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Advanced Financial Accounting

Sample Paper 2
2016/ 2017
Questions & Suggested Solutions

Page 1 of 26
NOTES TO USERS ABOUT SAMPLE PAPERS

Sample papers are published by Accounting Technicians Ireland. They are intended to provide guidance
to students and their teachers regarding the style and type of question, and their suggested solutions, in
our examinations. They are not intended to provide an exhaustive list of all possible questions that may
be asked and both students and teachers alike are reminded to consult our published syllabus (see
www.AccountingTechniciansIreland.ie) for a comprehensive list of examinable topics.

There are often many possible approaches to the solution of questions in professional examinations. It
should not be assumed that the approach adopted in these solutions is the only correct approach,
particularly with discursive answers. Alternative answers will be marked on their own merits.

This publication is copyright 2016 and may not be reproduced without permission of Accounting
Technicians Ireland.

© Accounting Technicians Ireland, 2016.

Page 2 of 26 AFA Sample Paper 2


INSTRUCTIONS TO CANDIDATES

PLEASE READ CAREFULLY

Candidates must indicate clearly whether they are answering the paper in accordance with the law
and practice of Northern Ireland or the Republic of Ireland.

In this examination paper the €/£ symbol may be understood and used by candidates in Northern
Ireland to indicate the UK pound sterling by candidates in the Republic of Ireland to indicate the
Euro.

Answer ALL THREE questions in Section A and TWO of the THREE questions in Section B. If
more than TWO questions is answered in Section B, then only the first TWO questions, in the
order filed, will be corrected.

Candidates should allocate their time carefully. All

workings should be shown.

All figures should be labelled, as appropriate, e.g. €’s, £’s, units etc. Answers

should be illustrated with examples, where appropriate. Question 1 begins on

Page 2 overleaf.

NOTE: This sample paper and solution have been prepared to reflect the provisions of FRS102.

Page 3 of 26 AFA Sample Paper 2


SECTION A

Answer ALL THREE Questions in this Section


(The total marks for section A will be 60, made up of a theory question of 20 marks, a
multiple choice question of 15 marks and a further question of 25 marks)

QUESTION 1

(i) The FRC is responsible for the framework of codes and standards for the accounting profession.

What are ‘accounting standards’ and describe the objective of such standards.
8 marks

(ii) Describe the steps involved in the standard setting process and the measures taken to improve
transparency within the process.
12 marks

Total 20 marks

QUESTION 2

The following multiple choice question consists of TEN parts, each of which is followed by FOUR
possible answers. There is ONLY ONE right answer in each part.

Each part carries 1½ marks.

Requirement

Indicate the right answer to each of the following TEN parts.


Total 15 Marks

N.B. Candidates should answer this question by ticking the appropriate boxes on the special green
answer sheet which is supplied with the examination paper.

[1] In accordance with FRS 102 net realisable value is defined as:

(a) the actual or estimated selling price


(b) the actual or estimated selling price less all further costs to completion and all costs to be
incurred in marketing, selling and distribution
(c) the actual or estimated selling price less all costs to be incurred in marketing selling and
distribution
(d) the actual or estimated selling price less all further costs to be completion

Page 4 of 26 AFA Sample Paper 2


QUESTION 2 (cont’d)

BACKGROUND INFORMATION TO PARTS [2] & [3]

Brian and Jean are in partnership and their capital account balances are £/€ 56,000 and £/€ 84,000
respectively. The partnership agreement details appropriation of partnership profits as follows:

Brian Jean

Annual salary £/€19,500 £/€28,000


Interest on capital 10 % 10 %
Share of residual profit 40 % 60 %

[2] If the profit for the year, before appropriation, was £/€112,000 what would Brian’s entitlement be
in total:

(a) £/€ 25,100


(b) £/€ 30,300
(c) £/€ 45,300
(d) £/€ 20,200

[3] If the profit for the year, before appropriation, was £/€112,000 what would Jean’s entitlement be
in total:

(a) £/€ 45,300


(b) £/€ 30,300
(c) £/€ 25,100
(d) £/€ 66,700

[4] In accordance with FRS 102 the clarification after the end of the accounting period of proceeds
from assets sold before the end of the accounting period, is an example of:

(a) an adjusting event


(b) a non-adjusting event
(c) a material event
(d) an immaterial event

[5] The formula for price earnings ratio is:

(a) dividend per share / market value per share


(b) earnings per share / market value per share
(c) market value per share / earnings per share
(d) market value per share / dividend per share

Page 5 of 26 AFA Sample Paper 2


QUESTION 2 (cont’d)

[6] Company A has inventory days of 23 and receivable days of 38. Ideally payable days should be:

(a) greater than 38 but less than 61


(b) greater than 61
(c) less than 61
(d) greater than 23 but less than 61

[7] If a capital grant is recognised as deferred income in the Statement of Financial Position what are
the entries to be made each year over the useful life of the associated asset:

(a) debit deferred income, credit other operating income


(b) credit deferred income, debit other operating income
(c) debit deferred income, credit bank
(d) credit deferred income, debit bank

BACKGROUND INFORMATION TO PARTS [8] & [9]

The business premises of ABC Limited went on fire on 30 November 2010 and financial records
were destroyed. However the following information is available:

£/€
Receivables : opening 45,000
Closing 56,000
Inventory : opening 60,000
Closing 44,000
Sales (credit) 270,000
Irrecoverable Receivables 14,000

Gross margin 20%

[8] Using the information available what is the value of purchases:

(a) £/€ 112,000


(b) £/€ 209,000
(c) £/€ 121,000
(d) £/€ 200,000

[9] Using the information available what is the value of sales receipts:

(a) £/€ 295,000


(b) £/€ 245,000
(c) £/€ 273,000
(d) £/€ 259,000

Page 6 of 26 AFA Sample Paper 2


QUESTION 2 (cont’d)

[10] In preparing a cash flow statement in accordance with FRS 102 a profit on disposal of a non -
current asset should be:

(a) deducted from operating profit in computing the net cash flow from operating activities
(b) added back to operating profit in computing the net cash flow from operating activities
(c) deducted from payments to acquire tangible fixed assets to compute capital expenditure
(d) added to payments to acquire tangible fixed assets to compute capital expenditure

Page 7 of 26 AFA Sample Paper 2


QUESTION 3

WIRE Ltd., a retailing company, has an authorised share capital of €/£2,500,000, comprised of 4,000,000
ordinary shares of 50 cent/pence each and €/£500,000 of 5% preference shares of €/£1 each.

The following trial balance was extracted as at 31st December 2014

€/£’000 €/£’000

Ordinary share capital.................................................................... 1,500


5% preference share capital ........................................................... 300
Share premium account ................................................................. 150
General reserve .............................................................................. 230
Retained profits at 1 January 2014 ................................................ 41
6% debenture stock (redeemable in 2018)..................................... 200
Freehold premises at cost at 1st January 2014................................ 2,500
Freehold premises accumulated depreciation at 1st January 2014 . 400
Plant & machinery at cost at 1st January 2014 ............................... 420
Plant & machinery accumulated depreciation at 1st January 2014. 240
Motor vehicles at cost at 1st January 2014 ..................................... 120
Motor vehicles accumulated depreciation at 1st January 2014....... 70
Computer equip at cost ................................................................. 120
Computer equip accumulated depreciation at 1st January 2014 ..... 45
Additions to non-current assets at cost:
Plant & machinery .................................................................... 70
Motor vehicles .......................................................................... 25
Computer equipment ................................................................ 30
Disposal of motor vehicles (sale proceeds).................................... 24
Inventory at 31 December 2014..................................................... 50
Receivables & payables ................................................................. 156 85
Bank............................................................................................... 66
VAT ............................................................................................... 32
Corporation tax .............................................................................. 98
Prepayments & accruals ................................................................ 12 18
Long term investments .................................................................. 60
Short term investments .................................................................. 40
Retained profit for the year (after providing for dividends and ....
debenture interest but before adjusting for items 1 to 3 below)..... 146
Deferred government grants at 1st January 2014............................ 90
.................................................................................................
3,669 3,669
ADDITIONAL INFORMATION

(1) Depreciation is to be provided on non-current assets as follows:

Freehold premises ............................. 2% on cost


Plant & machinery............................. 10% on cost
Motor vehicles .................................. 20% on cost
Computer equipment ......................... 33 1/3 % on cost

A full year’s depreciation is provided in the year of purchase and none in the year of disposal.

Page 8 of 26 AFA Sample Paper 2


QUESTION 3 (Cont’d)

(2) During the year motor vehicles which cost £/€ 45,000 in 2011 were disposed of for £/€ 24,000.
The only entries made (before extracting the above trial balance) were to debit the bank account
and credit the disposal of motor vehicles account.

(3) The deferred government grants balance included in the above trial balance arises in respect of a
grant of £/€ 100,000 received in 2013 to help finance the cost of plant and machinery purchased
during that year.

In addition a grant of £/€ 18,000 was received on 29th December 2014 towards the cost of new
computers purchased during the year. This grant has not yet been recorded in the company’s
books.

(4) Prepaid expenses valued at €/£24,000 were incorrectly included in operating costs.

Requirement

(a) Prepare, in the form required by FRS 102, the Statement of Financial Position for WIRE Ltd., for
the year ended 31st December 2014 in as far as the information provided permits.

N. B. You are NOT required to prepare a Statement of Comprehensive Income or notes to the accounts.
You are required to submit workings to show the make-up of the figures in the statement of
financial position.

17 Marks

(b) Prepare the following notes to the accounts for the year ended 31 December 2014:

(i) Non-current assets


(ii) Deferred government grants
6 Marks

Presentation 2 marks
Total 25 Marks

Page 9 of 26 AFA Sample Paper 2


SECTION B
Answer TWO of the THREE questions in this Section

QUESTION
4

CARTER Limited is installing a new production plant at a cost of £/€ 1 million, in respect of which
government grants have been approved as follows:

Capital cost - 40%


Training costs - 100%

The company depreciates its plant and equipment on the basis of 20% on original cost. The directors are
aware that the accounting treatment for grants is dealt with in FRS 102, and they have asked you to
advise them on the accounting options available to them and the effect which they would have on the
company’s financial statements.

Requirement

You are required to draft a report to the directors which:


(a) outlines the accounting treatment of the foregoing grants under FRS 102;
(b) recommends (with reasons) the treatment which you believe would be most suitable in the case
of CARTER Limited; and
(c) indicate the form of accounting policy or other notes which should be included in the annual
financial statements of the company.
18 Marks

Presentation 2 marks
Total 20 Marks

QUESTION 5

The following errors were identified by the financial accountant of CUSACK Limited (a VAT registered
company) when reviewing the year end draft financial statements:

[i] A cheque was written for £/€20,000 to MAC GARAGE Limited and was entered into the motor
expense account. No other entries were made in the financial records. The cheque was in respect of
the balancing payment for the purchase of a new car. A car which has originally cost £/€13,000 and
which had a net book value of £/€6,500 at 1st January 2014 was traded in as part exchange. Assume
no loss or gain was made on the trade-in.

[ii] Depreciation on motor vehicles is charged at 25% per annum with a full year’s depreciation charged
in the year of acquisition and none in the year of disposal. No account was taken of the transactions
in note (i) above when calculating the depreciation for the year to December 2014.

[iii] During the year a new machine was purchased for £/€484,000 (which is inclusive of VAT of 21%).
CUSACK Limited received a government grant of £/€60,000 towards the cost of the new machine.
Plant and machinery is depreciated at a rate of 10% per annum including a full year’s depreciation in
the year of acquisition. No entries were made to record this transaction.
QUESTION 5 (cont’d)

Requirement

(a) Prepare the journal entries to show how each of the above items should be dealt with in the
final accounts for the year ended 31st December 2014. Narratives for the journals are required.

15 marks

(b) Compute the adjusted net profit before taxation for the year ended 31st December 2014 taking
into account the adjustments made at (a) above. The net profit before taxation as per the draft
accounts was £/€ 350,000.
3 marks

Presentation 2 marks
Total 20 Marks

QUESTION 6

The Statement of Financial Position, Statement of Changes in Equity and other relevant information of
CLINIC Limited, for the year ended 31 December 2014, are as follows:

Statement of Changes in Equity as at 31


December 2014
Ord
share Share Retained Total
capital premium profits equity

£/€'000 £/€'000 £/€'000 £/€'000

As at 1 January 2014 270 - 180 450


Net profit for year end 31 December 2014 90 90
Share issue 30 30 60
Ordinary dividends ( 60) (60)

300 30 210 540

Page 11 of 26 AFA Sample Paper 2


QUESTION 6 (cont’d)

Statement of Financial Position as at 31 December 2014

£/€'000 £/€'000 £/€'000 £/€'000

ASSETS
Non-current assets 1,440 1,320

Current assets
Inventory 1,890 1,530
Receivables 2,850 2,130
Cash & cash equivalents 30 30
4,770 3,690

Total assets 6,210 5,010

EQUITY and LIABILITIES

Capital and reserves


£/€1 ordinary shares 300 270
Preference shares 300 300
Share premium account 30 -
Retained earnings 210 180
840 750
Non-current liabilities
Bank loans 2,190 1,800
10% debentures 1,140 900
3,330 2,700
Current liabilities
Bank overdraft 30 -
Current installments due on loans 540 540
10% debentures 300 -
Trade payables 1,140 930
Taxation 30 90

2,040 1,560

Total equity and liabilities 6,210 5,010

Page 12 of 26 AFA Sample Paper 2


QUESTION 6(Cont’d)

Additional information:

(1) On 1 July 2014 CLINIC issued £/€ 1 ordinary shares at £/€ 2 per share.

(2) During the year CLINIC sold non-current assets with a net book value of £/€90,000 for cash.
Included in the Statement of Comprehensive Income is a profit on disposal of £/€ 60,000.

(3) Included in trade payables at 31 December 2014 is an amount of £/€ 450,000 in respect of non-
current assets purchased during the year.

(4) The Statement of Comprehensive Income includes the following charges for the year:

........................................................... 31 Dec 2014 31 Dec 2013

(i) Depreciation ...................... £/€ 600,000 £/€ 550,000


(ii) Interest ..................................... £/€ 540,000 £/€ 270,000
(iii) Tax .......................................... £/€ 30,000 £/€ 60,000

Requirement

(a) Prepare a statement of cash flows for CLINIC Limited for the year ended 31 December 2014 in
accordance with FRS 102.
.
N. B. You are NOT required to prepare notes to the statement of cash flows.
18 Marks
Presentation 2 marks
Total 20 Marks

Page 13 of 26 AFA Sample Paper 2


Advanced Financial Accounting

Sample Paper 2 – Suggested Solutions

NOTE: This sample paper and solution have been prepared to reflect the provisions of FRS 100‐
FRS102.

Page 14 of 26 AFA Sample Paper 2


Solution to question 1

(a) What are Accounting Standards and describe the objectives of these standards.

Accounting standards are a set of rules that describe how an item in financial accounting is
treated and calculated and how accounts should be prepared and presented. The objective of
accounting standards is to regulate the accounting profession and to provide guidance to both
accounting practitioners and users of financial information about how contentious and
difficult areas should be treated.

Accounting standards are issued by a national or international body of the accounting


profession and are intended to apply to all financial accounts which are intended to give a true
and fair view of the financial position and profit/loss of an entity. Standards are detailed
working regulations within the framework of government legislation and they cover areas in
which the law is silent. A sub‐committee of the FRC‐ the Codes and Standards Committee are
responsible for Irish and UK GAAP.

(b) Standard setting process

The standard setting process involves eight steps and incorporates an extensive
consultation process from stakeholders. The eight steps are as follows;

1. Initial scoping of the issue being considered.


2. A discussion paper providing a detailed overview of the issue, why a standard is necessary,
different potential approaches to dealing with the issue, preliminary views of the FRC and
an invitation to comment on the issue.
3. Public consultation.
4. Outreach events to encourage input to the standard setting process including lab activities, case
studies and investigations.
5. Exposure Draft
6. The final code or standard
7. Post implementation review
8. Regular reviews.
Transparency within the process

As can be seen from the above discussion the process through which the standard is developed
involves a significant amount of public consultation. This improves transparency in the standard
setting process. It is not possible for an accounting standard to be issued without taking on
board comments from interested parties. This avoids the situation whereby the process becomes
a pure academic exercise and ensures that the practical application is considered, understood
and provided for.

Page 15 of 26 AFA Sample Paper 2


Solution to question 2

(1) B

(2) C (see working)

(3) D (see working)

(4) A

(5) C

(6) B

(7) A

(8) D (see working)

(9) B (see working)

(10) A

Workings:

(2) 112,000 – (19,500+ 28,000) ‐10%(56,000 + 84,000) = 50,500 x 40% = 20,200


20,200 + 19,500 + 5,600 = 45,300

(3) 50,500 x 60% = 30,300 + 28,000 + 8,400 = 66,700

(8) Sales 270,000


Gross margin 20% = 54,000
Cost of sales = 270, 000 – 54,000 = 216,000
216,000 + closing inventory 44,000 – opening inventory 60,000 = purchases 200,000

(9) Opening receivables 45,000 + sales 270,000 = 315,000


315,000 – irrecoverable receivables 14,000 – closing receivables 56,000 = sales receipts
245,000

Page 16 of 26 AFA Sample Paper 2


Solution to question 3

(a)
WIRE Ltd.

Statement of Financial Position as at 31 December 2014

£/€’000 £/€’000

Non‐current assets

Property, plant & equipment (Note 1) 2,343


Other financial assets 60
2,403

Current assets

Inventories 50
Trade receivables 156
Prepayments (W1) 36
Cash and cash equivalents (W2) 124
366

Total assets 2,769

Equity and liabilities

Capital (W4) 1,800


Reserves 380
Accumulated profits (W3) 64
2,244

Non‐current liabilities

Interest‐bearing borrowings 200


200

Current liabilities

Trade and other payables (W7) 233


233

Deferred government grants (Note 2) 92

2,769

Page 17 of 26 AFA Sample Paper 2


Solution to question 3(cont’d)

(b)

WIRE LIMITED

Notes to the Accounts for the year ended 31 December 2014

(1) Property, plant and equipment

Freehold Plant & Motor Computer


premises machinery vehicles equip Total
£/€’000 £/€’000 £/€’000 £/€’000 £/€’000
Cost
at 1st January 2014 2,500 420 120 120 3,160
additions 70 25 30 125
disposals (45) (45)
at 31st December
2014 2,500 490 100 150 3,240

Accumulated depreciation
at 1st January 2014 400 240 70 45 755
charge for year 50 49 20 50 169
450 289 90 95 924
disposals 0 0 (27) 0 (27)
at 31st December
2014 450 289 63 95 897

Net book value


at 1st January 2014 2,100 180 50 75 2,405
at 31st December
2014 2,050 201 37 55 2,343

(2) Deferred Government Grants

At 1st January 2014 90


Received during the year 18
108

Released to Income during the year (16)

At 31st December 2014 92

Page 18 of 26 AFA Sample Paper 2


Solution to question 3(cont’d)

Workings

(1) Prepayments

£/€’000

Prepayments per trial balance 12


Add prepayments omitted in error 24

36

(2) Cash and cash equivalents

£/€’000

Bank balance 66
Short term investment 40
106

Government grant received 18

124

(3) Accumulated profits

£/€’000

Retained profit for year per trial balance 146


Profit on disposal of motor vehicle 6
Depreciation (Note 1) (169)
Prepayments 24
Government grants released 16
23

Retained Profit brought forward 1 Jan 2014 41

Accumulated profits 64

(4) Issued capital


£/€’000

Ordinary share capital 1,500


8% preference capital 300

1,800

Page 19 of 26 AFA Sample Paper 2


Solution to question 3(cont’d)

(5) Reserves
£/€’000

Share premium 150


General reserves 230

380

(7) Trade and other payables


£/€’000

Trade payables per Trial Balance 85


Corporation tax 98
VAT 32
Accrued expenses 18

233

(8) Disposal of motor vehicle


£/€’000

Cost in 2011 45
Depreciation charge:
2011
2012
2013
NBV 18
Proceeds 24

Profit on disposal 6

Advanced Financial Accounting Sample Paper 2 Page 20 of 26


Solution to question 4

To : The Directors
From : A. Accountant
Date : XX/MM/YY
Subject : Accounting treatment of government grants

A. Accounting treatment

The grants which have been approved for the new production facility fall into two distinct
categories:

1. Revenue based grant – the grant for training costs


2. Capital based grant – the grant for plant

The above two grants are treated differently for accounting purposes. FRS 102 provides that: Revenue

based grants are to be credited to revenue as “other income” in the period in which the
related revenue expenditure has been incurred.

Capital based grants should be credited to revenue over the life of the related non‐current asset. The
amount of the grant should be credited to a deferred grant account, a portion of which is transferred to
revenue annually on the same basis as the related asset is depreciated

B. Recommendations

I recommend that Carter Limited adopt the following accounting treatment; Training

grants – these grants be credited to revenue as “other income” .


Capital Grants – these grants should be credited to a deferred grant account and disclosed
separately in the Statement of Financial Position under the heading ‘Government Grants’. The
grants should be released to the Statement of Comprehensive Income over the life of the related
assets using the same rates of depreciation as applied to those assets..

C. Accounting policies

The notes to the accounts of CARTER Limited should include the following:

(i)
Accounting Policy – Government Grants

Grants receivable on additions to non‐current assets are credited to the Deferred Government Grant
Account and are allocated to the Statement of Comprehensive Income over the estimated useful lives of
the assets concerned. Revenue based grants are credited directly to the Statement of Comprehensive
Income in the year in which they become due.

Page 21 of 26 AFA Sample Paper 2


(ii) Note to the Financial Statements
£/€

Balance at start of year XXXX


Received during the year XXXX
Released to the profit and loss account during the year XXXX

Balance at end of year XXXXX

Solution to question 5

(a) DR CR
(i)
DR Motor vehicles (SOFP) 20000
CR Motor Expenses (SOCI) 20,000
DR Motor Vehicles 6,500
CR Disposal a/c 6,500
DR Disposal a/c 13,000
CR Motor Vehicles 13,000
DR Disposal a/c 6,500
CR Accumulated Depreciation 6,500

[Being cheque to purchase motor vehicle debited to motor expense in error


Trade in of old motor vehicle not recorded.]

(ii)

DR Depreciation (SOCI) 3,375


CR Accumulated depreciation (SOFP) 3,375

[Being calculation of depreciation charge on additions (6,625 – 3,250)]

(iii)

DR Plant & machinery 400,000


DR VAT recoverable 84,000
CR Bank 484,000

[Being purchase of new machine]

DR Depreciation (SOCI) 40,000


CR Accumulated depreciation (SOFP) 40,000

[Being calculation of depreciation on new machine]

DR Bank 60,000
Cr Deferred income (SOFP) 60,000

Page 22 of 26 AFA Sample Paper 2


[Being receipt of government grant]

DR Deferred income (SOFP) 6,000


CR Grant released (SOCI) 6,000

[Being release of proportion of grant to Statement of Comprehensive Income]

Solution to question 5 (cont’d)

(b)

£/€

Net profit before tax 350,000

(i) Motor vehicle expense 20,000

(ii) Motor vehicle depreciation (3,375)

(iii) Plant and machinery (40,000)

(iii) Grant released 6,000

Revised net profit 332,625

Page 23 of 26 AFA Sample Paper 2


Solution to question 6

[a]
CLINIC Limited

Statement of Cash Flows for the year ended 31 December 2010

£/€ '000 £/€ '000

Cash flows from operating activities

Net profit before interest (W1) 660

Adjustments for:
Depreciation 600
Profit on disposal (W3) (60)

Changes in working capital


Increase in inventory (W2) (360)
Increase in receivables (W2) (720)
Decrease in payables (W2) (240)
(780)
Cash generated from operations (120)

Interest paid (540)


Tax paid (W4) (90)
(630)

Net cash from operating activities (750)

Cash flows from investing activities


Payment to acquire non-current assets (W5) (360)
Receipt from sale of non-current assets (W3) 150
(210)

Cash flows from financing


Proceeds from share issue (incl share prem) 60
New bank loans (W6) 390
Issue of new debentures (W7) 540
Dividends paid (60)
930

Decrease in cash and cash equivalents (30)

Cash and cash equivalents at start of year 30


Cash and cash equivalents at end of year 0

Page 24 of 26 AFA Sample Paper 2


Workings

(1) Net profit before interest


£/€’000

Net profit for year 90


Add: tax 30
Add : interest 540
660

(2) Changes in working capital


£/€’000

Inventory (1,890 – 1,530) 360 increase


Receivables (2,850 – 2,130) 720 increase
Trade payables (1,140 – 450 – 930) 240 decrease

(3) Non‐current asset disposal


£/€’000

NBV 90
Profit on sale 60
Sale proceeds 150

(4) Taxation
£/€’000

Opening balance 90
Charge for year 30
Closing balance (30)
Amount paid 90

(5) Non‐current asset acquisition


£/€’000

Opening balance 1,320


Less: disposal (90)
Depreciation charge (600)
630
Closing balance (1,440)

Purchases 810
Amount owing included in trade payables 450
Amount paid 360

Page 25 of 26 AFA Sample Paper 2


(6) Bank loans
£/€’000

Opening balance (1,800 + 540) 2,340


Closing balance (2,190 + 540) 2,730

New loans 390

(7) Debentures
£/€’000

Opening balance 900


Closing balance (1,140 + 300) (1,440)

New debentures issued 540

Page 26 of 26 AFA Sample Paper 2