UNIVERSITY OF SURREY ® Faculty of Arts and Social Sciences Surrey Business School Undergraduate Programme in Accounting & Finance Time allowed: 50 minutes Student Name: URN: Module MAN1061: 15 credits FINANCIAL ACCOUNTING 1 (Close Book Class Test) ANSWERS !!!!! Answer all questions Instructions to candidates: The paper consists of TWENTY questions. Answer all questions. This question booklet is also your answer booklet. You must write your answers on this booklet only as no other booklets will be marked. You are required to hand this entire booklet to an invigilator at the end of the test.
Section A (1 mark per question) (1) Which ONE of the following applies to the preparation of financial statements? A They include forecast costs and revenues B They are prepared mainly for internal users C They include financial and non-financial information D They are usually prepared annually Answer: D (2) Which of the following should be accounted for as capital expenditure and which as revenue expenditure. Tick the correct answer. Building repairs and maintenance Staff salaries Capital Delivery van purchase ... .X. Utility bills .. X. Revenue .X ..... .X ..... (3) Complete the name of the missing accounting concept in the sentence below: The concept states that assets and profits should never be overstated and losses, both actual and anticipated, should never be understated. Answer: The Prudence Concept
(4) What does IFRS stand for? Answer: International Financial Reporting Standard (5) A sole trader uses the business phone to make personal calls to the value of £5ff. Show the journal entries to correct this: Answer: Account Name Drawings Telephone expenses Dr(£) 50 Cr(£) 50 (6) A machine cost £16,5ffff on 1st January 2ff13 and had an expected useful life of 3 years. The residual value is expected to be £1,5ffff. What would be the annual depreciation charge using the straight line method? (16500-1500)/3 Answer: £5,000 (7) If Sales were £19,3ffff returns inwards £5ffff, opening inventory £3,2ffff, purchases 8,1ffff, and closing inventory £2,6ffff, what was the gross profit/loss for the year? 19300-500-(3200+8100-2600)= Answer: £10,100