KTTC2

A company has 30,000 40p equity shares outstanding at a premium of 8p per share. Current market value of the company’s shares is 90p each. What is the balance on the company's equity share capital account?

• £9,600

• £27,000

• £14,400

• £12,000

In a partnership, interest on partners' drawings affects neither net profit available for appropriation nor the cash position.

• True

• False

A prepayment of £300 was incorrectly treated as an accrual. How would the profit be affected?

• Overstated by £600

• Overstated by £300

• Understated by £600

• Understated by £300

The asset register showed a total carrying amount of £67,460. A non-current asset costing £15,000 had been sold for £4,000, making a loss on disposal of £1,250. The balance on the asset register after accounting for the disposal is:

• £42,710

• £51,210

• £53,710

• £62,210

Stripes Plc purchased new machinery on 1 August 20X4 for £38,000. The scrap value of the machinery at the end of its six-year useful life has been assessed as £2,000. Stripes Plc's policy is to calculate depreciation monthly on the straight-line basis. The depreciation charge in Stripes Plc's statement of profit or loss for year ended 31 March 20X5 should be:

• £4,000

• £3,500

• 
  £6,000

• £4,500

A company had the following capital structure at 31 December 20X2: 100,000 equity shares of 50p each: £50,000; Share premium: £80,000. During 20X3, the company issued 60,000 shares for cash at 80p per share, and later made a 1 for 2 bonus issue, using the share premium for the purpose. What is the company’s capital structure at 31 December 20X3?

• Equity share capital: £80,000, Share premium: £98,000

• Equity share capital: £120,000, Share premium: £58,000

• Equity share capital: £90,000, Share premium: £40,000

• Equity share capital: £105,000, Share premium: £73,000

Constains plc. has an insurance prepayment of £320 at 31 March 20X2. During the year ended 31 March 20X2 Constains Plc paid two insurance bills, one for £1,300 and one for £520. What was the insurance prepayment at 31 March 20X1 if the charge for insurance for the year was £1,760?

• £200

• £260

• £320

• £380

What is the reasoning behind charging depreciation in historical cost accounting?

• To ensure funds are available for the eventual replacement of the asset

• To comply with the consistency concept

• To ensure the asset is included in the statement of financial position at the lower of cost and net realisable value

• To match the cost of the non-current asset with the revenue that the asset generates

Automat Plc purchases a machine for which the supplier's list price is £18,000. Automat Plc pays £13,000 in cash and trades in an old machine which has a carrying amount of £8,000. It is the company's policy to depreciate such machines monthly at the rate of 10% per annum on cost. The carrying amount of the new machine after one year is:

• £16,200

• £18,000

• £18,900

• £21,000

The statement of changes in equity is an optional financial statement

• True

• False