Question 1

Section B - Case 2: Single Entity Accounts

**Scenario: AquaHarvest Marine Farms**
AquaHarvest prepares its financial statements for the year ended 30 September 20X6. The draft profit before adjustments is $120,000. 
Issue 1: A payment for marine insurance of $6,000 for the year ending 31 December 20X6 was recorded entirely as an expense in the P&L.
Issue 2: Depreciation on harvesting equipment (Cost $80,000, Acc Dep $30,000) needs to be charged at 20% reducing balance.
Issue 3: A customer went bankrupt owing $2,500. This needs to be written off.
Issue 4: A suspense account has a $4,500 Credit balance because a cash receipt of $4,500 from a credit customer was only recorded in the cash book.

Regarding Issue 1, what is the prepayment amount for marine insurance at 30 September 20X6? (Enter the number only)

Accepted Answer

Determine how many months of the insurance payment relate to the period AFTER the year-end (30 September). Calculate the value of those months.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Calculating the expense for the year ($4,500) instead of the prepayment.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 5

More questions from this exam