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BA3 - Fundamentals of Financial Accounting

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BA3 Questions and Answers

Question # 1

Select the THREE INCORRECT statements from the following list of statements about memorandum accounts:

A.

A memorandum ledger is an account that is not part of the bookkeeping system as a whole

B.

All transactions in a memorandum account have to be balanced with a corresponding entry in the nominal ledger

C.

A memorandum account is part of the nominal ledger

D.

A memorandum account is a daybook

Question # 2

Refer to the Exhibit.

Soffit plc is calculating its irrecoverable debt charge and allowance for receivables for inclusion in its year-end accounts. Based on an aged receivables schedule, it is estimated that an allowance for receivables of $125,820 is required.

In addition, a specific allowance for receivables of $18,640 is also required for two customers who are experiencing cash flow difficulties. There are also two customers who have gone into receivership while owing the company $6,300. The current allowance for receivables is $156,000.

Which is the correct entry to be made to the accounts to record these transactions?

A.

A

B.

B

C.

C

D.

D

Question # 3

Which ONE of the following does not apply to the preparation of management accounts?

A.

Prepared annually, summarizing financial performance

B.

Prepared frequently throughout the year

C.

Prepared mainly for internal users of accounting information

D.

Prepared to show the detailed costs of manufacturing and trading

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