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T6 MULTIPLE CHOICE PRACTICE QUESTIONS

Prepared by | Hasaan Fazal

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CAT – T6 Drafting Financial Statements www.ACCA-LIVE.com

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CAT – T6 Drafting Financial Statements

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CAT – T6 Drafting Financial Statements www.ACCA-LIVE.com

The following data relates to Question# 1, 2, 3, 4 and 5

Profit earned during the year ending 31 October is 73,000. There are three partners namely James Bond,
Jason Bourne, Rambo sharing profits and losses in the ratio 3:8:4. As most of the work is done by Rambo
and the other two are most of the time busy researching new technologies, Rambo gets a guaranteed
minimum profit of 20,000. On the other hand Jason has concerns that he sometimes fulfil those tasks
which cannot be done by Bond or Rambo that is why he will share the loss only upto 14,000.
Due to sophistication and to cover the overheads of Bond’s dress he is awarded salary of 5,000.

The opening balances of capital accounts of Bond, Bourne and Rambo is 100,000, 150,000 and 200,000.
Interest on capital is given at the rate of 5% per annum. Bond and Bourne made withdrawals of 2,500
and 3,100 on 31 August.

Q1. What is the balance of profit that will be divided among the partners in profit/loss sharing ratio?
Q2. What is the closing balance of capital account of James bond?
Q3. What amount will be transferred from appropriation account to Rambo’s Current account?
If we suppose the business has suffered a loss of 14,000 then how much loss will be borne by:
Q4. James Bond
Q5. Jason Bourne

The following data relates to Question# 6, 7, 8, 9 and 10

“The E-nergy” is a partnership with partners Kinetic, Potential and Heat sharing profits in the ratio 6:4:2.
For the year ended 31 March 2009 the profits are 110,000. On October 1, 2008 Electron is admitted who
brought 50,000 as capital of which 15,000 represents payment towards goodwill and now the new name
of partnership is “Bionic 4” and the new profit sharing ratio Is 4:3:2:1. Profit earned upto this date will
be allocated to each half of the year in the ratio 4:2.

Kinetic was receiving a salary of 6,000 on quarterly basis where Potential was receving salary of 8,000 on
annual basis.

On admission of new partner the assets of partnership were revalued and the situation is as
follows:

Plant and machiner increased by 6000

Office equipment increased by 12500
Building decreased by 3800
Inventory decreased by 17000

Goodwill is not to be disclosed in the books of account.

Q6. What is the total share of Kinetic in profits from the first half of the year?
Q7. What is the total share of Electron from the profits alone?
Q8. What is the amount of goodwill?
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CAT – T6 Drafting Financial Statements www.ACCA-LIVE.com

Q9. What is the share of Heat in profit/loss from revaluation of assets?

Q10. If Potential’s Opening capital is 250,000 than what is the amount of closing capital at 31 March
2009?

The following data relates to Question# 11, 12, 13 and 14

Voltron Inc is the sole manufacturer of making robocops – cyborgs (cyborg is a combination of
cybernetic organisms). To build such a supreme of technology company needs world’s finest assembling
machinery. At the moment company has 2 machines costing, in total, 2,500,000. Financial year ends at
December 2009
Machine Value
XX – Theta 1,000,000
ZZ – Neurox 1,500,000
These machines were bought 3 years back and were depreciated on machine hours basis. No of useful
hours for each machine is 90,000. Machines run 5 days a week 6 hours a day.

At the start of the year company revalued XX – Theta and found that current market value is 1,250,000
and therefore it has been restated at fairmarket value.

By June 1 new machine T – 1000 came to market and company bought this new machine by exchanging
ZZ – Neurox with brand new T – 1000. T – 1000 market value was 3,000,000. Deal was settled by giving
ZZ – Neurox and 1,250,000 in cash. The total useful machine hours of T – 1000 are 120,000 and company
is using T – 1000 6 days a week 8 hours a day.

Compute:

Q 11. How much depreciation was eliminated on XX – Theta on revaluation?

Q 12. With what amount Revaluation Reserve of XX – Theta will be adjusted at the end of the year?
Q 13. Gain/loss on sale of ZZ – Neurox
Q 14. What is the total depreciation to be charged for the year?

Q 15.
Which of the following is/are TRUE regarding revaluation:

I. Once fixed asset is recorded on revaluation basis then periodic revaluation should
be done on regular basis
II. We revalue the fixed asset in order to make the view of business fairer
III. Revaluation surplus occurs when carrying amount of fixed asset is more then fair market value
of asset
A. I, II and III
B. I and II only
C. II and III only
D. I and III only

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CAT – T6 Drafting Financial Statements www.ACCA-LIVE.com

Q16. Mr. Bingo owed 21,000 of rentals by the start of the year. By the year ended he prepaid 12,000 of
rent. During the year he paid the following towards rentals; 50,000 in cash and 24,000 by cheque. What
is the amount of rentals to be included in the income statement?

Q17. Mr. Bob is a freelancer and he makes his livings by giving his accounting services online.
Regarding his online income he maintaines “Online Fee” account. Opening balance of Fee account
suggests that he had 25,000 worth of fee payable by his customers and the year end balance suggest
that he had prepaid fee of 16,000. During the year he earned 75,000 fee. How much money did he
received during the year from his customers?

Mr. Oyul is a sole distributor of Fooks Lubrication. His business works on receving supplies from Fooks
and then selling those supplies through sales men. Oyul receive 5% of total sales as commission and also
he buys each pint of oil at a reduced price which is 5 lesser then retail price, total retail price is 55. He
pays 3% of sales made by individual sales man in addition to promised salary of 5,000. He has in total 15
sales men.

During the year he received 10 cartons of oil where each carton 1 dozen oil pints. At the start of the year
he had commission receivable totaling 66,000 and by the end of the year it was 120,000. He owed
26,000 to his employees by the end of the year. Whole of the supplies was sold out which was received
during the year.

Q18. What is the purchase price of this years supply?

Q19. How much commission was earned by Bob during the year?
Q20. What is the total commission expense for the whole year?
Q21. How much profit is earned by Bob this year?

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