Sole Traders and Partnership accounts revision

Last updated over 5 years ago

14 questions

Note from the author:

10

1

Library

Sole Traders and Partnership accounts revision

Last updated over 5 years ago

14 questions

Note from the author:

AAT sole traders and partnerships

10

1

Briefly state why overstating profits is misleading to potential investors

1

You are asked to cover for a colleage at work who is off sick. Her work involves capital gains tax, which you have no real experience of. Which fundamental principle does this compromise?

1

Draggable item		Corresponding Item

AAT sole traders and partnerships

A statement of profit or loss shows a profit of £14,900. It is discovered that no allowance has been made for advertising expenses accrued of £620 and rent prepaid of £450 at the year end. What is the adjusted profit for the year?

A £14,730

B £15,070

C £15,970

D £13,830

A business shows a profit for the year ended of £18,790. The owner of the business wishes to increase the allowance for doubtful debts by £800 and to write off irrecoverable debts of £250. What is the adjusted profit for the year?

A £18,240

B £19,840

C £19,340

D £17,740

Accruals (of expenses) will appear where in the final accounts?

A Expense in the PoL account

B An asset in the SoFP

C A liability in the SoFP

D Income in the PoL account

Sales ledger control account will appear where in the final accounts?

A Expense in PoL account

B As trade payables in non current assets

C As trade receivables in current assets

D As trade receivables in current liabilities

How do we account for allowance for doubtful debt in the final accounts?

A As an expense in the PoL account

B As a liability under current liabilities

C As a reduction in the value of trade receivables in the current assets

D As a liability under non current liabilities

State the meaning of a credit balance for disposal of a non-current asset in a trial balance

A The business has made a gain on disposal

B The business has made a loss on disposal

C The asset has been under depreciated

D The asset has been part-exchanged on disposal

A partnership may choose to over-ride some or all of the accounting rules in the partnership Act 1890 by the partners entering into a separate:

A Appropriation account

B Accounting policy

C Partnership agreement

D Loan agreement

Profits of a two person partnership are £32,100 before the following are taken into account: interest on partners capital accounts £1,800 salary of one partner £10,000 interest on partners drawings £700 What is the profit share for each partner 1:1 sharing ratio.

A £10,500

B £11,400

C £12,300

D £16,400

Mia, Nell and Olly are in a partnership sharing profits equally. Mia is to retire and it is agreed that goodwill is worth £30,000.After Mia's retirement, Nell and Olly will continue to run the partnership and will share profits equally. What will be the goodwill adjustment to Nell's capital account?

A debit £10,000; credit £10,000

B debit £10,000; credit £15,000

C debit £15,000; credit £15,000

D debit £15,000; credit £10,000

Norman and Oliver are in partnership sharing profits equally. Each has a capital account with a balance of £75,000. Peter joins as anew partner. The profit share will be Norman 40%, Oliver 40% and Peter 20%. Goodwill is valued at £40,000. No goodwill is to be left in the accounts. What will be the balance of Oliver's capital account after the creation and elimination of goodwill?

A £71,000

B £79,000

C £91,000

D £95,000

Which of the following accurately describes a business entity?

the financial statements record and report on the activities of one particular business

the presumption that the business to which the financial statements relate will continue to trade in the forseeable future

some items are of such low value that it is not worthwhile recording them separately

Briefly state why overstating profits is misleading to potential investors

You are asked to cover for a colleage at work who is off sick. Her work involves capital gains tax, which you have no real experience of. Which fundamental principle does this compromise?

Match the supporting qualitative characteristics with the descriptions.

Draggable item		Corresponding Item
timeliness		users can compare information with previous years and with similar businesses
understandability		users are assured of information
verifability		users receive information in time to make decisions
comparability		information is presented clearly and precisely

A statement of profit or loss shows a profit of £14,900. It is discovered that
no allowance has been made for advertising expenses accrued of £620 and rent
prepaid of £450 at the year end. What is the adjusted profit for the year?

A £14,730

B £15,070

C £15,970

D £13,830

A business shows a profit for the year ended of £18,790. The owner of the
business wishes to increase the allowance for doubtful debts by £800 and to
write off irrecoverable debts of £250. What is the adjusted profit for the year?

A £18,240

B £19,840

C £19,340

D £17,740

Accruals (of expenses) will appear where in the final accounts?

A Expense in the PoL account

B An asset in the SoFP

C A liability in the SoFP

D Income in the PoL account

Sales ledger control account will appear where in the final accounts?

A Expense in PoL account

B As trade payables in non current assets

C As trade receivables in current assets

D As trade receivables in current liabilities

How do we account for allowance for doubtful debt in the final accounts?

A As an expense in the PoL account

B As a liability under current liabilities

C As a reduction in the value of trade receivables in the current assets

D As a liability under non current liabilities

State the meaning of a credit balance for disposal of a non-current asset in a
trial balance

A The business has made a gain on disposal

B The business has made a loss on disposal

C The asset has been under depreciated

D The asset has been part-exchanged on disposal

A partnership may choose to over-ride some or all of the accounting rules in the
partnership Act 1890 by the partners entering into a separate:

A Appropriation account

B Accounting policy

C Partnership agreement

D Loan agreement

Profits of a two person partnership are £32,100 before the following are taken
into account:

interest on partners capital accounts £1,800

salary of one partner £10,000

interest on partners drawings £700 What is the profit share for each partner 1:1 sharing ratio.

A £10,500

B £11,400

C £12,300

D £16,400

Mia, Nell and Olly are in a partnership sharing profits equally. Mia is to
retire and it is agreed that goodwill is worth £30,000.After Mia's retirement,
Nell and Olly will continue to run the partnership and will share profits
equally. What will be the goodwill adjustment to Nell's capital account?

A debit £10,000; credit £10,000

B debit £10,000; credit £15,000

C debit £15,000; credit £15,000

D debit £15,000; credit £10,000

Norman and Oliver are in partnership sharing profits equally. Each has a capital
account with a balance of £75,000. Peter joins as anew partner. The profit share
will be Norman 40%, Oliver 40% and Peter 20%. Goodwill is valued at £40,000. No
goodwill is to be left in the accounts. What will be the balance of Oliver's
capital account after the creation and elimination of goodwill?

A £71,000

B £79,000

C £91,000

D £95,000

Which of the following accurately describes a business entity?

the financial statements record and report on the activities of one particular business

the presumption that the business to which the financial statements relate will continue to trade in the forseeable future

some items are of such low value that it is not worthwhile recording them separately

Match the supporting qualitative characteristics with the descriptions.

timeliness

users can compare information with previous years and with similar businesses

understandability

users are assured of information

verifability

users receive information in time to make decisions

comparability

information is presented clearly and precisely