Q: What is the formula for calculating the allowance for doubtful debts as per the information provided?

Allowance for doubtful debts = Trade receivables $$\times 5$$%

Q: What is the correct formula for calculating depreciation on buildings for the year?

Depreciation = $$\text{Cost of Buildings} \times 5\%$$

Q: If office equipment is depreciated at 8% per annum using the reducing balance method, what is the depreciation expense for the year ended 30 April 2023?

Depreciation = $$(\text{Cost} - \text{Accumulated Depreciation}) \times 8\%$$

Q: What is the correct formula for calculating the proposed final ordinary dividend for the year ended 30 April 2023?

Proposed Dividend = Total Ordinary Shares $$\times$$ Dividend per Share

Question 1

Which of the following best describes the treatment of the Rs 12,500 inventory included in the closing balance but sold after year-end for Rs 7,500 due to proximity to expiry date, according to IAS 2?

Accepted Answer

It should be valued at Rs 7,500 in the closing inventory.

Question 2

What is the formula for calculating the allowance for doubtful debts as per the information provided?

Accepted Answer

Allowance for doubtful debts = Trade receivables $$	imes 5$$%

Question 3

How should the Rs 10,250 prepaid advertising expense be treated in the Statement of Profit or Loss for the year ended 30 April 2023?

Accepted Answer

It should be deducted from selling and distribution costs.

Question 4

What is the correct formula for calculating depreciation on buildings for the year?

Accepted Answer

Depreciation = $$	ext{Cost of Buildings} 	imes 5\%$$

Question 5

If office equipment is depreciated at 8% per annum using the reducing balance method, what is the depreciation expense for the year ended 30 April 2023?

Accepted Answer

Depreciation = $$(	ext{Cost} - 	ext{Accumulated Depreciation}) 	imes 8\%$$

Question 6

How should the revaluation of land by Rs 100,000 at year-end be reflected in the financial statements?

Accepted Answer

It should be added to the carrying amount of land and credited to revaluation reserve in equity.

Question 7

What is the correct formula for calculating the cost of goods sold (COGS) for Retail Ltd for the year ended 30 April 2023?

Accepted Answer

COGS = Opening Inventory + Purchases - Closing Inventory

Question 8

Which of the following is NOT included in the calculation of profit before tax?

Accepted Answer

Ordinary dividend paid

Question 9

How should accrued office salaries of Rs 7,850 at year-end be treated in the financial statements?

Accepted Answer

Added to administrative expenses and shown as a current liability

Question 10

What is the correct formula for calculating the proposed final ordinary dividend for the year ended 30 April 2023?

Accepted Answer

Proposed Dividend = Total Ordinary Shares $$	imes$$ Dividend per Share

Question 11

Which of the following best describes the treatment of share premium received from the issue of new shares?

Accepted Answer

It is credited to the share premium account in equity.

Question 12

What is the correct formula for calculating net profit after tax?

Accepted Answer

Net Profit after Tax = Profit before Tax $$-$$ Taxation

Question 13

Which of the following is a correct classification for 12% debentures repayable 31 December 2035 in the Statement of Financial Position as at 30 April 2023?

Accepted Answer

Non-current liability

Question 14

How should the Rs 31,750 estimated taxation for the year ended 30 April 2023 be treated in the financial statements?

Accepted Answer

It should be shown as a current liability and deducted from profit before tax.

Question 15

Which of the following is the correct formula for calculating total equity at year-end?

Accepted Answer

Total Equity = Share Capital + Share Premium + General Reserves + Retained Earnings + Revaluation Reserve

Question 16

Which of the following is NOT a component of current assets in the Statement of Financial Position?

Accepted Answer

Buildings (cost)

Question 17

What is the correct formula for calculating the carrying amount of office equipment at year-end?

Accepted Answer

Carrying Amount = Cost $$-$$ Accumulated Depreciation

Question 18

Which of the following is the correct formula for calculating gross profit?

Accepted Answer

Gross Profit = Revenue $$-$$ Cost of Goods Sold

Question 19

How should the Rs 4,825 allowance for doubtful debts be adjusted if the new allowance is calculated as 5% of trade receivables (Rs 31,250)?

Accepted Answer

Question 20

Which of the following is the correct formula for calculating retained earnings at year-end?

Accepted Answer

Retained Earnings = Opening Retained Earnings + Net Profit after Tax $$-$$ Dividends Paid

Preparation of Financial Statements for Retail Ltd (IAS 1)

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