AAT L3 Final Accounts Preparation 2

Question 1

When preparing a profit or loss account, accrued income at year end is:

Accepted Answer

Added to revenue as income earned but not yet received

Answer

Deducted from revenue

Answer

Ignored as it is not yet due

Answer

Classified as a long-term asset

Question 2

In a limited company's income statement, corporation tax is shown as:

Accepted Answer

A tax charge after profit before tax

Answer

An operating expense before gross profit

Answer

A deduction from gross profit

Answer

Not shown — it appears only in the notes

Question 3

Partners' capital accounts are normally fixed. Changes are made for:

Accepted Answer

Additional capital introduced or permanent changes to the partnership agreement

Answer

Monthly drawings only

Answer

Profit share allocations each year

Answer

Interest on drawings

Question 4

Carriage inwards is classified as:

Accepted Answer

Part of cost of sales (cost of goods sold)

Answer

A selling expense

Answer

A financial expense

Answer

An administrative expense

Question 5

The revaluation reserve in a limited company balance sheet arises from:

Accepted Answer

An upward revaluation of non-current assets

Answer

Profits retained in the business

Answer

The issue of shares at a premium

Answer

Currency translation differences

Question 6

A limited company's statement of changes in equity shows:

Accepted Answer

All changes in equity during the period including profit, dividends, share issues, and other movements

Answer

Only the profit for the year

Answer

The tax liability for the year

Answer

Only share capital movements