1
ACCOUNTING EXAM 2025 SET OF QUESTIONS AND
CORRECT ANSWRS ALREADY GRADED A+
GUARANTEED SUCCESS
What is the cash flow from investing activities?
1. Find the purchase cost of the NCA
2. Put purchase bal fig into this formula
Can you reclaim VAT on a car?
No its irrecoverable so ignore it, not included in how much you owe HMRC
Source documents include:
Invoice which includes purchase invoice and sales invoice
Purchase of NCA x
Proceeds of sale of NCA (x)
= Net cash out flow
Accrual and distribution cost - what amount for distribution should be on the p/l?
Open accrual (x)
Distribution expense
Closing accrual x
What's the difference between "charge" and "credit"?
“Charge” means you are recording an expense. It reduces profit.It’s like saying,
“We lost this money.” Example: Charging £100 for bad debts = bad news = less
profit.
“Credit” in this context means you are recording income or reducing an expense. It
increases profit. Example: Crediting £100 for money recovered = good news =
more profit.
, 2
What is a provision, and how is it recorded?
A provision is a liability of uncertain timing or amount (e.g., legal claims,
warranties).
It is an expense in the income statement and a liability in the balance sheet.
Difference between IFRS S1 and IFRS S2
IFRS S1 requires disclosures about sustainability-related risks and opportunities
IFRS S2 requires disclosures about climate-related risks and opportunities
Cash flow from operating activities
Depreciation
Impairment losses
Profit on sale of non-current assets
Movement in working capital
Cash generated from core business operations.
Depreciation - ADD
Impairment losses - ADD
Profit on sale of non-current assets - DEDUCT
Movement in working capital AIR/LIA
The term ‘sustainability’ is understood to mean:
The practice of meeting the needs of the present without compromising the ability
of future generations to meet their own needs
Accounting Equation
Assets = Capital + Liabilities
, 3
Capital includes capital + profit - drawing
Closing Assets = assets + capital + profit - drawing
Sole trader net profit
Profit = closing net assets - open net assets - capital + drawings
Net profit = net assets (added cash figures ) - capital + drawings
Invoices
Used to record transactions made on credit. When goods / services are supplied but
payment not made straight away.
sales invoice
a document notifying customers of the amount of a sale and where to send
payment
Net Cash Inflow
occurs when the proceeds in a category exceed the payments
Net Cash Outflow
occurs when the payments/ purchase exceed the proceeds
reedemable preference shares
1) capital balance placed in non-current liabilities
2) dividend = % x redeemable preference shares balance to get the finance cost
Borrowings = preference shares
Finance cost = borrowings x preference shares %
dividends on these shares will be treated as finance cost in the sopl and any unpaid
amount shown as other payables
, 4
Irredemable shares
treaty as equity and therefore included in the equity section of the SOFP
Dividends are deducted from retained earnings
Finance cost
the interest incurred in the year should be recorded as finance cost
dr finance cost
cr interest accrual
dividends declared not paid yet
dr retained earnings
cr dividends payable
dividends paid
DR Retained Earnings
CR Cash
bonus issue
dr reserve account
cr share capital
purchase invoice
a document that provides support for each purchase
credit note
"A document given to a customer when they have returned goods, or reduced the
quantity of an order or overpaid for the goods they have received."
incur expenditure provision
when the expenditure is greater than the provision
dr expense
ACCOUNTING EXAM 2025 SET OF QUESTIONS AND
CORRECT ANSWRS ALREADY GRADED A+
GUARANTEED SUCCESS
What is the cash flow from investing activities?
1. Find the purchase cost of the NCA
2. Put purchase bal fig into this formula
Can you reclaim VAT on a car?
No its irrecoverable so ignore it, not included in how much you owe HMRC
Source documents include:
Invoice which includes purchase invoice and sales invoice
Purchase of NCA x
Proceeds of sale of NCA (x)
= Net cash out flow
Accrual and distribution cost - what amount for distribution should be on the p/l?
Open accrual (x)
Distribution expense
Closing accrual x
What's the difference between "charge" and "credit"?
“Charge” means you are recording an expense. It reduces profit.It’s like saying,
“We lost this money.” Example: Charging £100 for bad debts = bad news = less
profit.
“Credit” in this context means you are recording income or reducing an expense. It
increases profit. Example: Crediting £100 for money recovered = good news =
more profit.
, 2
What is a provision, and how is it recorded?
A provision is a liability of uncertain timing or amount (e.g., legal claims,
warranties).
It is an expense in the income statement and a liability in the balance sheet.
Difference between IFRS S1 and IFRS S2
IFRS S1 requires disclosures about sustainability-related risks and opportunities
IFRS S2 requires disclosures about climate-related risks and opportunities
Cash flow from operating activities
Depreciation
Impairment losses
Profit on sale of non-current assets
Movement in working capital
Cash generated from core business operations.
Depreciation - ADD
Impairment losses - ADD
Profit on sale of non-current assets - DEDUCT
Movement in working capital AIR/LIA
The term ‘sustainability’ is understood to mean:
The practice of meeting the needs of the present without compromising the ability
of future generations to meet their own needs
Accounting Equation
Assets = Capital + Liabilities
, 3
Capital includes capital + profit - drawing
Closing Assets = assets + capital + profit - drawing
Sole trader net profit
Profit = closing net assets - open net assets - capital + drawings
Net profit = net assets (added cash figures ) - capital + drawings
Invoices
Used to record transactions made on credit. When goods / services are supplied but
payment not made straight away.
sales invoice
a document notifying customers of the amount of a sale and where to send
payment
Net Cash Inflow
occurs when the proceeds in a category exceed the payments
Net Cash Outflow
occurs when the payments/ purchase exceed the proceeds
reedemable preference shares
1) capital balance placed in non-current liabilities
2) dividend = % x redeemable preference shares balance to get the finance cost
Borrowings = preference shares
Finance cost = borrowings x preference shares %
dividends on these shares will be treated as finance cost in the sopl and any unpaid
amount shown as other payables
, 4
Irredemable shares
treaty as equity and therefore included in the equity section of the SOFP
Dividends are deducted from retained earnings
Finance cost
the interest incurred in the year should be recorded as finance cost
dr finance cost
cr interest accrual
dividends declared not paid yet
dr retained earnings
cr dividends payable
dividends paid
DR Retained Earnings
CR Cash
bonus issue
dr reserve account
cr share capital
purchase invoice
a document that provides support for each purchase
credit note
"A document given to a customer when they have returned goods, or reduced the
quantity of an order or overpaid for the goods they have received."
incur expenditure provision
when the expenditure is greater than the provision
dr expense
