Acca mock financial Accounting

 

31 

With regard to a business registered to account for sales tax, which of the following 

statements is true? 

(1) 

Sales tax is always a liability on the statement of financial position. 

(2) 

Sales tax is always an asset on the statement of financial position. 

(3) 

Revenue should be recorded net of sales tax. 

(4) 

Sales tax on purchases is an expense in the statement of profit or loss.

 

A (4) 

only 

B (2) 

and 

(4) 

C (1) 

and 

(3) 

D (3) 

only

 

 

 

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MO CK QUESTIONS 

K APLAN P UBLISH IN G 

 

11

 

32 

When completing his final accounts, James found that he had overstated a year end 

accrual.

  

How are James’ net profit and capital affected by the correction of the error? 

 

Net profit 

Net assets 

A Increased 

Increased 

B Increased 

Decreased 

C Decreased 

Increased 

D Decreased 

Decreased

 

33 

In the prior financial year, Peekaboo Co had a gross profit margin of 9%. In the current 

financial year, the gross profit margin has increased to 16%.

 

Which of the following might explain the movement in the gross profit margin? 

A 

The volume of sales has been higher in the current year. 

B 

Prompt payment discounts received have been higher in the current year. 

C 

There have been higher levels of inventory obsolescence in the current year. 

D 

The mix of products sold in the current year has changed.