Financial accounting

1. CIMA C02 Fundamental of
Financial Accounting
1zaheerswati@ciit.net.pk

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4. Wherever the examiner uses the following words, then consider
trading account.
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Trading Accounts
(i) Opening stock (if first year of trading, this will not be given)
(ii) Closing stock

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MCQs 1
Mark-up on cost of sales = 10%
Sales = £6,160
Cost of sales = ????
6,160/110 *100 = £5,600
Solution:

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MCQs 2
Gross profit on sales = 20%
Cost of sales £20,000
Sales ????
Solution:

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Control Accounts

9.  Whenever the examiners use the following words or
terminology, always consider opening a DLCA to
calculate the sales figure.
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Debtor Ledger Control Accounts
(i) Opening debtors
(ii) Closing debtors
(iii) Amount received from debtors

10. Example 6.1: Zeeshan knows that his receivables at 1 January 20X1
were $27,000, and during the year he received $140,000 in cheques
from customers, after allowing $2,000 in cash discounts for prompt
payment. He wrote off a bad debt of $5,000 during the year, and his
closing receivables at 31 December 20X1 amount to $24,500.
Calculate the value of his sales for the year (Note: Sales ledger
control account is actually receivable control account)
Solution:
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$144,500

11.  Whenever the examiner uses the following words or
terminology, always consider opening a CLCA to
calculate the purchase figure.
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(i) Opening creditors
(ii) Closing creditors
(iii) Cash/cheque paid to creditors

12. Example 6.2: Mr. Walied knows that his payable at 1 January 20X1 were $50,000,
and during the year he paid through bank and cash to supplier $10,000, receiving
$1,000 in cash discounts for prompt payment to vendor and his closing payables at
31 December 20X1 amount to $75,500. Calculate the value of his purchase for the
year (Note: Purchase ledger control account is actually payable control account)
Solution:
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13. •An organization is not a business.
•Different set of words used to ‘flag’ this difference.
•Cash Book  Receipts & Payments a/c
•P & L  Income & Expenditure a/c
•Profit  Excess of Income or Surplus
•Loss  Deficit
•Capital  Accumulated Fund
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Accounting for Non-Profit Organizations

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MCQs 3

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MCQs 4

16.  This type of scheme requires members to pay a fee
annually in order to retain membership
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Annual Subscription Account
 Care must be taken to adjust appropriately for
subscriptions in advance (a liability) and for subscriptions
in arrears (an asset)
 If a member has outstanding subscriptions it is unlikely
that legal action will be taken to recover them (because of
the legal costs involved and the difficulty of proving the
debt)
 So it is common for them to be written off as a bad debt.
However, each organisation will have its own policy

17.  These are fees payable in addition to the annual
subscription when a person first joins the organisation as a
member (they may also be referred to as joining fees)
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Annual Subscription Account

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MCQs 5
A receipts and payments account is similar to
(a) An income and expenditure account
(b) A profit and loss account
(c) A trading account
(d) A cash book summary
(d) A cash book summary

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MCQs 6

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Regulatory Framework

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