financial statements practice exam

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Try this financial statements practice exam. Financial statements is an important unit in the Advanced Diploma in Accounting.

Question 1

At 31 December 2015 a company’s capital structure was as follows:

Ordinary share capital

(500,000 shares of 50p each)

Share premium account 250,000

In the year ended 31 December 2016 the company made a rights issue of 1 share for every 2 held at £2 per share and this was taken up in full.

Later in the year the company made a bonus issue of 1 share for every 10 held, using the share premium account for the purpose.
What was the company’s capital structure at 31 December 2016?

Question 2

WXY Ltd purchased 60,000 ordinary shares in RAL Ltd for £185,000 five years ago, when RAL Ltds retained earnings were £40,000.
RAL’s equity and reserves at 31 July 2015 were as follows:
Ordinary shares £1       £80,000
Retained earnings         £70,000
The fair value of the non-controlling interest at acquisition was £42,000.
What was the goodwill arising on acquisition of RAL Ltd?

Question 3

Is the following statement true or false?
Capitalised development costs are shown in the statement of financial position under the heading of non-current assets.

Question 4

Is the following statement true or false?

Subsidiaries are consolidated in full and Associates are equity accounted

Question 5

You are employed as an accounting trainee for a dealer in computer equipment. You are revising for your financial statements practice exam when your boss asks you which TWO of the following will be classified as non-current assets?

(1) Office furniture
(2) Vehicles for delivering computers
(3) Business capital
(4) Computers for resale

A 1 and 2
B 2 and 3
C 2 and 4
D 3 and 4