At 31 May 20X7 Roberta's trial balance included

the following items. 1 June 20X6
Inventory 23,856
Trade receivables 55,742 32,165 + 5,855 = 38,020
Trade payables 32,165
Bank overdraft 5,855
Loan due for repayment in 20X9 15,000
What is the value of Roberta's current liabilities
at 31 May 20X7?
Which of the following are examples of payables
of a business? Only 4
1. Interest owed from the bank ( own to: nợ ai )
2. Loans and advances to employees
3. Money owed from customers
4. Tax owed to the tax authority
Which of the following are not examples of
payables of a business?
1. An estimation of tax owed to the tax authority
for the year just ended
2. $500 owed to a supplier for invoiced goods
3. An estimation of probable repair costs under
warranty claims
A business commenced trading on 01 January
20X1. The following transactions with Supplier A
have been recorded in the purchase ledger.
01 January 20X1 Opening balance $nil

(3) and (6) only

Which transactions should be noted as reconciling

items on the supplier statement reconciliation at
31 March 20X1
Which of the following statements about
provisions and contingencies is/are correct?
1. Acompany should disclose details ofthe change
in carrying value of a provision fromthe beginning (1) And (3) only
to the end of the year.
2. Contingent assets must be recognised in the
financial statements in accordance with the
prudence concept.
3. Contingent liabilities must be treated as actual
liabilities and provided for if it is probable that
they will arise.

Which of the following statements about

contingent assets and contingent liabilities are
correct? (1) And (4) only
1 A contingent asset should be disclosed by note 
if an inflow of economic benefits is probable.
2 A contingent liability should be disclosed by
note if it is probable that a transfer of economic
benefits to settle it will be required, with no
provision being made.
3 No disclosure is required for a contingent 
liability if it is not probable that a transfer of 
economicbenefits to settle it will be required.
4 No disclosure is required for either a contingent 
liability or a contingent asset if the likelihood of a
payment or receipt is remote
An ex-director of X company has commenced an
action against the company claiming substantial
damages for wrongful dismissal. The company's Disclose a provision of $50,000 and a contingent l
solicitors have advised that the ex-director is iability of $500,000
unlikely to succeed with his claim, although the
chance of X paying anymoniesto the ex-directoris
notremote. The solicitors' estimates of the
company's potential liabilities are :

Legal costs (to be incurred whether the claim is

successful or not)  50,000 
Settlement of claim if successful  500,000
550.000
According to IAS 37 Provisions, contingent
liabilities and continent assets, how should this
claim betreated in the financial statements?

The following items have to be considered in

finalising the financial statements of Q, a limited Provision (1) - warranty
liability company: Disclose (2) – possible - contigens
1. The company gives warranties on its products.
The company’s statistics show that about 5% of
sales give rise to a warranty claim.
2. The company has guaranteed the overdraft of
another company. The likelihood of a liability
arising under the guarantee is assessed as
possible. According to IAS 37 Provisions,
contingent liabilities and continent assets, what is
the correct action to be taken in the financial
statements for these items?

Which of the following statements about the

requirements of IAS 37 Provisions, contingent (1) And (3)
liabilities and contingent assets are correct?
1. A contingent asset should be disclosed by note
if an inflow of economic benefits is probable.
2 . No disclosure of a contingent liability is
required if the possibility of a transfer of
economic benefits arising is remote.
3. Contingent assets must not be recognised in
financial statements unless an inflow of economic
benefits is virtually certain to arise.
Wanda Co allows customers to return faulty goods
within 14 days of purchase. At 30 November A charge of $1,086
20X5 a provision of $6,548 was made for sales
returns. At 30 November 20X6, the provision was Dr exp (charge)
re-calculated and should now be $7,634. Cr Provision
What should be reported in Wanda Co's statement
of profit or loss for the year to 31 October 20X6
in respect of the provision?
Doggard Co is a business that sells second hand
cars. If a car develops a fault within 30 days of the A credit of $500
sale, Doggard Co will repair it free of charge. At
30 April 20X4 Doggard Co had made a provision
for repairs of $2,500. At 30 April 20X5 Doggard
Co calculated that the provision should be $2,000.
What entry should be made for the provision in
Doggard Co's statement of profit or loss for the
year to 30 April 20X5?
Which of the following best describes a provision
according to IAS 37 Provisions, contingent A provision is a liability of uncertain timing or
liabilities and contingent assets? amount
A. A provision is a liability of uncertain timing or
amount.
B. A provision is a possible obligation of
uncertain timing or amount.
C. A provision is a credit balance set up to offset a
contingent asset so that the effect on the statement
of financial position is nil.
D. A provision is a possible asset that arises from
past events.
Which of the following items does the statement
below describe? “A possible obligation that A contingent liability
arises from past events and whose existence will
be confirmed only by the occurrence or non-
occurrence of one or more uncertain future events
not wholly within the entity's control”

Montague’s paint shop has suffered some bad

publicity as a result of a customer claiming to be
suffering from skin rashes as a result of using a $3,000
new brand of paint sold by Montague’s shop. The
customer launched a court action against
Montague in November 20X3, claiming damages
of $5,000. Montague’s lawyer has advised him
that the most probable outcome is that he will
have to pay the customer $3,000.
What amount should Montague include as a
provision in his accounts for the year ended 31
December 20X3
Mobiles Co sells goods with a one year warranty
under which customers are covered for any defect
that becomes apparent within a year of purchase.
In calendar year 20X4, Mobiles Co sold 100,000
units. The company expects warranty claims for (100 x 5 %) (100 x 5 %)
5% of units sold. Half of these claims will be for a 50 x 2
+ 10 x
2
= 150.000
major defect, with an average claim value of $50.
The other half of these claims will be for a minor
defect, with an average claim value of $10.
What amount should Mobiles Co include as a
provision in the statement of financial position
for the year ended 31 December 20X4?
When a provision is needed that involves a Each possible outcome weighted according to the
number of outcomes, the provision is calculated probability of each outcome happening
using the expected value of expenditure. The
expected value of expenditure is the total
expenditure of:

X Co sells goods with a one year warranty and had

a provision for warranty claims of $64,000 at 31 64,000 – 25,000 = $39,000.
December 20X0. During the year ended 31
December 20X1, $25,000 in claims were paid to (5% x 150,000) + (20% x 25,000) + (75% x 60,000)
customers. On 31 December 20X1, X Co = $57,500.
estimated that the following claims will be paid in
the following year:
57,500 – 39,000 = $18,500.

What amount should X Co record in the statement

of profit or loss for the year ended 31 December
20X1 in respect of the provision?
A supplier sends you a statement showing a The supplier has allowed you $150 cash discount
balance outstanding of $14,350. Your own records which you had omitted to enter in your ledgers.
show a balance outstanding of $14,500. Which
one of the following could be the reason for this
difference?

Your payables control account has a balance at 1 Opening balance 34,500

October 20X8 of $34,500 credit. During October, Credit purchases 78,400
credit purchases were $78,400, cash purchases Discounts (1,200)
were $2,400 and payments made to suppliers, Payments (68,900)
excluding cash purchases, and after deducting Purchase returns (4,700)
settlement discounts of $1,200, were $68,900. 38,100
Purchase returns were $4,700. What was the
closing balance?
The payables ledger control account below
contains a number of errors:
PAYABLES LEDGER CONTROL ACCOUNT $

All items relate to credit purchases.

What should the closing balance be when all the
errors are corrected?
At 1 April 20X9, the payables ledger control
account showed a balance of $142,320 Dr Cr
At the end of April the following totals are Return outward 27.490 Opening balance 142,320
Payment to payable 196.360 Purchase credit 215.965
extracted from the subsidiary books for April: $ cash discount 1,430 (183,800 x 17.5%)
Purchases day book 183,800 contrast 2,420
Returns outwards day book 27,490 Closing 130,585
Returns inwards day book 13,240
Payments to payables, after deducting $1,430 cash
discount 196,360
It is also discovered that:
(a) the purchase day book figure is net of sales tax
at 17.5%; the other figures all include sales tax.
(b) a customer's balance of $2,420 has been offset
against his balance of $3,650 in the payables
ledger.
(c) a supplier's account in the payables ledger,
with a debit balance of $800, has been included on
the list of payables as a credit balance.
What is the corrected balance on the payables
ledger control account?

The accountant at Borris Co has prepared the

following reconciliation between the balance on
the trade payables ledger control account in the
general ledger and the list of balances from the
suppliers ledger

What balance should be reported on Borris Co’s

statement of financial position for trade payables?
How should the balance on the payables ledger current liability
control account be reported in the final accounts?

Which of the following companies are subsidiaries

of Gamma Co? Iota Co and Kappa Co
+ Zeta Co: Gamma Co owns 51% of the non-
voting preference shares of Zeta Co
+ Iota Co: Gamma Co has 3 representatives on the
board of directors of Iota Co. Each director can
cast 10 votes each out of the total of 40 votes at
board meetings.
+ Kappa Co: Gamma Co owns 75% of the
ordinary share capital of Kappa Co, however
Kappa Cois located overseas and is subject to tax
in that country
Which of the following statements is/are
incorrect?
1. A Co owns 25% of the ordinary share capital of
B Co, which means that B Co is an associate of A
Co.
2. C Co can appoint 4 out of 6 directors to the
board of D Co, which means that C Co has control
over D Co.
3. E Co has the power to govern the financial and
operating policies of F Co, which means that F Co
is an associate of E Co.
4. G Co owns 19% of the share capital of H Co, but
by agreement with the majority shareholder, has
control over the financial and operating policies of
H Co, so H Co is an associate of G Co