QUESTION: 113

A purchase of fixed assets was debited to the purchases account.

This resulted in:

An overstatement of profit and an overstatement of fixed assets
An overstatement of profit and an understatement of fixed assets
An understatement of profit and an overstatement of fixed assets
An understatement of profit and an understatement of fixed assets

Answer(s): D

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QUESTION: 114

Which of the following is the correct double entry for a prepayment?

Debit expense Credit prepayment (current asset)
Debit prepayment (current liability) Credit expense
Debit prepayment (current asset) Credit expense
Debit expense Credit prepayment (current liability)

Answer(s): A

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QUESTION: 115

Which of the following methods of inventory valuation is not acceptable in the UK for financial reporting purposes?

Periodic weighted average
Weighted average
First In First Out (FIFO)
Last in First Out (LIFO)

Answer(s): D

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QUESTION: 116

Which of the following transactions in the current year explains a reason for an increase in the gearing ratio of an entity from 35% last year to 45% this year?

Equity shares have been issued
Supplier credit terms have been extended
The profit for the year has increased
An additional long term loan has been taken out

Answer(s): A

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Free BA3 Exam Braindumps (page: 29)

QUESTION: 113

QUESTION: 114

QUESTION: 115

QUESTION: 116