Download CIMA Exam Practice Kit: Financial Accounting Fundamentals by Dak Patel PDF

By Dak Patel

CIMA examination perform Kits consolidate studying by means of offering an in depth financial institution of perform questions. every one answer presents a close research of the proper solution and highlights why the choices are fallacious. CIMA examination perform Kits are perfect for scholars learning independently or attending a tutored revision path. It vitamins the authentic CIMA research platforms and CIMA Revision playing cards with a wealth of extra questions and fabric centred basically on making use of what has been learnt to passing the examination. CIMA examination perform Kits support scholars organize with self assurance for examination day, and to go the recent syllabus first time. * contains 2 hundred examination commonplace a number of selection questions* arrange to cross with vast extra query perform * presents labored solutions to totally clarify the proper resolution, and research of improper solutions - aiding CIMA scholars steer clear of universal pitfalls

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Stock is an asset Increase in value Assets can only How Treat all items below as asset How When your customer returns the stock back to you When you buy more stock Decrease in value Hence Assets Increase Debit Decrease Credit Purchase A/C When you sell more stock Hence You return the stock back to your supplier Sales A /C Debit (stock increases) Purchase by cash Purchase on credit Dr Purchase Cr Cash Dr Purchase Dr Supplier Return inwards A /C or Sales return A /C Debit (stock increases) Credit (stock decreases) Sales on cash Dr Cash Cr Sales Sales on credit Dr Debtor (Customer) Cr Sales Return outwards A /C or Purchase return A /C Credit (stock decreases) 24 Exam Practice Kit: Financial Accounting Fundamentals Stock account The accounting system in action Ledger account Title of account Date Accounting equation Narrative £ Date Narrative Left hand side Right hand side Debit Credit £ Balance sheet Capital + Liabilities Credit side Increase Assets increase always DEBIT Capital and Liabilities increase always CREDIT Decrease Assets decrease always CREDIT Capital and Liabilities decrease always DEBIT Profit and loss Account Expenses or costs Always DEBIT Revenue or income Always CREDIT The Accounting System in Action 25 Assets Debit side 26 Exam Practice Kit: Financial Accounting Fundamentals Books of prime entry includes the following: (i) (ii) (iii) (iv) (v) Sales day book or Sales journal or Sales book Purchases day book or Purchase journal or Purchase book Journals Cash book Petty cash book Accounts Sales ledger Purchase ledger General / Nominal ledger Cash book Sales invoice or Sales day book or Sales journal or Sales book Invoice number Date Name of customers Gross amount Sales ledger Credit sales ONLY Petty cash book is a book of prime entry and it is also part of the double entry system.

Error of principle – as for errors of commission, but the correct and incorrect amounts are of different types for example entered in purchase account instead of fixed asset account. 2 The debit side of a trial balance totals £200 more than the credit side. 3 An invoice from a supplier of office equipment has been debited to the stationery account. 1 C This is a straightforward test of your knowledge of types of errors that can exist. If the wrong account is used, and this results in an incorrect statement of profit, then an error of principle has been made.

Therefore, options A, B and C are irrelevant. 3 C The standard ‘accounting equation’ is Assets ϭ liabilities ϩ capital and capital equals opening capital plus profits less drawings. The only rearrangement of this equation that maintains the integrity of the accounting equation is C. 6 20,000 8,000 (16,000) (3,000) 9,000 D The accounting equation changes when one or more of assets, liabilities or capital changes. Selling goods at a profit would change capital; purchasing a fixed asset on credit would change assets and liabilities; the owner withdrawing cash would change assets and capital; debtors paying their accounts in cash would not affect any of these.

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