ACCA FA Financial Statements, Cash Flows & Incomplete Records Practice Questions
Financial Statements, Cash Flows & Incomplete Records makes up 7 of every 50 questions on a Tigertest ACCA FA practice test. Here are 10 of the 28 questions on it, each with the answer and the reason.
Updated by the Tigertest team. Based on ACCA's FA syllabus and study guide for 2026-27, with IFRS 18 formats. Original Section A style questions; Section B not included. Not affiliated with ACCA.
1. Under IFRS 18, income and expenses in the statement of profit or loss are classified into categories that include:
- A.Direct, indirect and overhead
- B.Operating, investing and financing
- C.Trading, capital and revenue
- D.Current, non-current and equity
Answer: B. IFRS 18 uses five categories: operating, investing, financing, income taxes and discontinued operations. Their subtotals include operating profit.
2. Which subtotal must be presented in the statement of profit or loss under IFRS 18?
- A.Gross margin percentage
- B.Cash from operations
- C.Earnings before depreciation
- D.Operating profit
Answer: D. IFRS 18 requires operating profit, profit before financing and income taxes, and profit. Gross profit is common but not required, and EBITDA is a performance measure.
3. For a retailer, interest expense on a bank loan is presented in which IFRS 18 category?
- A.Financing
- B.Income taxes
- C.Operating
- D.Investing
Answer: A. Expenses from liabilities that only raise finance, such as bank loans, go in the financing category, below operating profit and profit before financing and income taxes.
4. Under IFRS 18, an investor's share of the profit of an associate is presented in the:
- A.Financing category
- B.Other comprehensive income
- C.Investing category
- D.Operating category
Answer: C. IFRS 18 places income and expenses from equity-accounted investments in the investing category, outside operating profit.
5. A retailer reports revenue $820,000, cost of sales $497,000, distribution costs $61,000, administrative expenses $88,000, interest on a bank deposit $4,000 and interest on a bank loan $12,000. Its operating profit is:
- A.$166,000
- B.$323,000
- C.$174,000
- D.$178,000
Answer: C. Operating profit = $820,000 - $497,000 - $61,000 - $88,000 = $174,000. Deposit interest is investing and loan interest is financing, so both fall below operating profit.
6. A company reports revenue $615,000, cost of sales $362,000, operating expenses $141,000, dividends from an equity investment $6,500 and interest on loan notes $9,800. Profit before financing and income taxes is:
- A.$118,500
- B.$108,700
- C.$253,000
- D.$112,000
Answer: A. Operating profit is $112,000. Adding the investing income gives profit before financing and income taxes of $118,500. Loan note interest is financing and comes after it.
7. Last year's income tax was estimated at $42,000 but was settled at $45,500. This year's estimate is $51,000. The income tax expense for this year is:
- A.$96,500
- B.$47,500
- C.$51,000
- D.$54,500
Answer: D. The $3,500 under-provision from last year is added to this year's charge: $51,000 + $3,500 = $54,500.
8. This year's income tax is estimated at $38,600. Last year's liability of $33,000 was settled for $31,200. The income tax liability in this year's statement of financial position is:
- A.$33,000
- B.$38,600
- C.$36,800
- D.$40,400
Answer: B. The liability is this year's estimate, $38,600. The $1,800 over-provision only reduces this year's tax expense.
9. A bank loan repayable in equal yearly instalments over five years is presented as:
- A.A deduction from equity
- B.Split between current and non-current
- C.Wholly a non-current liability
- D.Wholly a current liability
Answer: B. The instalment due within 12 months is a current liability and the rest is non-current.
10. Profit for the year, less dividends, increases which item in the statement of financial position?
- A.Revaluation surplus
- B.Share capital
- C.Share premium
- D.Retained earnings
Answer: D. Profit belongs to the shareholders and builds up in retained earnings; dividends are paid out of it. This links the statement of profit or loss to the statement of financial position.
Practice all 28 financial statements, cash flows & incomplete records questions, and the rest of the 200-question bank, in the free ACCA FA training sets. Questions you miss come back until you have mastered them.
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