ACCT1110 Financial Reporting and Analysis
SAMPLE MID_SEMESTER EXAM PAPER
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THESE ARE REVISION QUESTIONS ONLY FOR EXTRA PRACTICE.
NONE OF THESE QUESTIONS WILL APPEAR ON THE ACTUAL EXAM
PAPER.
THE EXAM QUESTIONS MAY BE OF A DIFFERENT STYLE TO THE ONES
HERE.
PLEASE MAKE SURE YOU HAVE GONE THROUGH ALL LECTURE AND
TUTORIAL QUESTIONS
ACCT1110 Financial Reporting and Analysis
SAMPLE MID_SEMESTER EXAM PAPER
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1. Wombat Pty Ltd purchased inventory with an invoice price of $1,000 and credit terms
identified on the invoice of 2.5/10, n/30. What do these terms mean to Wombat Pty Ltd?
a. no discount is applicable if paid within 10 days.
b. the full invoice value of $5,000 is payable within 10 days.
c. a discount of 2.5% applies no matter when the invoice is paid.
d. a discount of 2.5% will be applied if the invoice is paid within 10 days of the date of
the invoice.
2. Financial information is presented below:
Sales revenue $100,000
Discount allowed 3,000
Costs of sales 50,000
Purchases returns and allowances 6,000
Operating expenses 25,000
The amount of net sales on the income statement would be:
a. $100,000.
b. $97,000.
c. $94,000.
d. $103,000.
3. Financial information is presented below:
Operating expenses $ 25,000
Sales returns and allowances 3,000
Interest expenses 6,000
Sales revenue 100,000
Costs of sales 50,000
The amount of gross profit on the income statement would be:
a. $47,000.
b. $16,000.
c. $50,000.
d. $25,000.
4. Under the perpetual inventory system what is the correct entry for the credit purchase
of goods for an invoiced value of $550 inclusive of GST?
a. Debit Inventory $500; credit Accounts payable $550, debit GST paid $50
b. Debit Inventory $550; credit Accounts payable $550
c. Debit Accounts payable $650; credit Inventory $500, credit GST paid $50
d. Debit Inventory $500; credit Accounts payable $500
ACCT1110 Financial Reporting and Analysis
SAMPLE MID_SEMESTER EXAM PAPER
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5. Kangaroo Ltd sold 10 trampolines to Hop-Along on credit. The price per trampoline
inclusive of GST was $220. What is the correct dollar amount to be recorded as sales
revenue on this transaction in Kangaroo Ltd’s books?
a. $2,200.
b. $2,000.
c. $2,420
d. $220.
6. Platypus Ltd sold goods to Quoll Ltd for $1,045 including GST. Quoll Ltd paid their
account within the discount period and received a settlement discount of 3%. The correct
GST to be recorded in Platypus Ltd books related to the payment from Quoll Ltd is:
a. DR GST payable $95;
b. CR GST payable $2.85
c. CR GST payable $95
d. DR GST payable $2.85.
7. The following information has been extracted from the books of Kookaburra Ltd in the
most recent trading period.
Purchases $35,000
Sales returns and allowances 6,000
Discount on sales 2,100
Freight-out 1,750
Purchase returns and allowances 900
Kookaburra Ltd’s cost of goods purchased for the period is:
a. $37,500.
b. $33,250.
c. $34,100.
d. $35,900.
8. Galah Ltd uses the periodic inventory method for inventory. The following data was
taken from the accounting ledger in the current period.
Purchases $32,000
Purchases returns and allowances 600
Beginning inventory 12,000
Ending inventory 15,000
What would be the cost of goods sold recorded by Galah Ltd for the period?
a. $32,000.
b. $29,000.
c. $28,400.
d. $34,400.
ACCT1110 Financial Reporting and Analysis
SAMPLE MID_SEMESTER EXAM PAPER
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9. The net realisable value (NRV) of an item of inventory is
a. the historical cost at date of purchase.
b. the selling price.
c. the fair value.
d. estimated selling price in the ordinary course of business less all marketing, selling and
distribution costs.
10. Bower Bird Ltd has calculated its inventory turnover ratio as being 10.00 times a
year for the year ended 30 June 2022. Bower Bird Ltd has provided the following
information:
Ending inventory $56,000
Cost of sales $500,000
Sales revenue $1,000,000
Bower Bird Ltd’s inventory on hand at the beginning of the period was:
a. 56,000
b. 44,000
c. 54,000
d. 46,000
11. If a cheque correctly written and paid by the bank for $126 is incorrectly recorded on
the company's books for $162, the appropriate treatment on the bank reconciliation would
be to:
a. add $36 to the bank's balance.
b. add $36 to the cash at bank book balance.
c. deduct $36 from the bank's balance.
d. deduct $36 from the cash at bank book balance.
12. A deposit for $15,755 is incorrectly recorded by a company as $15,775. On the bank
reconciliation, the $20 error should be:
a. added to the balance per books.
b. deducted from the balance per books.
c. added to the balance per bank.
d. deducted from the balance per bank.
ACCT1110 Financial Reporting and Analysis
SAMPLE MID_SEMESTER EXAM PAPER
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13. Bank charges of $25 appeared on the bank statement when it was emailed at the end
of the month. How should the bank charge be treated in the monthly bank reconciliation
process?
a. Record the bank charges as an expense to be posted in the Cash at bank account.
b. Add $25 to the bank balance to ensure the reconciliation is complete.
c. Ignore the bank charge.
d. Record the bank charges as a receipt to be posted in the Cash at bank account.
14. An extract of the cash flow statement of Porcupine Ltd for the year ended 30 June
2022 reveals the following information:
Profit after tax $3,200,000
Depreciation expense $350,000
Total cash expenses $2,700,000
Net cash provided by operating activities $650,000
Cash dividends paid $250,000
Net cash out flows for investing $320,000;
Ending cash and cash equivalents $600,000
Porcupine Ltd’s cash to daily cash expenses ratio is:
a. 87.9
b. 81.1
c. 93.2
d. 101.0
15. Peacock Ltd recorded sales of $780,000 during the year ended 30 June 2020 with
$700,000 being on credit. Bad debts have averaged 2.5% of credit sales in recent years
and the company uses this information as the basis to estimate the provision for doubtful
debts. The balance of the provision for doubtful debts account at the end of the reporting
period should be:
a. nil
b. $17,500.
c. $2,000
d. $19,500
ACCT1110 Financial Reporting and Analysis
SAMPLE MID_SEMESTER EXAM PAPER
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16. Wallaby Ltd uses the allowance method of accounting for bad and doubtful debts. The
credit controller for Wallaby Ltd recently received a notice from a liquidator that a debtor,
who owed Wallaby Ltd $1 500, was in liquidation and no payment is anticipated. The
credit controller has decided to write off the debt as bad. What is the general journal entry
required by the credit controller to record the write off?
a. DR Bad debts expense $1,500; CR Accounts receivable $1,500
b. DR Bad debts expense $1,500; CR Allowance for doubtful debts $1,500
c. DR Allowance for doubtful debts $1,500; CR Accounts receivable $1,500
d. DR Allowance for doubtful debts $1,500; CR Bad debts expense $1,500
17. Eclectic Coffee Ltd is a retail café. The correct general journal entry for a sale of one
latte at $4.95, including GST, paid for by a customer with a credit card, is:
a. DR Bank $4.95; CR Sales $4.50; CR GST collected $0.45
b. DR Bank $4.95; CR Sales $4.95
c. DR Accounts receivable $4.95; CR Sales $4.50; CR GST collected $0.45
d. DR Bank $4.50; DR GST collected $0.45; CR Sales $4.95
18. For the year ended 30 June 2022, Tassie Devil Ltd reported credit sales of $2,500,000,
of which $230,000 remained uncollected at year end. The credit manager estimates that
$10,000 of these receivables will become uncollectable. The opening net receivables were
$215,000. The receivables turnover ratio for Tassie Devil Ltd was:
a. 32 days
b. 11.5 times
c. 11.2 times
d. 11.6 times
ACCT1110 Financial Reporting and Analysis
SAMPLE MID_SEMESTER EXAM PAPER
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The following information pertains to Question 19 and 20.
Oliver's Oats Pty Ltd, is a wholesaler of the oat grain to cereal and muesli bar producers,
and has reported the following for the month of April 2023.
Date Units
(tonnes)
Cost price
per unit
Selling
price
per unit
April
1 Opening balance 85 $500
10 Purchases 110 $515
12 Sales 125 $550
18 Purchases 125 $525
24 Sales 75 $550
30 Closing balance 120
19. Assuming Oliver's Oats uses the periodic inventory system and the first-in-first-out
(FIFO) inventory method, what is the value of the cost of sales for the month of April
2023?
a. $104,250
b. $102,985
c. $101,775
d. $164,775
20. Assuming Oliver's Oats uses the perpetual inventory system and weighted average
cost method, what is the weighted average cost per tonne of the inventory held at the end
of April 2023?
a. $513.33
b. $525.00
c. $514.92
d. $519.06
ACCT1110 Financial Reporting and Analysis
SAMPLE MID_SEMESTER EXAM PAPER
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Question 21 10 marks
Biotek Ltd identified the following transactions (listed as 1 to 5) at the end of the financial
year 2022 that require an end of period adjustment. Record the appropriate adjusting
entries at 31 December 2022.
1. On 1 November 2022, Biotek issued a $10,000, 3 month, 9% note payable to a
supplier. The $225 total interest is to be paid when the note is paid in 2023.
Account name Dr Cr
2. On 1 January 2022 Biotek had $200 of supplies on hand. During the year the
company purchased $1,300 of supplies and debited supplies inventory
account. A count on 31 December 2022 determined that $90 of supplies are
still on hand.
Account name Dr Cr
3. Biotek received $900 on 12 December 2022 from Krauss Ltd for services
expected to be completed by 31 December 2022. Analysis reveals that only
two thirds of those fees were earned in December.
Account name Dr Cr
4. $1,300 is owed to employees for work done in
December 2022.
Account name Dr Cr
5. On 1 December 2022 Biotek received $1,500 for
two months’ rent in advance for a portion of its
building rented to Biosoft Ltd.
Account name Dr Cr
ACCT1110 Financial Reporting and Analysis
SAMPLE MID_SEMESTER EXAM PAPER
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SOLUTIONS – MULTIPLE CHOICE QUESTIONS
Q A Feedback
1. d. Credit terms of 2.5/10, n/30 means that a 2.5% cash discount may be
deducted from the invoice price if payment is made within 10 days of the
invoice date; otherwise, the invoice price is due 30 days from the invoice
date $1,000 x .975 = $975).
2. a. Discount allowed is treated as a finance expense in the income statement
and not deducted from sales to arrive at net sales ($100,000 - sales returns
and allowances of 0 = $100,000.
3. a. Cost of sales is deducted from net sales to determine gross profit
($100,000 – $3,000 – $50,000 = $47,000).
4. a. The correct accounting entry is debit Inventory $500, debit GST paid $50;
credit Accounts payable $550. The GST on the purchase is not part of the
cost of inventory.
5. b. The correct amount to be recorded for credit Sales is $2,000 being $200
the GST exclusive price per trampoline. GST would be credited for $200
and Accounts receivable debited for $2,200.
6. d. $1,045 x 97% = $1,013.65 amount Quoll Ltd pays after discount, 3%
discount totals $31.35 inclusive of GST, so the GST portion is $2.85
($31.35 GST inclusive amount/11).
7. c. Cost of goods purchased = $35,000 Purchases - $900 Purchases returns
and allowances = $34,100.
8. c. Cost of goods sold = $12,000 Beginning inventory +$32,000 Purchases –
$600 Purchases returns and allowances - $15,000 Ending inventory =
$28,400.
9. d. Net realisable value is defined as the estimated selling price in the
ordinary course of business less, where applicable, estimated further costs
to be incurred in completing, marketing, selling and distributing to
customers.
10. b. Inventory turnover
ratio:
$500,000
($? ? +$56,000) ÷ 2
=
$500,000
$50,000
= 10.00
Beginning inventory Must be (X + 56,000)/2 = 50,000 hence
2x = 50,000 – 56,000/2
x -= 44,000
11. b. The appropriate treatment in this situation is to add $36 to the cash at
bank book balance.
12. b. In this situation the $20 error should be deducted from the balance per
books.
ACCT1110 Financial Reporting and Analysis
SAMPLE MID_SEMESTER EXAM PAPER
Page 10 of 12
Q A Feedback
13. a. The correct thing to do is to post the bank charges to a bank charges
account expense account and recognise the reduction to the cash at bank
balance
14. b. The ratio of cash to daily cash expenses is calculated by dividing cash and
cash equivalents by average daily cash expenses ($600,000 /
(2,700,000/365) = 81.1
15. b. Estimated bad debts expense is $17,500 = 2.5% x $700,000
16. c. The company uses the allowance method so there is already a provision for
doubtful debts and any bad debts are written off against this provision.
DR Allowance for doubtful debts $1,500; CR Accounts receivable $1,500
17. a. The sale is treated as a cash sale.
DR Bank $4.95; CR Sales $4.50; CR GST collected $0.45
18. b. Receivables turnover ratio =
$2,500,000
$((230,000−10,000)+215,000)/2
= 11.5 times
19. Using the perpetual inventory system and weighted average cost method,
the cost of sales is measured at each point sales are made during the
month and cost of inventory are continuously reweighted for additional
purchases.
The weighted average cost of the sale of 15 units on 12 April 2023 is
determined as
85 units @ $500 = $42,500
110 units @ $515 = $56,650
195 units available for sale = $99,150 or weighted average of $508.46.
After the sale of 125 units on 12 April there would be 70 units left with a
weighted average cost of $508.46 = $35,592.31.
The weighted average cost of goods available for sale prior to the next
sale would then comprise
70 units @ $508.46 = $35,592.31
125 units @ $525.00 = $65,625.00
195 units available for sale = $101,217.31 or weighted average of
$519.06.
After the sale of 75 units on 24 April there would be 120 units left with a
weighted average cost of $519.06 = $62,287.58.
The weighted average cost of the ending inventory is $519.06 per unit.
20. Using the periodic inventory system and FIFO method:
The total cost of goods available for sale is comprised of
85 units @ $500 = $42,500
110 units @ $515 = $56,650
125 units @ $525 = $65,625
Total cost of goods available for sale = $164,775
ACCT1110 Financial Reporting and Analysis
SAMPLE MID_SEMESTER EXAM PAPER
Page 11 of 12
Q A Feedback
Cost of sales could be worked out by summing all the units sold being
125 on 12 April and 75 on 24 April = 200 units.
Using FIFO, the composition of cost of goods sold would be
Opening balance 85 units @ $500 = $42,500
Purchases 10 Apr 110 units @ $515 = $56,650
Purchases 18 Apr 5 units @ $525 = $ 2,625
Total cost of goods sold 200 units = $101,775.
An alternate method to determine the cost of sales would be to deduct
ending inventory from the cost of goods available for sale.
Value of the ending inventory under FIFO would comprise
Purchases 18 Apr 120 units @ $525= $63,000
Cost of goods available for sale $164,775 less ending inventory $63,000 =
Cost of sales = $101,775.
ACCT1110 Financial Reporting and Analysis
SAMPLE MID_SEMESTER EXAM PAPER
Page 12 of 12
SOLUTION
Question 21 10 marks
Biotek Ltd identified the following transactions (listed as 1 to 5) at the end of the financial
year 2022 that require an end of period adjustment. Record the appropriate adjusting
entries at 31 December 2022 in the space provided (narrations are not required).
1. On 1 November 2022, Biotek issued a $10,000, 3 month, 9% note payable to a
supplier. The $225 total interest is to be paid when the note is paid in 2023.
Account name Dr Cr
Interest expense $150
Interest payable $150
2. On 1 January 2022 Biotek had $200 of supplies on hand. During the year the
company purchased $1,300 of supplies and debited supplies inventory
account. A count on 31 December 2022 determined that $90 of supplies are
still on hand.
Account name Dr Cr
Supplies expense $1,410
Supplies $1,410
(Opening $200 + Purchase $1,300 – Closing $90 =
$1,410 used / to be expensed)
3. Biotek received $900 on 12 December 2022 from Krauss Ltd for services
expected to be completed by 31 December 2022. Analysis reveals that only
two thirds of those fees were earned in December.
Account name Dr Cr
Unearned revenue OR Revenue received in advance* $600
Services revenue OR Revenue* $600
4. $1,300 is owed to employees for work done in
December 2022.
Account name Dr Cr
Salaries expense $1,300
Salaries payable OR Accrued salaries* $1,300
5. On 1 December 2022 Biotek received $1,500 for
two months’ rent in advance for a portion of its
building rented to Biosoft Ltd.
Account name Dr Cr
Unearned revenue OR Revenue received in advance* $750
Rent revenue $750
*Either account name is acceptable