level 3 exams Accounts Preparation Practice

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Try these level 3 exams Accounts Preparation Practice exams. Exam practice is essential for success in Intermediate Diploma in Accounting.

Question 1
SYB Ltd’s financial year ended on 30 November 201X. It incurs the same telephone expense each month. The last invoice paid for telephone calls was £1,800. This invoice covered the three months to 31 October 201X.
What adjustment is required when preparing the accounts for the year to 30 November 201X?
A.  A prepayment of £ 600
B.  A prepayment of £1,200
C.  An accrual of £600
D.  An accrual of £1,200

Question 2
A trial balance fails to agree by £2,000.
Which of the following errors could have caused its difference?
A.  A £2,000 cheque received from a customer, FBL Ltd, has been credited to JBL Ltds’ account in the payables ledger
B.  A rent payment of £1000 had been debited to a non-current asset account
C.  A non-current asset costing £1000 had been credited to the purchases account
D.  A £2,000 cheque paid to a supplier had been credited to the supplier’s account in the payables ledger

Question 3
NOR Ltd is entering data into the register of non-current assets.
Which of the following items of information will be used when undertaking a verification of the physical existnce of non-current assets?
(1) Supplier
(2) Location
(3) Description
(4) Cost
A.  2 and 1
B.  3 and 1
C.  2 and 3
D.  4 and 3

Question 4
JON Ltd’s bank manager has asked for a copy of the final accounts.
What is the most likely reason the bank manager has asked for the accounts?
A.  To ensure that the profit is sufficient to provide a good income for JON Ltd
B.  To calculate the tax payable on JON Ltd’s business profit
C.  To ensure that JON Ltd’s profit margin is as good as the margin earned by other bank customers
D.  To ensure that the business is able to make the repayments on a loan

Question 5
HAR Ltd’s accounting trainee is studying for his level 3 exams and is carrying out a reconciliation of the payables ledger. He needs to make correcting entries due to the following errors:
(1) A payment to BD Ltd has been posted to the account of DB Ltd
(2) An invoice for £345 has been entered in the purchase day book as £435
Which of the corrections will result in an entry in the general ledger?
A.  1 only
B.  2 only
C.  Both 1 and 2
D.  Neither 1 nor 2

Question 6
Which of the following statements correctly describes the dual aspect convention of accounting?
A.  Only two ledger accounts will be needed to record any transaction
B.  A change in the value of assets leads to an equal change in the value of liabilities plus capital
C.  If a transaction requires two debit entries, two credit entries must also be made
D.  Transactions are recorded in both a book of prime entry and the general ledger

Question 7
JAN Ltd valued her inventory at 30 September at its cost of £12,960. This includes some items which cost £1,850 which have been difficult to sell. JAN Ltd intends to have these items repacked at a cost of £300. She can then sell them for £800.
What will be the value of closing inventory in Janet’s accounts at 30 September?
A.  £11,610
B.  £10,010
C.  £10,610
D.  £14310

Question 8
A business has cash of £10,100 trade payables of £20,500, a mortgage liability of £80,000 and land of £160,000.
What is the capital balance?
A.   £110600
B.   £105000
C.   £160000
D.   £69,600

Question 9
ADE Ltd  runs a laundry. In September 2015 the company accountant (who is studying for his level 3 exams) received a letter from a solicitor representing a customer who claims her clothes suffered damages after being sent to the laundry. The customer is claiming damages of £13,000. ADE Ltd offered to pay £1300. The company’s solicitor’s advice is that in the event of the case going to court, ADE Ltd is likely to be required to pay £3,500. The solicitor also advised that the court case is unlikely to take place before April 2016.
What amount should be provided for in respect of the claim in ADE Ltd’s final accounts for the year ended 30 September 2015?
A £3500
B nil
C £13,000
D £1,300