I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

 

514

 

47 

B 

37,000 + ((517,000 – 37,000) × 5%) – 39,000) = 22,000. New allowance required 

is $24,000, so the allowance is reduced by $15,000. 

48 

D 

Neither statement is true.  

An aged receivables analysis is a report used to help the business monitor its receivables 

balances and identify which receivables balances are overdue. A credit limit is the 

maximum amount a customer can owe to a business at any one time. If an order is placed 

by a customer that would take the customer's account over its credit limit, the order will 

not be filled until a payment is received to reduce the balance on the customer's account. 

49 B   

 

$ 

Receivables balance before adjustments 

 456,330.0 

Less irrecoverable debts written off 

       (780.0) 

 

455,550.0 

Receivables allowance $455,550 @ 5% 

  (22,777.5) 

Receivables balance for statement of financial position 

 432,772.5 

   

 

50 B   

Irrecoverable debts expense 

$ 

Increase in allowance (22,777.5 – 15,255) 

7,522.5 

Add irrecoverable debts written off 

    780.0 

 

8,302.5 

Less cash recovered from previously written off debt 

   (450.0) 

Irrecoverable debt expense 

 7,852.5 

51 

B 

No disclosure or provision is required. 

52 

B 

Booker should disclose a contingent liability in the financial statements because the 

amount cannot be reliably estimated. If the amount could be reliably estimated, then a 

provision would be recognised.   

53 

D 

As the likelihood of paying any cash to Space Co for the claim is remote, there is nothing 

to disclose in the accounts regarding this claim. A provision should be created for the 

warranties, as the conditions for recognising a provision are met – present obligation, 

probably outflow of cash, reliable estimate of amount.  

54 

C 

The 20X3 provision is calculated using expected cost: 

(80%  0) + (12%  545,000) + (8%  800,000) = $129,400 

The increase in the provision is therefore 129,400 – 99,750 = $29,650. This is a debit 

to the statement of profit or loss.  

55 

B 

 

PAYABLES LEDGER CONTROL ACCOUNT 

 

 

$ 

 

 

$ 

Cash paid 

222,340 

Opening balance 

 

308,600 

Discounts received 

 

4,900 Credit 

purchases 

 

337,200 

Contras against credit balance in 

receivable ledger 

1,400 

Interest payable on overdue 

amounts 

3,600 

Closing balance 

 420,760 

 

               

 

 649,400 

 

 649,400 

56 

B 

Because the credit note was not entered in the sales day book, it would not be included in 

the total that is entered into the receivables control account. Therefore the total of the list 

of balances would be $150 less than the receivables control account balance. The invoice 

entered incorrectly in the sales day book would cause both the list of balances and the 

receivables control account to be overstated by $90.  

57 

C 

Revenue for the sale should be recorded net of the settlement discounts allowed, if the 

customer is expected to take advantage of the discount. 

58 

C 

(12,160 + 1,800 – 150) – (14,560) = 750  

BPP Tutor Toolkit Copy

---

PRACTICE ANSWER BANK