EMT Practice Test

1. Question Content...

---

Question1: Which ONE of the following organizations issues International Accounting Standards (IFRS's)?

Question2: Financial controls are needed in order to:

Question3: If closing inventory at the end of an accounting period is overvalued by £2000 and no adjustment is made, the net profit in the following accounting period will be:

Question4: BCD has the following balances for the year ended 31 December 20X8:

What is the trade payables balance of BCD at 31 December 20X8? Give your answer to the nearest $"000.

Question5: In a manufacturing company, prime costs is the total of

Question6: The prime cost of goods manufactured is the total of:

Question7: Refer to the Exhibit.

A business writes a cheque using its overdraft balance to purchase new display shelving for its showroom Which of the following is the dual effect?

Question8: Which of the following transactions would be classified as a revenue transaction?

Question9: Company P are looking to create a balance sheet. Which of the following should be included in this document?

Question10: Refer to the Exhibit.

Soffit plc is calculating its irrecoverable debt charge and allowance for receivables for inclusion in its year-end accounts. Based on an aged receivables schedule, it is estimated that an allowance for receivables of $125,820 is required.
In addition, a specific allowance for receivables of $18,640 is also required for two customers who are experiencing cash flow difficulties. There are also two customers who have gone into receivership while owing the company $6,300. The current allowance for receivables is $156,000.
Which is the correct entry to be made to the accounts to record these transactions?

Question11: A company which is VAT registered, has sales for the period of $28,450 (excluding VAT) and purchases (including VAT) for the period of $14,687.50.
The balance on the VAT account, assuming all items are subject to VAT at 17.5%, is:

Question12: The Accounting Standards Board is responsible for:

Question13: An organization's cash book has an opening balance in the bank column of $4,850 credit.
The following transactions then took place:
(a) Cash sales of $14,500, including VAT of $1,500.
(b) Receipts from customers of debts of $24,000.
(c) Payments to creditors of debts of $18,000, less 5% cash discount.
(d) Dishonored cheques from customers amounting to $2,500.
The resulting balance in the bank column of the cash book should be:

Question14: JW's debits total £10,502 for this period. JW's credits total £8,940.
What amount does JW's accountant need to include in the company's suspense account to make the transactions balance?

Question15: The valuation of inventory in a manufacturing company will consist of:

Question16: Refer to the Exhibit.

A company operates a FIFO system of inventory valuation. The following information is available for the month of April:
The closing value of inventory at the end of the month of April is

Question17: Refer to the Exhibit.

Which of the following would be shown in the trial balance for the bank ledger account?

Question18: Which of the following would not require an adjustment to be made to the cashbook?

Question19: An internal audit is an independent appraisal function established within an organization to examine and evaluate its activities as a service to the organization Which of the following appoints the internal auditor?

Question20: A trial balance is extracted from the ledger accounts at the end of each accounting period.
Which of the following will a trial balance do?

Question21: Refer to the Exhibit.

The following information is given at a manufacturer's year end:
Using some or all of the above figures, the correct figure for factory cost of goods completed is:

Question22: Refer to the Exhibit.

A company that is VAT-registered has the following transactions for the month of March.
All purchases were in respect of goods for resale and all items were subject to VAT at 17.5%.
Opening inventory was $16,200 and closing inventory was $18,400.
The movement on the VAT account for the period was:

Question23: Refer to the exhibit.

The following is an extract from the trial balance of a business for its most recent year:
Net profit before tax has already been calculated as being £27m. Income tax of £5m is to be provided, and a final dividend of 30p per share is declared.
Using some or all of the figures above, the correct figure of retained profit for the year is

Question24: Comany D recently purchased an intangible asset from CompanyJFY, which was priced at £150,500, which Company D paid, along a goodwill amount that totalled 25% of the asking price.
Company D has estimated that the purchased entity will have a useful life of 35 years. Company D has decided to amortise the cost of the new asset using the straight line method.
What will the amortisation figure per annum be for Company D's new entity?

Question25: Refer to the exhibit.

A company has the following debt in the statement of financial position The finance cost to be charged to the income statement is

Question26: In a statement of cash flows, which one of the following would not be found under the section "cash flows from investing activities"?

Question27: If an auditor expresses an opinion of `fair presentation' on a set of financial statements, this means:

Question28: Refer to the exhibit.

The following information is available for a company:
The company has declared an ordinary dividend of $0.05 per share.
What is the total dividend payment to be made by the company?

Question29: Refer to the Exhibit.

Ax minster Limited is calculating its irrecoverable debt charge and allowance for receivables for inclusion in its year-end accounts. The current allowance for receivables is $28,600 and it is estimated that this needs to be raised to $30,400. There are also bad debts of $3,600 which should be written off.
Which is the correct entry to be made to the accounts to record these transactions?
The correct entry to be made to the accounts to record these transactions is:

Question30: Which of the following would meet the definition of a liability in accordance with the Conceptual Framework's definition?

Question31: Refer to the exhibit.

A company has the following equity balances at the beginning of the year During the year the company made a rights issue of 1 for 5 at a price of $1.50 The balance of share premium after this issue is

Question32: The issue of a company's shares for more than their normal value results in the creation of a

Question33: Which TWO of the following are transactions that would be recorded in the sales ledger control account?

Question34: Which of the following is an error of principle?

Question35: MNO operates an imprest system to maintain a float of petty cash of 5100 At the end of the week the petty cash expense vouchers total $76 and there is $36 cash in the float. Which of the following, taken independently, would explain this difference of $10?

Question36: Which of the following would be a good method of segregating the duties of staff?

Question37: An asset may best be defined as:

Question38: Refer to the exhibit.

The trial balance of Monchu Partnership, as at 30 June 2006, has a suspense account. Subsequent investigations revealed that:
(1) A payment of £352 to Mr. Tan was posted as £325.
(2) A remittance of £450 received from Arumugam was credited to Armits accounts.
(3) Salaries of £12000 have not been posted from the cash book.
Monchu suggested the following adjustments:
The appropriate journal entries are:

Question39: Which of the following is not a book of prime entry?

Question40: The accumulated fund is equal to:

Question41: Refer to the Exhibit.

A company has the following information available for the month of June:
The opening receivables balance was $124,600.
The closing receivables balance at the end of June was

Question42: "To assure shareholders that the stewardship of the organization was effectively carried out." What does this definition describe?

Question43: Refer to the Exhibit.

A company operates a FIFO system of inventory valuation. Opening inventory at the beginning of the period was 200 units @ £2.80 each. During the period the following movements of inventory were recorded.
The value of the closing inventory at the end of the period and amount charged to the income statement were:

Question44: An external audit is an independent examination of, and expression of opinion on the financial statements of an entity.
Who of the following appoints the external auditor?

Question45: Refer to the Exhibit.

Wilton Limited is preparing its year-end accounts and is calculating a revised allowance for receivables.
An aged receivables schedule shows the following position:

Included in the 3 months plus debt is an amount of $2,300 for a customer that has recently gone into liquidation. The current allowance for receivables is $4,200.
The charge to the income statement for the period and the net receivables figure on the statement of financial position will be:

Question46: The profit earned by Subramanian in 2006 was £ 50,000. He injected new capital of £12,000 during the year and withdrew goods for his private use that cost £4,000.
If net assets at the beginning of 2006 were £10,000, what were the closing net assets?

Question47: A company had disposed of a non-current asset for $4,000 during the financial year. The asset had an original cost of $24,000 and a loss on disposal of $2,000 was recorded in the accounts.
The accumulated depreciation for the non-current asset was $

Question48: Which one of the following book-keeping errors does not affect the view given by the financial accounts?

Question49: GG has the following statement of profit or loss extract for the year ended 31 December 20X3

What is the interest cover for GG for the year ended 31 December 20X3?

Question50: Refer to the Exhibit.

The Financial Accountant for a company is preparing the monthly bank reconciliation and has extracted the following information:
The correct cash book balance at the month end will be:

Question51: Store Y believe customer XF will not be able to pay his £300 debt. Which ONE of the following day books should this 'bad debt' be recorded in?

Question52: Which of the following would be a role of the management accountant?

Question53: Refer to the Exhibit.

At the beginning of the month, an organization had opening inventory of 30 units of a product, valued at £3.00 each. During the month, it had inventory movements, occurring on the following dates:
Using the FIFO method of inventory valuation, the closing inventory at the end of the month was:
Give your answer to 2 decimal places.

Question54: Which TWO of the following are responsibilities of the IFRS interpretations committee?

Question55: A company's cashbook has an opening balance of £4,860 debit. The following transactions then took place:
(a) Cash sales - £23,500, including VAT of £3,500
(b) Receipts from customers - £18,600
(c) Payments to payables £12,400, less cash discounts of £240
(d) Bank Charges - £260
What will be the resulting balance in the cash book?

Question56: FGH has extracted its trial balance from its nominal ledger for the year ended 31 March 20X6 The items below have a value greater than SNil Which are debit and which are credit balances?

Question57: A trial balance should be extracted from the ledger accounts prior to preparing the final accounts because:

Question58: The following is an extract of the trial balance of XYZ as at 31 December 20X7

What is the total value of assets to be included in the statement of financial position? Give your answer to the nearest $

Question59: The role of the internal auditors is primarily to:

Question60: ABC has the following summary of transactions for the quarter ended 30 June 20X9 ABC is registered for sales tax at 20%.

At the beginning of the quarter ABC owed $2,300 to the local tax authority.
What is the balance owing to the local tax authority at 30 June 20X97 Give your answer to the nearest dollar.

Question61: Refer to the Exhibit.

A business has three non-current assets.
(i) Asset 1 will be used to manufacture components over a 4 year period, after which it will be scrapped; the total contract is for 1 million components, to be produced in different quantities each year.
(ii) Asset 2 is a motor car for a director; it is expected to be kept for 3 years, and will travel 20,000 miles each year.
(iii) Asset 3 is a mobile truck used for transporting goods around the factory; it is expected to be kept for 20 years.
Which one of the following combinations of depreciation methods, would be most reasonable for the above three assets?
The answer is:

Question62: Which one of the following is an example of where the accrual or matching convention should be applied?

Question63: Refer to the Exhibit.

The following information is available for a company for the period:
The value of sales invoices for the period was:

Question64: The external auditor seeks to provide an opinion on whether the accounts show a true and fair view What is the international term for 'true and fair view'?

Question65: External auditors are primarily responsible for:

Question66: The role of the internal auditors is primarily to:

Question67: Refer to the Exhibit.

A company is preparing its accounts to 30 April 2006. The latest telephone bill received by the company was dated 31 March and included call charges for the quarter 1 December to 28 February. The amount of the bill for call charges (excluding VAT) was $960. Most of the company's telephone bills are for similar amounts.
Which of the following journal entries should be made to the company's accounts at 30 April 2006?
The journal entries which should be made to the company's accounts at 30 April 2006 is

Question68: Which one of the following would not be considered a purpose of segregation of duty?

Question69: Principles based accounting uses a conceptual basis to provide guidelines for preparing financial statements.
Which ONE of the following is an example of this approach?

Question70: Which of the following is not a correct definition of the accounting equation?

Question71: A company has authorized capital of 100,000 5% preference shares of $2 each and 500,000 ordinary shares of $0.20p each. All of the preference shares have been issued, and 400,000 ordinary shares have been issued at $0.45p each.
Interim dividends of $0.10p per ordinary share, plus half the preference dividend have been paid during the current year. A final dividend of $0.20p per ordinary share is declared.
The total of dividends payable for the year is

Question72: Refer to the Exhibit.

The correct ledger entry for payment of net wages to employees is:
The answer is:

Question73: MHJ purchased an asset for £53,500, which incurred a delivery charge of £20,000. MHJ decided to set a depreciation rate of 15% per annum for the asset.
In its second year, the asset is re-valued at 180% of the net carrying value of the previous year.
What will be the asset's net carrying amount by the end of its second year?

Question74: The suspense account of a company was opened with a credit balance of $360 when the trial balance failed to agree.
This could have arisen because

Question75: Which of the following transactions would be classified as a capital transaction?

Question76: Which TWO of the following are features of a private limited company?

Question77: The trial balance shows the debit total as $200 less than the credit total.
This could be due to:

Question78: The financial statements are produced in accordance with relevant accounting standards. This compliance ensures the requirement of fair presentation of transactions and events is met How is this compliance emphasized?

Question79: In times of rising prices, the 'FIFO' method of inventory valuation, when compared to the 'Average Cost' method of inventory valuation, will usually produce:

Question80: Financial statements should present fairly the financial position, financial performance and cash flows of an entity. In virtually all circumstances, a fair presentation is achieved by..........
Which of the following?

Question81: The owner of a business takes goods from inventory for his own personal use Which of the following accounting concepts would be relevant to this transaction?

Question82: Which TWO of the following are characteristics of financial accounts?

Question83: HJK has maintained minimal accounting records during the year but has the following information available:

HJK charges a mark-up on all goods sold of 25%. What is HJK's gross profit for the year?

Question84: CDE, an entity registered for sales tax, purchases a piece of equipment for cash on 31 December 20X6 for
$30,000 including sales tax. The sales tax rate is 20%. What is the journal entry required to record this transaction in the nominal ledger?
Place the labels in the corresponding position in the table below:

Question85: Which of the following is an example of a transaction that affects profit, but does not affect cash?

Question86: At the beginning of the year, a club's Membership Subscriptions account showed a debit balance of $500 and a credit balance of $225. During the following year, subscriptions received amounted to $12000.
At the end of the year, subscriptions paid in advance amounted to $200, and subscriptions in arrears, and expected to be collected, amounted to $150.
The amount to be transferred to the income and expenditure account for the year is

Question87: Which of the following transactions in the current year explains a reason for an increase in the gearing ratio of an entity from 35% last year to 45% this year?

Question88: The Framework is described as a conceptual framework when used in the creation of new accounting standards.
Which ONE of the following describes the approach of the Framework?

Question89: On 1 March, a company made a payment of $6,000, in respect of rent for the quarter 1 March - 31 May. The company's year end was 31 March.
What will be the amount of the prepayment shown in the accounts at the year end?

Question90: Your organization paid $120250 in net wages to its employees during the year.
Employees' tax and national insurance amounted to $32000 and employers national insurance was $11000.
Employees had contributed $6250 to a superannuation scheme.
The amount to be charged against profits for the year, in respect of wages is

Question91: The balance on LMN's cash account at 31 December 20X6 is $108,000 (debit) On performing the monthly bank reconciliation the following is discovered.
* a payment of $2,000 made to a supplier has not yet appeared on the bank statement,
* an automated receipt from a customer for $5,000 has not yet been recorded in the cash book, and
* a pigment to a supplier of $1,500 was incorrectly recorded in the cash book as $1,050 The balance showing on the bank statement at 31 December 20X6 is

Question92: Which one of the following would not be considered one of the roles of a Financial Accountant?

Question93: A company's financial statements show a gross profit of $15 million. A major error in the inventory value system has been discovered resulting in an overstatement on opening inventory of $1.2 million and an understatement in closing inventory of $1.5 million.
What is the correct gross profit figure for the period?

Question94: What will be the effect on the financial statements if the closing inventory figure is decreased?

Question95: VWX is registered for sales tax in Country B A sales invoice to its mam customer shows the following information:

What journal entry will WVX process to record this transaction in its nominal ledger?
A)

B)

C)

D)

Question96: Mr UY has just had property P re-valued. Mr UY originally purchased property P for £560,000. It is now worth £780,000.
Which ONE of the following shows how this transaction should be recorded in Mr UY's property account?

Question97: Select the THREE INCORRECT statements from the following list of statements about memorandum accounts:

Question98: ABC produces accounts lo the year ended 31 December annually Extracts from the most recent financial statements are.

Calculate the average inventory days ratio for the year ended 31 December 20X4.
Give your answer to the nearest day

Question99: A liability may best be defined as:

Question100: Refer to the exhibit.

The following is an extract from the trial balance of a business for its most recent year:
Gross profit has already been calculated as being $75,000. Depreciation is to be provided at 25% on the reducing balance, and the allowance for receivables for doubtful debts is to be amended to 5% of receivables.
Using some or all of the above figures, the correct net profit is

Question101: If the royalty cost falls on items used in the manufacturing process, which TWO of the following would be true?

Question102: A business has come to you for advice. There are about to start trading and want to ensure that they keep appropriate accounting records that will grow with their business, save time and produce useful information.
They have already established books of prime entry.
Which of the following would you also suggest they use?

Question103: At the beginning of the year, an organization's non-current asset register showed a total net book value for fixed assets of £86,000. The nominal ledger showed non-current assets at cost of £120,000 and provision for depreciation of £39,000.
The disposal of a non-current asset for £10,000, at a profit of £2,000, had not been accounted for in the non-current asset register.
After correcting for this, the net book value shown in the ledger accounts would be

Question104: The correct journal entries for subscriptions paid in advance is:

Question105: Refer to the exhibit.

ABC has the equity balances at the end of year 1.
During year 2 ABC issues 100,000 new shares at a price of $1.10
What is the balance on share premium at the end of year 2?

Question106: Different users have different needs from financial information. One of which is to know about the company's ability pay its debts Which of the following users will have this need for information?

Question107: Which of the following is the final document in the audit trail?

Question108: The petty cash imprest is restored to £500 at the end of each week. The following amounts are paid out of petty cash during week 23:
(a) Stationery - £70.50 (including VAT at 17.5%)
(b) Travelling costs - £127.50
(c) Office refreshments - £64.50
(d) Sundry payables - £120.00 plus VAT at 17.5%
The amount required to restore the imprest to £500.00 is:
Give your answer to 2 decimal places.

Question109: Cost of goods sold for a manufacturing company is the total of

Question110: If a profitable entity is not required to register for sales tax with its local tax authority, which of the following statements is TRUE?

Question111: Before lending to an entity, which TWO of the following pieces of information would a potential lender want to consider?

Question112: Entity HJ is a small business. In the period. Entity Hj earned revenue of £24,300, had opening inventories of
£1,500 and closing inventories of £8,000. Purchases came to £13,200.
What was Entity Hj's gross profit or loss for this period?

Question113: Refer to the exhibit.

A business has the following capital and long-term liabilities:
It calculates its gearing ratio as the proportion of debt to total capital.
At the end of the current year, its gearing ratio, compared with that of the previous year, is:

Question114: Refer to the Exhibit.

John, an employee of Kelt Ltd, earns gross wages for a week of £425.76.
Income tax is deducted at a rate of 25% on all earnings in excess of £85.00 per week and he is also liable to pay National Insurance contributions of 9% of his total earnings. Employers national insurance contributions are at a rate of 10.5%.
What are the correct ledger entries in the accounts of Kelt Ltd?
The answer is:

Question115: Refer to the Exhibit.

The following information relates to a business at its year end:
The prime cost of goods manufactured during the year is:

Question116: The method of accounting that attempts to recognize changing price levels by applying an industry or asset specific price index to the cost of goods sold and assets consumed is known as:

Question117: ABC manufactures vehicle engines and purchases components from a supplier Each engine requires one component costing $10 each ABC's supplier otters a 5% volume discount which has always been taken, this reduces the cost to $9.50 each. However, ABC has recorded the cost as $10 throughout the accounting system Once the correct price is recorded, what will be the effect on the factory costs incurred and the gross profit margin (GP%)?
A)

B)

C)

D)

Question118: Refer to the exhibit.

In a statement of cash flows, which three of the following would be found under the section "cash flows from investing activities"?

Question119: W and Partners has an opening capital balance at 1 January of £14,640 credit.
During the period there was an increase in assets of £6,820 and an increase in liabilities of £5,400.
The balance on the capital account at the end of the period is:

Question120: Which of the following represent liabilities of a business?

Question121: The financial accounts, as prepared by the directors of a company, are required to show a 'true and fair view'.
This means that:

Question122: A business buys a new production line at a cost of £100,000. After using the line for one year a more advanced version of the line is marketed by the manufacturer. As a result the production line in operation has a market value of £ 50,000. The line is being depreciated straight line over five years.
The charge to the income statement for impairment of the production line will be

Question123: Which one of the following best describes the stewardship function?

Question124: The formula for calculating payables days is

Question125: Entity V has a cost of sales of £23,850 for last year. Entity V's opening inventories for the year were £15,800, and its closing inventories were £3,570. Entity V had a gross profit margin of 240% for last year.
What was Entity V's inventories turnover figure to the nearest whole number for last year?

Question126: Refer to the Exhibit.

Transactions are often categorized between capital and revenue
Which of the following combinations are correct?