance from customers during the year amounts to $35,000. The cash basis is used to account fo cash received in advance from customers.

The tax rate is 30%. The company has:

O a temporary difference of $5,000.

a deferred tax liability of $9,000.

O a temporary difference of $30,000.

O a deferred tax asset of $10,500.

Question 44:

Retailer Co. purchases inventory from a manufacturer.

in a good internal control system, which of the following items is NOT required to be examined/compared by Retailer Co. before maki payment to the manufacturer?

O The invoice.

O The receiving report.

O The delivery docket.

The purchase order.

Question 45:

Adjusting entries are prepared annually at the end of the financial year (30 June). The allowance method is used for bad debts.

On July.1, ABC Ltd. has the following beginning account balances:

• Accounts Receivable = $100,000 (Dr);
• Allowance for Bad Debts = $20,000 (Cr).

During the year,

• credit sales (sales on account) = $800,000;
• cash collected from credit sales = $820,000; and
• bad debt write-offs = $18,000.

On June 30, using the aging method, the accountant estimates the uncollectable accounts to be $17,000.

At the end of the year, the carrying amount of Accounts Receivable (net) would be:

O $60,000

$80,000

O All answers given are incorrect.

Question 46:

For accounting purposes:

At the beginning of financial year, the opening balance of Provision for Warranty account = $25,000Cr.

During the year, Sales Revenue a $800,000; payment to satisfy warranty claims = $23,000,

At the end of the year, warranty expense was estimated and recorded at 3% of sales in an adjusting entry.

For tax purposes:

A warranty deduction is allowed when paid (i.e., the cash basis is used).

The tax rate = 30%

Because of the warranty, at the end of the financial year, the company has:

O a deferred tax asset of $7,500.

O a deferred tax liability of $7,200.

O a deferred tax asset of $7,800.

None of the answers given is correct.

Question 47:

At the beginning of the financial year, the company had the following account balances:

Deferred Tax Assets = $5,000Dr;

Deferred Tax Liabilities = $3,000Cr.

At the end of the financial year, the deferred tax worksheet showed:

Total Taxable Temporary Difference = $18,000;

Total Deductible Temporary Difference = $15,000.

The tax rate was 30%. The journal entry to account for deferred tax at the end of the financial year included:

O Cr Deferred Tax Liabilities

$5,400.

Cr Deferred Tax Assets

$4,500.

O Cr Deferred Tax Assets

$500.

O Cr Deferred Tax Liabilities $3,000.

Question 48

(No MCQ in this question)

Adjusting entries are prepared annually at the end of the financial year (june 30).

The cost model and the straight-line depreciation method are used for trucks.

On 1 July 2020, Sluggish Cat Delivery Ltd purchases a second-hand truck for $50,000.

Estimated total useful life = 5 years.

o Estimated residual value = $10,000.

After using the truck for 3 full years, the company decides to overhaul it.

On 1 July 2023 (the beginning of year 4), the company pays $14,000 to overhual the truck.

After the overhaul, the estimated remaining useful life of the truck is 6 years. The estimated residual value remains the same.

Calculate the depreciation expense for the truck for the year ended 30 June 2024 (year 4).

Question 49

1 points

Financial years are from 1 July to 30 June. The direct write-off method is used to account for bad debts.

in the current financial year, the Accounts Receivable account has the beginning balance of $95,000 (Dr) and the ending calance

$97.000 (0)

During the financial year, credit sales amounts to $900,000; cash collected from credit sales amounts to $880,000.

On average, bad debts amount to 3% of credit sales in this industry.

Calculate the Bad Debts Expense for this financial year.

$20,000

O $18,000

O $27,000

$26,400

Question 50:

Beckoning Cat Led purchased a block of land to be used for parking spaces.

The purchase price was $400,000.

The company also paid $4,000 for stamp duties and $2,000 for settlement fees.

The company then paid $3,000 to remove an unwanted garage, $20,000 to install asphalt paving and roads, and $4,000 to install lighting on the block of land.

Calculate the cost of this block of land.