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Fundamentals of Financial Accounting Questions 1–5 (page: 2)

Refer to the Exhibit.



The following information relates to a business at its year end:

The prime cost of goods manufactured during the year is:

The balance on LMN's cash account at 31 December 20X6 is $108,000 (debit) On performing the monthly bank reconciliation the following is discovered.

· a payment of $2,000 made to a supplier has not yet appeared on the bank statement,

· an automated receipt from a customer for $5,000 has not yet been recorded in the cash book, and

· a pigment to a supplier of $1,500 was incorrectly recorded in the cash book as $1,050

The balance showing on the bank statement at 31 December 20X6 is

Refer to the Exhibit.



On 1 May year 1 a company pays insurance of $1,800 for the period to 30 April year 2

What is the charge to the income statement and the entry in the statement of financial
position for year 1 ended 30 November?

Which one of the following statements best describes the usefulness of the income statement account of a company:

A company that is VAT-registered has sales for the period of $245,000 (excluding VAT) and purchases for the period of $123,375 (including VAT). The opening balance on the VAT account was $18,000 credit. The VAT rate is 17.5%.

What will be the closing balance on the VAT account at the end of the period?