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Question 1 Chapter 4

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Question 1 Chapter 4

  • This topic has 3 replies, 2 voices, and was last updated 6 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • July 26, 2016 at 10:15 am #329196
    ngannguyen
    Member
    • Topics: 3
    • Replies: 4
    • ☆

    Dear sir!

    Please help me with the first question:
    Current assets include cash and cash equivalents, accounts receivable, inventory, marketable securities, prepaid expenses and other liquid assets that can be readily converted to cash.

    1. 1/1 made a loan to an employee, interest 2%/year
    Dr loan receivable/ Cr cash: 28.800
    Dr interest receivable/Cr interest sales: 576

    2. Insurance from 01 September 2008 to 31 august 2009: 21.600
    Dr prepayment: 14.400
    Dr insurance expense: 7200
    Cr cash: 21600

    3.rent from tenant
    Dr rent receivable: 9600
    Cr sales: 9600

    I consider that the right answer is
    => current assets are adjusted : +28800-28800+576+14400-21600+9600=2976

    Please, explain me why I am wrong

    Thanks you very much.

    July 26, 2016 at 4:50 pm #329240
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51555
    • ☆☆☆☆☆

    I assume you a referring to question 1 of the online practice tests.

    The question does not ask for the total current assets – it asks what should be included in current assets for the items listed.
    You cannot include cash (which you have done) because there will be lots of other cash transactions taking place and so it is impossible to calculate what the final cash balance (to be included in current assets) would be.

    (This is an old exam question 🙂 )

    July 27, 2016 at 1:19 am #329582
    ngannguyen
    Member
    • Topics: 3
    • Replies: 4
    • ☆

    Dear Sir!
    I think if the question is about receivable, it is easier to make me understand.

    By the way,is study text 2015 out of date?

    Thank you in advance.

    July 27, 2016 at 7:29 am #329815
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51555
    • ☆☆☆☆☆

    I am afraid that is the sort of wording that you will have to accept in the exam.
    As it happened, in this question they were all either receivables or prepayments, but they could have included some related to inventory as well.
    But again, you were not asked for the total figure for current assets because that would be impossible – it is impossible to know what the total cash balance is at the end of the year.

    No – the 2015 is not out of date because the syllabus has not changed.

    If you are watching my free lectures then you don’t really need the Study Text. What you certainly must use is a Revision Kit from one of the ACCA approved publishers because practice on as many exam standard questions as possible is vital in order to be able to pass the exam.

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