QUESTION: 13

At 31 October 20X1 RS has in issue 10% debentures 20X8 with a carrying value of $350,000. Extracts from its statement of profit or loss for the year ending 31 October 20X7 are as follows:

What is the interest cover for RS for the ended 31 October 20X7?

9.0 times
11.1 times
10.0 times
8.0 times

Answer(s): A

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QUESTION: 14

CORRECT TEXT
Information extracted from JK's statement of financial position for the year ended 31 May 20X5 is as follows:

Calculate the gearing ratio (Debt/Equity measured as a percentage) at 31 May 20X5.
Give your answer to one decimal place.

58.4, 58, 58.44, 59, 58.5, 58.0

Answer(s): A

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QUESTION: 15

EFG is preparing its financial statements to 31 March 20X8. During the year ended 31 March 20X7, EFG purchased a piece of land for $1 million which is used as the staff car park. EFG has a policy of revaluing land, in accordance with International Accounting Standards, and at 31 March 20X8, accounted for a substantial increase in its value.
Revenue and operating profit has remained constant over the 2 years.
When comparing EFG's financial statements for the year ended 31 March 20X7 with those of 20X8, which THREE of the following would be expected?

Increase in profit before tax.
Increase in other comprehensive income.
Increase in return on capital employed.
Decrease in return on capital employed.
Increase in net asset turnover.
Decrease in net asset turnover.

Answer(s): B,D,F

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QUESTION: 16

BC are currently seeking to establish an accounting policy for a particular type of transaction. There are four alternative ways in which this transaction can be treated. Each treatment will have a different outcome on the financial statements as follows:
- Treatment one means that the financial statements will be easier to prepare. - Treatment two will give a fair representation of the transaction in the financial statements. - Treatment three will maximise the profit figure presented in the financial statements. - Treatment four means that the financial statements will be more easily understood by shareholders.
Which accounting treatment should BC adopt?

One
Two
Three
Four

Answer(s): B

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