ACCA Financial Accounting 3

Question 1

A machine costs $80,000, has a residual value of $8,000, and a useful life of 9 years. What is the annual straight-line depreciation charge?

Accepted Answer

$8,889

Answer

Straight-line depreciation = ($80,000 − $8,000) ÷ 9 = $8,000 per year — wait, ($80,000−$8,000)/9 = $72,000/9 = $8,000; the correct answer is $8,000.

Question 2

Under IAS 37, a provision should be recognised when:

Accepted Answer

A present obligation exists, an outflow is probable, and a reliable estimate can be made

Answer

IAS 37 requires recognition of a provision only when all three criteria are met: present obligation, probable outflow, and reliable estimate.

Question 3

The reducing balance method of depreciation results in:

Accepted Answer

Higher charges in earlier years and lower charges in later years

Answer

The reducing balance method applies a fixed percentage to the decreasing net book value, producing higher charges in early years and diminishing charges over time.

Question 4

Which of the following would appear as a CREDIT entry in a sales ledger control account?

Accepted Answer

Cash received from customers

Answer

Cash received from customers reduces the amount owed, and so is a credit entry in the sales ledger control account.

Question 5

Under IFRS 15 Revenue from Contracts with Customers, revenue is recognised when:

Accepted Answer

A performance obligation is satisfied by transferring control of a good or service to the customer

Answer

IFRS 15 requires revenue recognition at the point (or over time) when control of the promised good or service transfers to the customer.

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA Financial Accounting 3