Question: The following information is available for the

> A photocopier was bought for £32,000. It is predicted to be used for four years, and then traded in for £10,000. Show the calculations of the figures for depreciation for each year using (a) The straight-line method; and (b) The reducing balance method a

> Richard runs a small publishing business. He buys a new XP27 printing machine on 1 January 2021 for £100,000 which he expects to use for five years. He predicts that the machine will then have a residual value of £10,000. Richard expects to print a total

> A company maintains its non-current assets at cost. Separate accumulated depreciation accounts are kept for each class of asset. At 31 December 2018 the position was as follows: The following transactions were made in the year ended 31 December 2019: (a

> Enter the following transactions in T-accounts: May 1 Started in business with £18,000 in the bank. 2 Bought goods on time from B. Hind £1,455. 3 Bought goods on time from G. Smart £472. 5 Sold goods for cash £210. 6 We returned goods to B. Hind £82. 8 B

> On 31 March 2019, Dixie’s business traded-in a machine (a Z-15 model) which it had originally purchased on 1 April 2016 for £19,000. Dixie had depreciated the Z-15 at 10 per cent per annum using the straight-line method. Dixie part-exchanged the Z-15 for

> Contractors Ltd was formed on 1 January 2019 and the following purchases and sales of machinery were made during the first 3 years of operations. Each machine was estimated to last 10 years and to have a residual value of 5 per cent of its cost price. D

> (a) Jack’s business has a financial year end of 31 May. He bought an item of plant for £225,000 on 1 June 2022 and estimated its useful life to be six years and its residual value to be £45,000. He believed that the straight-line method of depreciation w

> Distance Limited owned three lorries at 1 April 2019: Lorry A: purchased on 21 May 2015 for £31,200 Lorry B: purchased on 20 June 2017 for £19,600 Lorry C: purchased on 1 January 2019 for £48,800 Depreciation is charged annually at 20 per cent of cost on

> A company maintains its non-current assets at cost. A separate accumulated depreciation account is used for each type of asset. Machinery is to be depreciated at the rate of 15% per annum, and fixtures depreciated at the rate of 5% per annum, using the r

> X Co constructed a new factory for itself. The costs incurred on the construction project were as follows: £’000 Architect’s fees (including £75,000 for an initial design that was rejected and discarded by X Co) 415 Costs of applying for and obtaining pl

> The data which follows was extracted from the books of account of H. Kassab, an engineer, on 31 March 2024, his financial year end. (a) Purchase of extra milling machine (includes £300 for repair of an old machine) 2,900 £ (b) Rent 750 (c) Electrical exp

> On what principles would you distinguish between capital and revenue expenditure? Illustrate your answer by reference to the following: (a) The cost of repairs and an extension to the premises. (b) Installation of a gas central heating boiler in place of

> Indicate which of the following would be revenue items and which would be capital items in a wholesale bakery: (a) Purchase of a new van. (b) Purchase of replacement engine for existing van. (c) Cost of altering the interior of the new van to increase ca

> On 18 August 2024, J. Barton purchased a new machine from DelFalco Ltd. Barton paid the following amounts in relation to this acquisition: List price of machine ………………………………………………. 195,000£ Costs of preparing the site for installation ……………………… 8,700 Ass

> Which of the following are shown under the wrong headings?

> Sema plc, a company in the heavy engineering industry, carried out an expansion programmed during its most recent financial year, in order to meet a permanent increase in contracts. The company selected a suitable site and commissioned a survey and valua

> (a) As at 31 October 2024, a balance of £12,900 on the allowance for doubtful debts account of Daisy’s business had been brought forward from the previous year end. It was then decided that specific debts totaling £14,300 were to be written off as the ca

> A business, which started trading on 1 January 2022, adjusted its allowance for doubtful debts at the end of each year on a percentage basis, but each year the percentage rate is adjusted in accordance with an analysis of the business’s

> The following balances appeared in the trial balance of Dave Bainbridge’s business as at 30 June 2024: Trade receivables ……………………………………. 117,000£ Bad debts expense ……………………………………… 18,720 Bad debts recovered ………………………………………. 690 Allowance for doubtful deb

> The balance sheet of Tyrone’s business as at 31 December 2021 included an allowance for doubtful debts of £4,010 and an allowance for prompt payment discounts of £288. Tyrone is now in the process of preparing his financial statements for the year ended

> Lohit is in business buying and selling goods on credit. The following information relates to his bad and doubtful debts for the year ended 31 August 2024. 1. Balance of Allowance for Doubtful Debts Accounts on 1 September 2023 was £1,100 2.

> Ameer purchased a business that buys and sells electrical household goods. When taking over the business, Ameer realised that the existing inventory was obsolete. He therefore decided to have a clearance sale of the existing inventory and replace it with

> (a) Tomasz’s business buys and sells various products, including Product J. The business has 100 units of J in stock at 1 February valued (using the FIFO assumption) at £4 each. Calculate the value of inventory at the end o

> Draw up trading account parts of the income statement using each of the three methods from the details in Review question 18.3A. Review Question 18.3A:

> From the following figures, calculate the closing inventory that would be shown using the (i) FIFO, (ii) LIFO, (iii) AVCO methods on a perpetual inventory basis.

> Enter the following transactions in the appropriate accounts: Aug 1 Started in business with £7,400 cash. 2 9aid £7,000 of the opening cash into the bank. 4 Bought goods on time £410 from J. Watson. 5 Bought a van by cheque £4,920. 7 Bought goods for cas

> Explain how to calculate depreciation using the reducing balance method.

> Explain why it is important to keep notes of all the workings you use in a financial calculation.

> Robles & Co is a VAT-registered business. During the quarter just ended, it bought goods and services to the value of £51,690 excluding VAT, and its sales were £81,906 including VAT. All of the business’s sales are subject to VAT at 20%. However, only tw

> On 1 March 2020, B. Cox, Middle Road, Paisley, a VAT-registered business, sold the following goods on credit to T. Ross, 24 Peter Street, Loughborough, Order No. 9841: 20,000 Coils Sealing Tape @ £6.70 per 1,000 coils 40,000 Sheets Bank A5 @ £5.20 per 1,

> Mudgee Ltd issued the following invoices to customers in respect of credit sales made during the last week of May 2020. The amounts stated are all net of Value Added Tax. All sales made by Mudgee Ltd are subject to VAT at 15%. On 29 May Laira Brand retu

> G. Brown’s sales including VAT were £130,000 in November 2020, then £150,000 in December 2020, and £110,000 during January 2021. Suppose that the rate of VAT was 20% until 31 December 2020 and 22.5% from 1 January 2021. Exactly three-fifths of Brown’s ne

> Show the journal entries necessary to record the following items: Apr 1 Bought office furniture on credit from Durham Brothers Ltd £1,400. 4 We take goods costing £270 out of the business inventory without paying for them. 9 £90 of the goods taken by us

> A. Henriques has the following purchases and sales for May 2024: May 1 Sold to M. Marshall: brass goods £24, bronze items £36. Less 25 per cent trade discount. 7 Sold to R. Richards: tin goods £70, lead items £230. Less 3313 per cent trade discount. 9 B

> J. Glen has the following purchases for the month of June: June 2 From J. Ring: 3 sets golf clubs at £900 each, 6 footballs at £36 each. Less 25 per cent trade discount. 11 From F. Clark: 6 cricket bats at £70 each, 8 ice skates at £40 each, 5 rugby ball

> J. Fisher, White House, Bolton, is selling the following items at the prices as shown: plastic tubing at £1 per metre, polythene sheeting at £2 per length, vinyl padding at £5 per box, foam rubber at £3 per sheet. She makes the following sales: June 1 To

> Classify the following items into liabilities and assets: (a) Computers (b) Buildings (c) Trade payables (d) Inventory (e) Trade receivables (f) Cash in bank (g) Bank overdraft (h) Loan from bank (i) Vans

> Enter up the Sales Day Book from the following details. Post the items to the relevant accounts in the Sales Ledger and then show the transfer to the sales account in the General Ledger.

> You are to enter the following items in the relevant day books, post to the personal accounts, and show the transfers to the General Ledger. 2024 July 1 Credit purchases from: K. Hill £380; M. Norman £500; N. Senior £106. 3 Credit sales to: E. Rigby £510

> Enter up the Sales Day Book and the returns inwards day book from the following details. Then post to the customers’ accounts and show the transfers to the General Ledger. 2024 June 1 Credit sales to: B. Dock £240; M. Ryan £126; G. Soul £94; F. Trip £107

> Rule up a petty cash book with analysis columns for office expenses, motor expenses, cleaning expenses and casual labour. The cash float is £450 and the amount spent is reimbursed on 30 November.

> At 1 September the financial position of Sara Young’s business was: Cash in hand ……………… 80£ Balance at bank ………….. 900 Trade receivables: AB ……………………. 200 CD ……………………. 500 EF ……………………. 300 Inventory ………… 1,000 Trade payables: GH ………………….… 600 IJ ……………………

> Enter the following in the three-column cash book of an office supply shop. Balance-off the cash book at the end of the month and show the discount accounts in the general ledger. June 1 Balances brought forward: Cash £420; Bank £4,940. 2 The following p

> Write up a two-column cash book for a second-hand bookshop from the following: Nov 1 Balance brought forward from last month: Cash £295; Bank £4,240. 2 Cash sales £310. 3 Took £200 out of the cash till and paid it into the bank. 4 F. Bell paid us by cheq

> The following questions all relate to the qualitative characteristics of useful financial information as defined by the IASB’s Conceptual Framework for Financial Reporting: (i) To which characteristic is the concept of materiality most closely related? (

> Carlos starts a business buying and selling a new type of foldaway commuter bike. In his first year of trading, he buys 100 bikes for £90 and sells 80 of them for £170 each. How should the 20 bikes in closing inventory be valued in his financial statemen

> F. Giannopoulos drew up the following trial balance as at 30 September 2020. You are to draft the income statement for the year ending 30 September 2020 and a balance sheet as at that date. Inventory at 30 September 2020 was £89,404.

> Complete the following table for a business that buys and sells cleaning products:

> The following is the trial balance of T. Agua as at 31 March 2023. Draw up a set of financial statements for the year ended 31 March 2023. Inventory at 31 March 2023 was £58,440.

> Ms Bukoski’s business position at 1 July was as follows: During July, she: Inventory at 31 July was £6,200. Required: (a) Open ledger accounts (including capital) at 1 July. (b) Record all transactions. (c) Prepare a tri

> Return to Review question 7.3A and prepare a balance sheet as at 31 May 2020. Review Question 7.3A: From the following trial balance of F. Dover drawn-up on conclusion of his first year in business, Inventory at 31 May 2020 was £28,972.

> The following information relates to A. Trader’s business: During the year, Trader had sold some of his personal investments for £4,000 which he paid into the business bank account, and he had drawn out £200 w

> Return to Review question 7.4A and prepare a balance sheet as at 30 June 2024. Review Question 7.4A: G. Graham trial balance as at 30 June 2024 after his first year of trading was as follows: Inventory at 30 June 2024 was £29,304.

> Record the following transactions for a new small business for the month of June, balance-off all the accounts, and then extract a trial balance as at 30 June. June 1 Started in business with £10,500 cash. 2 Put £9,000 of the cash into a bank account. 3

> Record the following details relating to a carpet wholesaler for the month of November and extract a trial balance as at 30 November. Nov 1 Started in business with £15,000 in the bank. 3 Bought goods on time from J. Small £290; F. Brown £1,200; R. Charl

> Extract an income statement for the year ending 30 June 2024 for G. Graham. The trial balance as at 30 June 2024 after his first year of trading was as follows: Inventory at 30 June 2024 was £29,304.

> From the following trial balance of F. Dover drawn-up on conclusion of his first year in business, draw up an income statement for the year ending 31 May 2020. A balance sheet is not required. Inventory at 31 May 2020 was £28,972.

> Complete the gaps in the following table:

> Redraft each of the accounts given in your answer to Review question 5.6A in three-column style. Question 5.6A: May 2024 1 Credit sales F. Black £620; G. Smith £84; L. Sime £1,200; J. Teel £608. 2 Credit purchases from P. Best £190; I. Donovan £63; G. L

> Enter the following transactions in personal accounts only. Bring down the balances at the end of the month. After completing this, state which of the balances represent debtors and which represent creditors. May 2024 1 Credit sales F. Black £620; G. Smi

> The following table shows the cumulative effects of a succession of separate transactions on the assets and liabilities of a business. The first column of data gives the opening position. Required: Identify clearly and as fully as you can what transacti

> (a) The following trial balance was extracted from the books of Peter Mackie on 30 April 2024. From this, and the note below it, prepare his income statement for the year ending 30 April 2024, and a balance sheet as at that date. Note: Closing inventory

> What benefits can result through the use of ratios and what limitations should be imposed on any conclusions drawn from their use?

> Write up the asset, capital and liability accounts in the books of D. Gough to record the following transactions: June 1 Started business with £16,000 in the bank. 2 Bought van paying by cheque £6,400. 5 Bought office fixtures £900 on time from Old Ltd.

> The rate of progress in technology is so rapid that it is very difficult to predict exactly how new technology will affect accounting in the future. Can you suggest any developments in technology that could have a significant impact on accounting in the

> You may have no plans to become an accountant in the future. Why is it still important for you to study the basics of accounting, such as those covered in this book?

> Some students who want to train with an accountancy practice tend to focus exclusively on trying to get a job with one of the ‘Big Four’ (PwC, Deloitte, EY and KPMG) and ignore smaller accounting firms altogether. Required: (a) What do you think are the

> In this chapter you’ve learnt about some specific roles and areas of accountancy, such as ‘financial controller’ or ‘tax adviser’. Can you suggest any other particular areas of accounting in which you can specialise?

> For simplicity and convenience, this chapter discusses accountants as working ‘in practice’, ‘in industry’ or ‘in the public sector’. However, some organisations might not fall neatly into one of these three categories but will still require accounting s

> There is now growing disapproval from some sections of the public of the elaborate tax planning arrangements that tax advisers at some accounting firms have recommended to their clients. These arrangements may be entirely legal but are often highly compl

> There have been several high-profile scandals in accounting in recent times, which have contributed to the raised profile of ethics and integrity in accounting. The details of many of these scandals might be difficult to understand at this stage in your

> You are given summarised information about two firms in the same line of business, A and B, as follows. Required: (a) Produce a table of eight ratios calculated for both businesses. (b) Write a report briefly outlining the strengths and weaknesses of th

> Yaso is in business buying and selling goods on credit. He is concerned that although his business is making a good profit, his balance at the bank is not increasing. The following information is available: 1. At 1 September 2022, the bank balance was &A

> Alistair is concerned about the performance of his business. He has decided to assess the performance using ratio analysis. He is able to provide the following information extracted from his income statement for the year ended 30 April 2018 in order to c

> Write up the accounts to record the following transactions: May 1 Started business with £1,500 cash and £18,000 in the bank. 2 Received a loan of £4,000 from T. fox by cheque. 3 Bought a computer for cash £1,200. 5 Bought display stands on time from Drop

> Laura has recently inherited £50,000 and has been investigating the possibility of buying shares as an investment. She is, initially, looking to maximise her income. She has researched two companies and has provided the following information

> Study the following financial statements of two companies and then answer the questions which follow. Both companies are wholesalers of household products. The values shown are in £000s. Required: (a) Calculate the following ratios for both

> Darius Lowe gives you the following information as at 31 March 2024: Inventory 1 April 2023 ……… 12,000£ Purchases …………………………. 72,000 His mark-up is 40% on ‘cost of goods sold’. His average inventory during the year was £14,000. Draw up an income statemen

> Arthur deals in bicycles. His business position at 1 October was as follows: Capital £3,369 Inventory £306 (3 x Model A bicycles @ £54 and 3 x Model B @ £48) Balance at bank £3,063 Having established good relations with his supplier he is able to obtain

> Trading Account for the year ending 31 December 2019 R. Sheldon presents you with the trading account set out above. Author’s note He always calculates his selling price by adding 33 1/3% of cost on to the cost price. (a) If he has adh

> The following figures relate to the retail business of Daisy King for the month of July. Goods sold fall into two categories, X and Y. You are to calculate for each category of goods: (a) Cost of goods sold. (b) Gross profit. (c) Total expenses. (d) Net

> The following details are provided to you regarding Southwall Ltd: (i) The company reported an operating profit of £432,000 for the year ended 31 December 2024. (ii) The depreciation expense for 2024 was £79,000. (iii) Extracts

> As at 31 May 2024 and 31 May 2023, Dendry Ltd had the following balance sheets: The company’s income statement for the year ended 31 May 2024 was as follows: Note also the following additional information: (i) The operating profit sho

> The balance sheets of Banton Ltd as at 31 August 2024 and 31 August 2023 are shown below: You are also given the income statement of Banton Ltd for the year ended 31 August 2024: Further information is given below: (i) There were no amounts outstanding

> Wilton Felder Ltd is finalising its financial statements for the year ended 31 October 2024. You are presented with the following information: Additional information: (i) There were no amounts outstanding in relation to interest payable or receivable as

> J. Hill has the following assets and liabilities on 30 November 2019: Trade payables £2,800; Equipment £6,200; Motor vehicle £7,300; Inventory £8,100; Trade receivables £4,050; Cash at bank £9,100; Cash in hand £195. You are not given the capital amount

> At 30 November 2023, Wandigo Ltd had the following capital structure: Share capital (500,000 ordinary shares of 25p each) ……… 125,000£ Share premium account ………………………………………………… 376,000 In January 2024, the company made a 1-for-4 rights issue at a price o

> You establish the following details in connection with the property, plant & equipment of Snoding Ltd for the year ended 30 June 2024: Carrying amount as at 1 July 2023 ……………………………………………………… 366,000£ Purchases of property, plant and equipment during the

> You are presented with the trial balance of Finnax Ltd at 30 November 2025 below: You are also provided with the following additional information: (i) Inventory at 30 November 2025 was counted and valued at a cost of £399,000. (ii) Towards

> The following information concerns Zarman plc in relation to its year ended 30 April 2024: The following additional information is relevant: (i) The inventory was counted at 30 April 2024 and was valued at a cost of £55,820. (ii) Depreciati

> The following information regarding Mashra Ltd relates to its year ended 30 June 2024: Trial balance as at 30 June 2024: Additional information: (i) The inventory was counted at 30 June 2024 and was valued at a cost of £44,767. (ii) Depreci

> The following details concern Oshada plc in connection with its financial year ended 31 March 2024: Note the following additional information: (i) Inventory at the year end was counted and valued at a cost of £38,319. (ii) Depreciation is t

> The trial balance below represents a summary of the balances on the nominal ledger of Banega Ltd (a wholesaler of hats and headwear) as at 31 December 2024: The following issues also need to be dealt with in preparing the financial statements: (i) The f

> The following trial balance has been extracted from the nominal ledger of Epicteta Ltd on 31 July 2024: In addition to the above trial balance, you are given the following information: (i) Closing inventory at 31 July 2024 was valued at a cost of &Acirc

> Minellan Ltd has extracted the following trial balance from its nominal ledger as at 31 March 2024: Additional information: (i) Inventory at 31 March 2024 was counted and valued at a cost of £181,000. Included in this figure, at a cost of &

> The following balances have been taken from the nominal ledger of Pandar plc as at 31 December 2024: The following points also need to be considered before preparation of the financial statements: (i) After producing the above trial balance, the followi

> Write up the following transactions in the T-accounts of F. Fernandes: Feb 1 Started in business with £11,000 in the bank and £1,600 cash. 2 Bought goods on time: J. Biggs £830; D. Martin £610; P. Lot £590. 3 Bought goods for cash £370. 4 Paid rent in ca

> As at 31 December 2023, Pointor plc had £400,000 6% loan notes in issue, interest being paid in two annual instalments on 31 March and 30 September each year. On 31 August 2024, the company then redeemed £300,000 of these loan notes at par, paying the in

> On 31 January 2023, the equity section of the balance sheet of Depper plc was as follows: . During the year ended 31 January 2024, the company: . Made a 1 for 6 bonus issue of shares, making use of the share premium account . Reported a final profit for

> (a) The share capital of Fogarino Ltd consists of 250,000 fully-paid ordinary (or ‘equity’) shares of 10 pence each, all of which were issued at a premium of 30 pence per share. The current market value of the company’s shares is 95 pence each. What is t