Sample questions and answers
This practice material consists of three sample Section B and three sample Section C questions, together with their suggested answers. These sample questions and answers are provided as practice material for students taking examinations on the revised COFA syllabus and are based on the recommended ICSA Publishing text. Please note: The assessment format for the Certificate in Offshore Finance and Administration examinations is not changing and will retain the three section structure of: Section A – answer all parts of Question 1. Section B – answer all five questions. Section C – answer two questions only.
© ICSA, 2012
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Sample questions 1. Identify and explain the two ratios that are used to assess the solvency of a business. (6 marks) Complete the missing labels denoted A – F.
Sole Trader Balance Sheet Fixed Assets Current Liabilities Long Term Liabilities Sole Trader’s Funds
Limited Company Balance Sheet Fixed Assets C D F
Public Listed Company A B Current Liabilities E Total equity and liabilities (6 marks)
Jennie Blue started a new arts and craft business last month. The following business transactions were found recorded in her diary: 4th 5th 8th 9th Received £2,750 from Dad Agreed to purchase second hand van for £950 from Just Vans Purchased stock from Craft House for £898. Paid £800, balance owing £98 Bank agreed £3,000 overdraft
20th Paid Xerox Toolz £347 for tools Prepare Jennie’s cashbook for the month ended 30 June 2012. (6 marks)
© ICSA, 2012
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Sample questions 4. (a) Explain each of the following terms: (i) (ii) (iii) (iv) (v) (vi) Carriage inwards Carriage outwards Discounts allowed Discounts received Purchase returns Sales returns (12 marks) (b) How should each of the above items be accounted for in a set of financial statements? (13 marks) (Total: 25 marks) The following trial balance has been prepared from Kirsty Jennings’ ledger balances for the business Jennings IT Services, for the year ended 30 June 2012. Trial balance for Jennings IT Services as at 30 June 2012 £ 126,320 5,855 31,945 74,800 14,960 1,390 8,525 36,800 13,248 19,580 16,420 13,964 15,998 397,640 26,987 79,586 14,630 9,270 3,368 470,084 £ 28,882
Purchases Capital bf Sales returns Drawings Discount received Equipment at cost Accumulated depreciation at 30 June 2011 Provision for doubtful debts Discounts allowed Motor vehicle at cost Accumulated depreciation at 30 June 2011 Stock Trade debtors Trade creditors Bank Sales Motor expenses Salaries Rent & rates Light & heat Printing & stationery
© ICSA, 2012
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Notes to the trial balance: (i) A payment for Kirsty’s personal rent for £1,500 was included in the rent & rates expenses. An unpaid electricity bill for £1,986 was still outstanding as at 30 June 2012. One month’s advance salary payment of £2,500 was paid to Kirsty’s cousin Stella to help her with holiday arrangements. Depreciation policy is as follows: Equipment at 10% of the original cost Motor vehicle at 20% reducing balance Provision for doubtful debt is expected to be 5% of the debtors balance. An outstanding invoice to Good Tyme Leisure for £3,760 has to be written off.
(vii) Stock held at 30 June 2012 was £17,322. Required (a) Prepare a trading, profit and loss account for the year ended 30 June 2012. (15 marks) Prepare a balance sheet as at 30 June 2012. (10 marks) (Total: 25 marks)
The treasurer of Perry Vale Rugby Football Club has prepared the following receipts and payments for the year ended 30 June 2012: Receipts Subscriptions Room hire Fundraising Bar sales £ 33,750 20,000 53,250 115,750 222,750 £ 99,250 16,000 49,500 41,500 206,250
Payments Bar stocks purchased Overheads Staff wages Grounds hire
Cash and bank...