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F3 Class Test

PAC Professionals and Accountancy Center

1. Which of the following statements about bank reconciliations are correct?1. In preparing a bank reconciliation, unpresented cheques must be deducted from a balance of cash at bank

shown in the bank statement.2. A cheque from a customer paid into the bank but dishonoured must be corrected by making a debit entry in

the cash book.3. An error by the bank must be corrected by an entry in the cash book.4. An overdraft is a debit balance in the bank statement.

A. 1 and 3

B. 2 and 3C. 1 and 4D. 2 and 4

2. Listed below are some possible causes of difference between the cash book balance and the bank statementbalance when preparing a bank reconciliation:1. Cheque paid in, subsequently dishonoured.2. Error by bank3. Bank charges4. Lodgements credited after date5. Outstanding cheques not yet presented.

Which of these items require an entry in the cash book?

A. 1 and 3 onlyB. 1, 2, 3, 4 and 5C. 2, 4, and 5 only

3. Which of the following statements about bank reconciliations are correct?1. A difference between the cash book and the bank statement must be corrected by means of a journal entry.2. In preparing a bank reconciliation, lodgements recorded before date in the cash book but credited by the bank

after date should reduce an overdrawn balance in the bank statement.3. Bank charges not yet entered in the cash book should be dealt with by an adjustment in the bank

reconciliation statement.4. If a cheque received from a customer is dishonoured after date, a credit entry in the cash book is required.

A. 2 and 4B. 1 and 4

C. 2 and 3D. 1 and 34. Listed below are five potential causes of difference between a company's cash book balance and its bank

statement balance as at 30 November 20X3:1. Cheques recorded and sent to suppliers before 30 November 20X3 but not yet presented for payment.2. An error by the bank in crediting to another customer's account a lodgement made by the company.3. Bank charges.4. Cheques paid in before 30 November 20X3 but not credited by the bank until 3 December 20X3.5. A cheque recorded and paid in before 30 November 20X3 but dishonoured by the bank.

Which one of the following alternatives correctly analyses these items into those requiring an entry in thecash book and those that would feature in the bank reconciliation?

Cash book entry Bank reconciliationA. 1, 2, 4 3, 5

B. 3, 5 1, 2, 4C. 3, 4 1, 2, 5D. 2, 3, 5 1, 4

5. Cheques, which are issued by a firm and sent to one of its creditors has not yet appeared on the firmsbank statement. The cheques are known as.

A. A standing order.B. A dishonored cheque.C. A credit transfer.D. An outstanding cheque


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6. Which of the following items would be a timing difference in bank reconciliation?A. Bank errorsB. Up resented chequesC. Direct debit not recorded in the cashbookD. Bank charges revealed by the bank statement.

7. The cash book of Worcester shows a credit balance of $1,350. Cheques of $56 have been written to suppliers butnot yet cleared the bank; uncleared lodgements amount to $128. The bank has accidentally credited Worcester's

account with interest of $15 due to another customer. A standing order of $300 has not been accounted for in thegeneral ledger.What is the balance on the bank statement?

A. $993 CrB. $993 DrC. $1,707 CrD. $1,707 Dr

8. An organizations cash book has an opening balance of $485 credit. The following transactions then took place:1. Cash sales $1,450 including sales tax of $150.2. Receipts from customers of debts of $2,400.3. Payments to suppliers of debts of $1,800 less 5% cash discount.4. Dishonoured cheques from customers amounting to $250.

The resulting balance in the cash book should be:A. $1,255 debitB. $1,405 debitC. $1,905 creditD. $2,375 credit

9. Your firm's cash book at 30 April20X8 shows a balance at the bank of $2,490. Comparison with the bankstatement at the same date reveals the following differences:

$Unpresented cheques 840Bank charges not in cash book 50Receipts not yet credited by the bank 470Dishonoured cheque not in cash book 140

The correct bank balance at 30 April 20X8 is:A. $1,460B. $2,300C. $2,580D. $3,140

10. Your firm's cash book shows a credit bank balance of $1,240 at 30 Apri120X9. On comparison with the bankstatement, you determine that there are unpresented cheques totalling $450, and a receipt of $140 which has notyet been passed through the bank account. The bank statement shows bank charges of $75 which have not beenentered in the cash book.The balance on the bank statement is:

A. $1,005 overdrawnB. $930 overdrawnC. $1,475 in creditD. $1,550 in credit

11. The following bank reconciliation statement has been prepared by an inexperienced bookkeeper at 31 December20X5:

$Balance per bank statement (overdrawn) 38,640Add: Lodgments not credited 19,270

57,910Less: Unpresented cheques 14,260Balance per cash book 43,650


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F3 Class Test


What should the final cash book balance be when all the above items have been properly dealt with?A. $43,650 overdrawnB. $33,630 overdrawnC. $5,110 overdrawnD. $.72,170 overdrawn

12. The bank statement on 31 October 20X7 showed an overdraft of $800. On reconciling the bank statement, it wasdiscovered that a cheque drawn by your company for $80 had not been presented for payment, and that acheque for $130 from a customer had been dishonoured on 30 October 20X7, but that this had not yet been

notified to you by the bank.What is the correct bank balance to be shown in the statement of financial position at 31 October 20X7?

A. $1,010 overdrawnB. $880 overdrawnC. $750 overdrawnD. $720 overdrawn

13. The following bank reconciliation statement has been prepared by a trainee accountant:Bank reconciliation 30 September 20x2

$Balance per bank statement (overdrawn) 36,840Add: lodgements credited after date 51,240

88,080

Less: outstanding cheques 43,620Balance per cash book (credit) 44,460Assuming the amounts stated for items other than the cash book balance are correct.What should the cash book balance be?

A. $44,460 credit as statedB. $60,020 creditC. $29,220 debitD. $29,220 credit

14. Jo's bank ledger account shows a balance of $190 credit. Her bank statement reports a balance of $250 credit.Which of the following will explain the difference in full?

A. Unpresented cheques of $100 and an uncleared lodgement of $30B. Unpresented cheques of $150, the misposting of a cash receipt of $130 to the wrong side of the cash

account and unrecorded bank interest received of $30C. An unrecorded direct debit of $30, a dishonored cheque of $70 and an uncleared lodgement of $40D. An unrecorded standing order of $60, an unpresented cheque of $110 and a bank error were by Jo's

account was accidentally credited with $110

15. A companys cashbook shows a debit balance of 700. The bank statement as at the same date shows anoverdrawn balance of 210.Which one of the following timing differences could account for the discrepancy?

A. Cheques drawn but not yet presented amounted to 490B. Cheques received but not yet cleared amounted to 490C. Cheques drawn but not yet presented amounted to 910D. Cheques received but not yet cleared amounted to 910

16. Which of the following assumptions underlie the Framework for the presentation and preparation offinancial statements?

A. Accruals and consistencyB. Prudence and going concernC. Accruals and going concernD. Consistency and prudence

17. Which one of the following statements is correct?A. The prudence concept requires assets to be understated and liabilities to be overstatedB. To comply with the law, the legal form of a transaction must always be reflected in financial statements


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C. If a non-current asset initially recbgnised at cost is revalued, the surplus must be credited in the statementof cash flows

D. In times of rising prices, the use of historical cost accounting tends to understate assets and overstateprofits

18. An item of inventory which had cost $5 was sold for $7. It cost the company $6 to replace the item. At thetime of the sale the $6 was the items:

A. historical costB. net realizable value

C. economic valueD. current cost

19. The accounting concept which dictates that non-current assets should be valued at cost lessaccumulated depreciation, rather than at their enforced saleable value, is:

A. UnderstandabilityB. RelevanceC. ComparabilityD. Going concern

20. Inventories should be valued at the lower of cost and net realizable value. Which ONE of the followingaccounting concepts governs this?

A. Comparability

B. PrudenceC. Going concern

21. Which of the following pairs of accounting concepts are most likely to be in conflict with one another?A. Comparability and understandabilityB. Accruals basis and going concernC. Comparability and reliabilityD. Relevance and reliability

22. Which of the following statements about the Framework are true?1. The Framework is an accounting standard.2. It assists in harmonizing accounting practice.3. It assists national standard setters in developing national standards.

4. It assists users of the accounts to interpret financial statements.A. 1 and 2B. 2, 3 and 4C. All 4D. 1 and 3

23. Which one of the following is the main aim of accounting?A. To maintain ledger accounts for every asset and liabilityB. To provide financial information to users of such informationC. To produce a trial balanceD. To record every financial transaction individually

24. Which accounting concept or convention which, in times of rising prices, tends to understate asset valuesand overstate profits?

A. The going concern conceptB. The prudence conceptC. The realisation conceptD. The historical cost convention

25. Which accounting concept which requires assets to be valued at their net book value, rather than their'break-up' value?

A. The materiality conceptB. The going concern conceptC. The historical cost conventionD. The business entity convention

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