Ch8. ACCA — Final Mock Exam (20 Questions) & Qualification Completion

ACCA Formula Quick Reference

Financial Accounting (FA)

Formula	Meaning
Assets = Liabilities + Equity	Accounting equation
NRV = Estimated selling price − Completion costs − Selling costs	IAS 2 inventory

Performance Management (PM)

Formula	Meaning
BEP (units)	Fixed costs / Contribution per unit
Margin of Safety %	(Actual − BEP revenue) / Actual revenue

Financial Management (FM)

Formula	Meaning
WACC	[E/(E+D)]×Ke + [D/(E+D)]×Kd×(1−T)
NPV	∑CFₜ/(1+r)ᵗ − initial investment
CAPM	Ke = Rf + β(Rm−Rf)

20-Question Integrated Mock Exam

Q1 (FA). Which inventory valuation method is NOT permitted under IFRS? A) FIFO B) Weighted average C) LIFO D) Specific identification

Q2 (FA). Under IFRS 16, how does a lessee account for an operating lease? A) No recognition B) Right-of-use asset and lease liability on balance sheet
C) Expense only D) Disclosure in notes only

Q3 (PM). Fixed costs $60,000, variable cost per unit$ 30, selling price $50. Break-even units? A) 1,000 B) 2,000 C) 3,000 D) 4,000

Q4 (PM). Which is NOT one of the four BSC perspectives? A) Financial B) Customer C) Suppliers D) Learning and Growth

Q5 (FR). What is Step 3 in the IFRS 15 five-step revenue recognition model? A) Identify the contract B) Identify performance obligations
C) Determine the transaction price D) Allocate the transaction price

Q6 (FR). How is goodwill treated after initial recognition under IFRS? A) Amortized straight-line B) Subject to annual impairment review
C) Expensed immediately D) Disclosed in notes only

Q7 (AA). Which is the correct audit risk formula? A) AR = IR + CR + DR B) AR = IR × CR × DR
C) AR = (IR + CR) / DR D) AR = IR × DR

Q8 (AA). Which scenario represents a SELF-REVIEW threat to auditor independence? A) Audit firm handles the client’s tax affairs
B) Audit firm also prepares the client’s financial statements
C) Same audit partner has worked on the client for 10 years
D) Client requests a favorable opinion

Q9 (FM). Why is the cost of debt multiplied by (1−T) in the WACC formula? A) To adjust for inflation B) To reflect the tax deductibility of interest
C) To adjust for market risk D) To adjust for currency exposure

Q10 (FM). When NPV and IRR give conflicting rankings, which method is generally preferred and why? A) IRR — more intuitive to explain
B) NPV — directly linked to firm value creation
C) Payback period — most conservative
D) They are treated equally

Q11 (FM). Which Cash Conversion Cycle formula is correct? A) Inventory days + Payable days − Receivable days
B) Inventory days + Receivable days − Payable days
C) Receivable days + Payable days − Inventory days
D) Inventory days × Receivable days / Payable days

Q12 (SBR). In IFRS 3, goodwill = Consideration + NCI − ? A) Acquirer’s net assets B) Fair value of acquired net assets
C) Total assets D) Total liabilities

Q13 (SBR). When translating a foreign subsidiary’s assets and liabilities, which rate is used? A) Transaction date rate B) Average rate C) Closing rate D) Historical rate

Q14. Which is NOT one of the ACCA Fundamental Ethical Principles? A) Integrity B) Objectivity C) Profitability D) Confidentiality

Q15. Which paper is an OPTIONAL Strategic Professional paper? A) Strategic Business Leader (SBL) B) Strategic Business Reporting (SBR)
C) Advanced Financial Management (AFM) D) Both A and B

Q16 (FM). Under MM with corporate taxes, using debt: A) Decreases firm value B) Increases firm value by the tax shield (T × D)
C) Has no effect D) Doubles the firm value

Q17 (PM). Material price variance formula: A) (Actual qty − Standard qty) × Standard price
B) (Actual price − Standard price) × Actual quantity
C) (Actual qty − Standard qty) × Actual price
D) (Actual price − Standard price) × Standard quantity

Q18 (FM). A stock with β = 0 under CAPM implies: A) Moves with the market B) Risk-free; uncorrelated with market returns
C) Twice as volatile as the market D) Inversely correlated with the market

Q19 (AA). Which audit opinion applies when financial statements are materially AND pervasively misstated? A) Unmodified B) Qualified C) Adverse D) Disclaimer

Q20 (SBR). IFRS 13 Level 1 inputs are: A) Management’s internal model estimates
B) Quoted prices in active markets for identical assets
C) Adjusted prices of similar assets
D) Any observable market data

Answer Key

Q	Answer	Explanation
1	C	IFRS prohibits LIFO (permitted only under US GAAP)
2	B	IFRS 16: all leases on-balance-sheet as ROU asset and liability
3	C	BEP = 60,000/(50−30) = 3,000 units
4	C	BSC: Financial, Customer, Internal Processes, Learning & Growth
5	C	Step 3: Determine the transaction price
6	B	Goodwill: no amortization; annual impairment test (IAS 36)
7	B	AR = IR × CR × DR (multiplication)
8	B	Preparing AND auditing the same financial statements = self-review
9	B	Interest is tax-deductible → effective after-tax cost = Kd×(1−T)
10	B	NPV directly measures value created for shareholders
11	B	CCC = Inventory days + Receivable days − Payable days
12	B	Goodwill = Consideration + NCI − FV of net assets acquired
13	C	Foreign subsidiary assets/liabilities: closing rate
14	C	ACCA principles: Integrity, Objectivity, Professional competence, Confidentiality, Professional behaviour
15	C	AFM is optional; SBL and SBR are both compulsory
16	B	VL = VU + T×D → firm value increases by the tax shield
17	B	Price variance = (AP − SP) × AQ
18	B	β = 0: asset return unrelated to market; like a risk-free asset
19	C	Material AND pervasive = Adverse opinion
20	B	Level 1: quoted prices in active markets (highest reliability)

ACCA Qualification Completion Roadmap

Stage	Requirements
1. Applied Knowledge	Pass BT, MA, FA
2. Applied Skills	Pass LW, PM, TX, FR, AA, FM
3. Ethics Module	Complete EPS online module
4. Strategic Professional	Pass SBR, SBL + 2 optional papers
5. Work Experience	Demonstrate 3 years of relevant PER (Practical Experience Requirements)
6. Membership	Apply to ACCA — become a qualified ACCA member

ACCA Chartered Accountant series complete! Best of luck on your path to global accountancy membership.