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<cite> @jawong said:</cite>
TenjinsmithWouldn’t you only make an allowance for the 60% of the 1600 at the beginning?
No – the purpose of the first part of the calculation is to calculate how much of the total receivables balance needs to be included in the general allowance calculation.
When you are calculating an allowance for receivables, a trade receivable balance is reviewed for inclusion in the allowance either specifically or generally but not both.
So, the 1,600 is reviewed as a specific allowance only, therefore excluded from the general allowance calculation.
Trade receivables 62,900
Less irrecoverable debt (2,000)
Less balance for which specific allowance required (1,600)
=> receivables balance for which general allowance required = 59,30010% x 59,300 = 5,930 general allowance
Balance for which specific allowance required = 1,600
60% x 1,600 = 960 specific allowance=> total allowance for receivables for inclusion on SOFP = 960 + 5,930 = 6,890.
See also questions 600 and 641 at https://www.tenjin.ie/projects.aspx.
Computer 890
Additional memory 95
Delivery 10
Installation 20Total to be capitalised = 1,015
If the purchaser is registered for sales tax, the sales tax is not capitalised.
If the purchaser is not registered for sales tax, the sales tax would be capitalised – but that is not the case in this question.
The tax is borne by the consumer who is not registered for sales tax.
Depreciation +980,000
Profit on disposal – 40,000
Increase in inventories -130,000
Decrease in receivables +100,000
Increase in payables +80,000Correct answer is an addition to operating profit of $990,000.
Check out question 667 at https://www.tenjin.ie/search/ACCA_F3 for variations on this type of question.
The 2010 estimate of $230,000 turns out to be an over-provision by $8,000.
This over-provision of $8,000 is credited to profit or loss in 2011.
The estimated tax charge for 2011 is 265,000. It is debited to profit or loss.
So, for 2011, the net expense to profit or loss is 265,000 – 8,000 = 257,000.
The SOFP at end of 2011 includes only the provision for the 2011 estimate, i.e. 265,000.
Correct option is c.
Practise this type of question at
In relation to the example on the internet that you found, the numbers as presented just don’t add up to the net profit figure included.
In relation to the ‘Incl errors’ column:
GP 260
Wages (100)
Admin ( 25)
Deprec ( 15)
Stationery ( 10)
Net profit is 110, not 120 as you have shown above.Similarly, in the ‘Corrections’ column:
GP 300
Wages (100)
Admin ( 25)
Deprec (15)
Net profit is 160, not 150 as you have shown above.Overall difference on net profit is 160 – 110 = 50.
The net profit is understated by £50,000 because the only error affecting the net profit is the incorrect inclusion of the capital expenditure in purchases.
Whereas it was incorrect to include the inventory of stationery in the gross profit calculation (hence the understatement of gross profit by £40,000), it is not incorrect to include the inventory of stationery in a net profit calculation.
So the net profit is only affected by the first error (therefore understated by £50,000).
Hope this helps.
Check out https://www.tenjin.ie/search/ACCA_F3 for free practise opportunities and explanations like this one.
This question required understanding of the accounting equation as follows:
assets = liabilities + equity
=> noncurrent assets (NCA) + current assets (CA) = noncurrent liabilities (NCL) +current liabilities + share capital (SC) + retained earnings (RE)
=> NCA + bank + other CA = NCL + CL + SC + RE
=> NCA + bank +(other CA – CL) = NCL + SC + RE
=> NCA + bank + other net current assets = NCL + SC + RE
The accounting equation applies at all times so if there are movements in assets, there must be corresponding movements in equity and/or liabilities. The question provides sufficient information about movements in all items in the equation except for the movement in retained earnings (which of course would correspond to the profit or loss for the year)
Plugging in the numbers:
100 + 750 + 575 = -750 + 1,000 + RE
Solving the equation for the movement in RE (profit for the year) gives a result of 1,175.
In summary, the movement in the bank account must be considered with all other known movements in assets, liabilities and equity to figure out the bit of information that was not provided in the question, i.e. the profit for the year. Knowledge and understanding of the accounting equation would enable you to figure out the profit for the year.
Bank increases by $750
Other net current assets increase by $575
Noncurrent assets increase by $100Total increase in noncurrent and net current assets $1,425
Share capital increases by $ 1,000
Loan note decreases by $ (750)
Excluding profit or loss for the year, net increase in equity and loans $250Profit for the year is difference between 1,425 and 250 = 1,175.
For information, I updated Tenjin to include modified ACCA F7 INT December 2012 questions and solutions.
Hope this is helpful.
Hello all,
I have developed a web application that generates practise questions and solutions in teachers and students of accounting and finance. I have modified past exam ACCA F3 questions for use with the application. They can be downloaded for free at:
https://www.tenjin.ie/search/ACCA_F3
Points to note:
The questions have been modified primarily to update for changes in accounting standards and the syllabus since the original exam
They have been configured to generate a new version of the question (and solution) each time you downloadSo, plenty of free practise opportunities for anyone who is taking ACCA F3 in June 2013.
I hope this helps – please feel free to share the link. All feedback is welcome. I can be contacted directly through the website.
Barry
Hello all,
I have developed a web application that generates practise questions and solutions to assist teachers and students of accounting and finance. I have modified past exam ACCA F7 questions for use with the application. They can be downloaded for free at:
https://www.tenjin.ie/search/ACCA_F7
Points to note:
The questions have been modified primarily to update for changes in accounting standards and the syllabus since the original exam
They have been configured to generate a new version of the question (and solution) each time you download
The solutions are detailed and contain tutorial notes.So, plenty of free practise opportunities for anyone who is taking ACCA F7 in June 2013.
I hope this helps – please feel free to share the link. All feedback is welcome. I can be contacted directly through the website. I also post updates on Twitter (@tenjintech)
Barry
I’m planning to include MCQs in time for the June 2013 exams. I agree that it helps to break the full computational questions into shorter questions. If you are interested to see how they will look, have a look at the ACCA F3 project that I have on the same site – MCQs that can be attempted on-screen.
Thanks for the feedback.
@kaushal99 said:
Thanks for such a helpful link.. Appreciate it! can you please suggest anything like this for F5 as well!!The software can be used for the other ACCA subjects. all going well, I’ll be working on them next year but won’t have it ready for December 2012 – sorry about that!
But please recommend it to your friends and tutors!
New practise question on EPS now available at https://www.tenjin.ie/search/ACCA_F7 for those who may be interested. Input 749 to the keyword search box or tick the EPS box.
I will notify of any further updates on Twitter from now on. Follow TenjinTech if you wish to be notified.
Feedback welcome thanks.