MT - Business case - Deloitte entrance test 1

SAPP Academy 6 Floor, No 2, Trai Ca Valley, Truong Dinh street, Ha Noi Tel 096 972 94 63 Sapp.edu.vn SAPP Academy No. 20, 198 alley, Xa Dan street, Ha Noi Tel: 0166 7703 493 Sapp.edu.vn DELOITTE ENTRANCE TEST I. 1. Full name: Test: Total question: 60 MCQs + 1 essay Time: 90 minutes ACCOUNTING (20 questions) The following information is available for a sole trader who keeps no accounting records: Net business assets at 1 July 20X6 186,000 Net business assets at 30 June 20X7 274,000 During the year ended 30 June 20X6: Cash drawings by proprietor Additional capital introduced by proprietor Business cash used to buy a car for the proprietor's wife, who takes no part in the business 68,000 50,000 20,000 Using this information, what is the trader's profit for the year ended 30 June 20X6? A. $126,000 B. $50,000 C. $86,000 D. $90,00 2. Which of the following statements apply when producing a consolidated statement of financial position? (i) All intra-group balances should be eliminated. (ii) Intra-group profit in year-end inventory should be eliminated. (iii) Closing inventory held by subsidiaries needs to be included at fair value. A. i only B. i, ii and iii C. i and ii only D. iii only Page 1 of 19 3. SAPP Academy 6 Floor, No 2, Trai Ca Valley, Truong Dinh street, Ha Noi Tel 096 972 94 63 Sapp.edu.vn SAPP Academy No. 20, 198 alley, Xa Dan street, Ha Noi Tel: 0166 7703 493 Sapp.edu.vn Which of the following items could appear in a company’s statement of cash flows? (i) Surplus on revaluation of non-current assets (ii) Repayment of long-term borrowing (iii) Bonus issue of shares (iv) Interest received A. B. C. D. i and ii iii and iv i and iii ii and iv 4. Which of the following statements are correct? (i) A liability is a present obligation, arising from past events, the settlement of which is expected to result in an outflow of economic resources. (ii) An uncertain liability may be called a provision. (iii) A contingent liability should be disclosed in the notes to the financial statements. A. i only B. i and ii only C. ii and iii only D. i, ii and iii 5. A company sublets part of its office accommodation. In the year ended 30 June 20X5 cash received from tenants was $83,700. Details of rent in arrears and in advance at the beginning and end of the year were: In arrears In arrears $ $ 30 June 20X6 3,800 2,400 30 June 20X7 4,700 3,000 All arrears of rent were subsequently received. What figure for rental income should be included in the company's statement of profit or loss for the year ended 30 June 20X5? A. $84,000 B. $83,400 C. $80,600 D. $85,800 Page 2 of 19 SAPP Academy 6 Floor, No 2, Trai Ca Valley, Truong Dinh street, Ha Noi Tel 096 972 94 63 Sapp.edu.vn SAPP Academy No. 20, 198 alley, Xa Dan street, Ha Noi Tel: 0166 7703 493 Sapp.edu.vn 6. Which of the following are correct? (i) The statement of financial position value of inventory should be as close as possible to net realisable value. (ii) The valuation of finished goods inventory must include production overheads. (iii) Production overheads included in valuing inventory should be calculated by reference to the company's normal level of production during the period. (iv) In assessing net realisable value, inventory items must be considered separately, or in groups of similar items, not by taking the inventory value as a whole. A. i and ii only B. iii and iv only C. i and iii only D. ii, iii and iv 7. The figures shown in the table below are an extract from the accounts of Ridgeway (capital employed is $1.5m). $ Revenue 1,000,000 Cost of sales 400,000 Gross profit 600,000 Distribution expenses and administration cost 300,000 Profit before interest and tax 300,000 Finance cost 50,000 Profit before tax 250,000 Income tax expense 100,000 Profit after tax 150,000 What is the return on capital employed (ROCE)? A. 7% B. 10% C. 40% D. 20% Page 3 of 19 SAPP Academy 6 Floor, No 2, Trai Ca Valley, Truong Dinh street, Ha Noi Tel 096 972 94 63 Sapp.edu.vn SAPP Academy No. 20, 198 alley, Xa Dan street, Ha Noi Tel: 0166 7703 493 Sapp.edu.vn 8. Ordan received a statement from one of its suppliers, Alta, showing a balance due of $3,980. The amount due according to the payables ledger account of Alta in Ordan's records was only $230. Comparison of the statement and the ledger account revealed the following differences: A cheque sent by Ordan for $270 has not been allowed for in Alta's statement. Alta has not allowed for goods returned by Ordan $180. Ordan made a contra entry, reducing the amount due to Alta by $3,200, for a balance due from Alta in Ordan's receivables ledger. No such entry has been made in Alta's records. What difference remains between the two companies' records after adjusting for these items? A. $460 B. $640 C. $6,500 D. $100 9. Which of the following statements are correct? (i) Contingent assets are included as assets in financial statements if it is probable that they will arise. (ii) Contingent liabilities must be provided for in financial statements if it is probable that they will arise. (iii) Material non-adjusting events are disclosed by note in the financial statements. A. i only B. i and iii C. ii and iii D. iii only 10. At 1 January 20X5 a company had an allowance for receivables of $18,000 At 31 December 20X5 the company's trade receivables were $458,000. It was decided: To write off debts totalling $28,000 as irrecoverable. To adjust the allowance for receivables to the equivalent of 5% of the remaining receivables. What figure should appear in the company's statement of profit or loss for the total of debts written off as irrecoverable and the movement in the allowance for receivables for the year ended 31 December 20X5? A. $49,500 B. $31,500 C. $32,900 D. $50,900 Page 4 of 19 SAPP Academy 6 Floor, No 2, Trai Ca Valley, Truong Dinh street, Ha Noi Tel 096 972 94 63 Sapp.edu.vn SAPP Academy No. 20, 198 alley, Xa Dan street, Ha Noi Tel: 0166 7703 493 Sapp.edu.vn 11. The following information is available about the transactions of Razil, a sole trader who does not keep proper accounting records: $ Opening inventory 77,000 Closing inventory 84,000 Purchases 763,000 Gross profit as a percentage of sales 30% Based on this information, what is Razil's sales revenue for the year? A. $982,800 B. $1,090,000 C. $2,520,000 D. $1,080,000 12. Tinsel Co has 5 million $1 issued ordinary shares. At 1 May 20X0 Fairy Co purchased 60% of Tinsel Co’s $1 ordinary shares for $4,000,000. At that date Tinsel Co had net assets with a fair value of $4,750,000 and a share price of $1.10. Fairy Co valued the noncontrolling interest in Tinsel Co at acquisition as $2,200,000. What is the total goodwill on acquisition at 1 May 20X0? A. $1,150,000 B. $1,750,000 C. $ 750,000 D. $1,450,000 13. On 1 September 20X6, a business had inventory of $380,000. During the month, sales totaled $650,000 and purchases $480,000. On 30 September 20X6 a fire destroyed some of the inventory. The undamaged goods in inventory were valued at $220,000. The business operates with a standard gross profit margin of 30%. Based on this information, what is the cost of the inventory destroyed in the fire? A. $185,000 B. $140,000 C. $405,000 D. $360,000 Page 5 of 19 SAPP Academy 6 Floor, No 2, Trai Ca Valley, Truong Dinh street, Ha Noi Tel 096 972 94 63 Sapp.edu.vn SAPP Academy No. 20, 198 alley, Xa Dan street, Ha Noi Tel: 0166 7703 493 Sapp.edu.vn 14. A business received a delivery of goods on 29 June 20X6, which was included in inventory at 30 June 20X6. The invoice for the goods was recorded in July 20X6. (i) Profit for the year ended 30 June 20X6 will be overstated. (ii) Inventory at 30 June 20X6 will be understated. (iii) Profit for the year ending 30 June 20X7 will be overstated. (iv) Inventory at 30 June 20X6 will be overstated. What effect will this have on the business? A. i and ii B. ii and iii C. i only D. i and iv 15. Which of the following statements about the requirements of VAS 18 Provisions, Contingent Liabilities and Contingent Assets are correct? (i) Contingent assets and liabilities should not be recognised in the financial statements. (ii) A contingent asset should only be disclosed in the notes to a financial statement where an inflow of economic benefits is probable. (iii) A contingent liability may be ignored if the possibility of the transfer of economic benefits is remote. A. All three statements are correct B. i and ii only C. i and iii only D. ii and iii only 16. Carter, a limited liability company, has non-current assets with a carrying value of $2,500,000 on 1 December 20X7. During the year ended 30 November 20X8, the following occurred: Depreciation of $75,000 was charged to the statement of profit or loss. Land and buildings with a carrying value of $1,200,000 were revalued to $1,700,000. An asset with a carrying value of $120,000 was disposed of for $150,000. The carrying value of non-current assets at 30 November 20X8 was $4,200,000. In accordance with VAS 24 Statement of Cash Flows, what net cash flows from the above transactions would be included within ‘net cash flows from investing activities’ for the year ended 30 November 20X8? A. $(1,395,000) B. $(1,365,000) C. $150,000 D. $(1,245,000) Page 6 of 19