ACCA AK Financial Accounting 3

Question 1

Which financial statement shows the financial position of a business at a specific point in time?

Accepted Answer

Statement of financial position

Answer

The statement of financial position (balance sheet) is a snapshot of assets, liabilities and equity at a specific date, unlike the income statement which covers a period.

Question 2

Non-current assets are defined as assets that:

Accepted Answer

Are held for use in the business for more than one accounting period

Answer

Non-current (fixed) assets are held for use in operations over more than one accounting period. They are not intended for resale in the ordinary course of business.

Question 3

The straight-line method of depreciation allocates:

Accepted Answer

An equal amount of depreciation each year

Answer

Straight-line depreciation = (Cost − Residual value) ÷ Useful life. The same charge is allocated each year over the asset's useful life.

Question 4

Which of the following adjustments is made at the year-end for an 'accrued expense'?

Accepted Answer

Debit expenses, Credit accruals (liability)

Answer

An accrued expense is a cost incurred but not yet paid. The year-end adjustment is: Debit expenses (to recognise the cost) and Credit accruals (a current liability).

Question 5

Trade receivables on the statement of financial position are shown:

Accepted Answer

At net realisable value after deducting any allowance for doubtful debts

Answer

Trade receivables are presented net of any allowance (provision) for doubtful debts, giving the amount expected to be collected (net realisable value).

ACCA Applied Knowledge Practice Test

ACCA Applied Knowledge Practice Test

ACCA AK Financial Accounting 3