ACA Accounting (Certificate Level)

Question 1

Under FRS 102, which of the following is NOT a component of the statement of financial position?

Accepted Answer

Revenue

Answer

Revenue is reported in the statement of comprehensive income (profit or loss), not the statement of financial position. The statement of financial position comprises assets, liabilities, and equity as defined by FRS 102 Section 2.

Question 2

A UK company purchases inventory for £12,000 plus VAT at 20%. The company is VAT-registered. At what value should the inventory be initially recorded?

Accepted Answer

£12,000

Answer

For a VAT-registered business, input VAT is recoverable from HMRC and therefore is not included in the cost of inventory. The inventory is recorded at £12,000, with the £2,400 VAT recorded as a receivable from HMRC.

Question 3

Which of the following errors would cause the trial balance NOT to balance?

Accepted Answer

Posting £500 to the correct debit account but £50 to the correct credit account

Answer

A transposition or amount error where the debit entry (£500) differs from the credit entry (£50) would cause the trial balance totals to disagree. The other errors maintain equal debits and credits despite being incorrect.

Question 4

Under the UK Companies Act 2006, what is the minimum number of directors required for a private limited company?

Accepted Answer

One

Answer

Under section 154 of the Companies Act 2006, a private company must have at least one director, and at least one director must be a natural person (section 155).

Question 5

A business has opening capital of £50,000, makes a profit of £15,000, and the owner withdraws £8,000 in drawings. What is the closing capital?

Accepted Answer

£57,000

Answer

Closing capital = Opening capital + Profit − Drawings = £50,000 + £15,000 − £8,000 = £57,000. The accounting equation requires that drawings reduce the owner's equity.

ACA ICAEW Practice Test

ACA ICAEW Practice Test

ACA Accounting (Certificate Level)