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SOCPA Accounting Technician Exam: free practice test

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Practice test questions with answers and explanations

Try the questions in the test above first, then open each one here to see the correct answer and why every other option is wrong.

01An accountant discovers that the provision estimate his superior requests would result in misleading information, and no safeguards are available to reduce the threat to an acceptable level. What is the most appropriate action under the Code?

Practice question Unit: Conceptual framework, professional standards, presentation and disclosure

  1. AEliminate the circumstances creating the threat, or decline or end the work ✓ Correct answer

    If the threat cannot be reduced to an acceptable level, the accountant must eliminate its cause, or decline or end the assignment.

  2. BCarry out the request while recording his objection in an internal note

    Recording an objection neither reduces the threat nor prevents misleading information from being prepared, so it is insufficient.

  3. CContinue the work and wait for circumstances to change later

    Continuing without action leaves the threat in place and breaches the duty to evaluate and address threats.

  4. DAccept the request because the threat relates to the estimate rather than the figures

    An estimate is part of the financial information, and misleading information breaches integrity whatever its source.

Reference: IESBA Code of Ethics as endorsed in Saudi Arabia, Section 120: The conceptual framework

02Company (S) bought a machine for 120,000 riyals. At the reporting date, an equivalent machine of the same age and condition would cost 150,000 riyals to acquire, it could be sold in the market for 140,000 riyals, and the present value of the cash flows from using it is 135,000 riyals. At what amount is the machine shown if measured at current cost?

Practice question Unit: Conceptual framework, professional standards, presentation and disclosure

  1. A120,000 riyals

    This is historical cost, what the company paid on purchase.

  2. B150,000 riyals ✓ Correct answer

    Current cost is the cost at the measurement date of an equivalent asset of the same age and condition.

  3. C140,000 riyals

    This is fair value, the price to sell in an orderly transaction between market participants.

  4. D135,000 riyals

    This is value in use, the present value of the cash flows expected from using the asset.

Reference: Conceptual Framework for Financial Reporting (2018), Chapter 6: Measurement

03The cash balance in the entity's books is 52,300 riyals. The bank statement shows unrecorded bank charges of 200 riyals, unrecorded interest income of 450 riyals, a customer check of 1,800 riyals returned for insufficient funds, and a note receivable of 5,000 riyals collected by the bank on the entity's behalf and not yet recorded. What is the adjusted book balance?

Practice question Unit: Elements of the financial statements: recognition, measurement, valuation, presentation and disclosure

  1. A59,350 riyals

    This result adds the returned check instead of deducting it; a returned check reduces the book balance.

  2. B50,750 riyals

    This result leaves out the 5,000-riyal note collected, which reached the entity's bank account but is not yet in the books.

  3. C55,950 riyals

    This result ignores the 200-riyal bank charges, an expense that reduces the book balance.

  4. D55,750 riyals ✓ Correct answer

    52,300 − 200 + 450 − 1,800 + 5,000 = 55,750 riyals: charges and the returned check are deducted; interest and the collected note are added.

Reference: Accounting principles: bank reconciliation

04At year end the allowance account has a debit balance of 3,000 riyals because write-offs exceeded the allowance. An ageing analysis shows a required allowance of 23,000 riyals. What is the bad debt expense for the year?

Practice question Unit: Elements of the financial statements: recognition, measurement, valuation, presentation and disclosure

  1. A23,000 riyals

    This is only the required allowance; the existing debit balance has not been added.

  2. B20,000 riyals

    The debit balance was subtracted instead of added, which reverses the direction.

  3. C26,000 riyals ✓ Correct answer

    Correct: 23,000 + 3,000 = 26,000 riyals, because the allowance starts with a debit balance that must be covered first.

  4. D3,000 riyals

    This is only the current debit balance, not the expense needed to reach the target balance.

Reference: Accounting principles: receivables (allowance for doubtful accounts)

05On 1 October Company (S) received a one-year note receivable of 60,000 riyals at 10% annual interest, and at 31 December it accrued interest for the three months. Its financial year ends on 31 December. How much interest income on this note does the company recognise in the following year?

Practice question Unit: Elements of the financial statements: recognition, measurement, valuation, presentation and disclosure

  1. A6,000 riyals

    This is the full year of interest; 1,500 riyals of it was already recognised in the first year and is not recognised again.

  2. B7,500 riyals

    This result adds the 1,500 riyals accrued to the full year of interest, counting the first three months twice.

  3. C1,500 riyals

    This is the interest accrued at 31 December for the first three months, which was recognised in the first year.

  4. D4,500 riyals ✓ Correct answer

    60,000 × 10% × 9 ÷ 12 = 4,500 riyals for the nine months from January to September.

Reference: Accounting principles: notes receivable (interest)

06Al-Noor Trading Company bought goods at a list price of 50,000 riyals with a 10% trade discount. Freight-in was 1,500 riyals, non-recoverable customs duties 2,500 riyals, recoverable tax 2,250 riyals, and later storage costs 1,200 riyals. What is the cost of the inventory?

Practice question Unit: Elements of the financial statements: recognition, measurement, valuation, presentation and disclosure

  1. A49,000 riyals ✓ Correct answer

    Cost = 45,000 (after the trade discount) + 1,500 freight + 2,500 non-recoverable duties = 49,000 riyals.

  2. B51,250 riyals

    This amount includes the recoverable tax (45,000 + 1,500 + 2,500 + 2,250), which is not part of cost.

  3. C50,200 riyals

    This amount includes the later storage costs (1,200 riyals), which are expensed and not part of cost.

  4. D54,000 riyals

    This amount ignores the trade discount (50,000 + 1,500 + 2,500); trade discounts reduce the purchase cost.

Reference: IAS 2 Inventories, paragraphs 10–11 and 16

07On 1 April 20X1 the company (S) bought equipment for SAR 120,000 and depreciates it using the reducing-balance method at 20% a year of the carrying amount at the start of the period, time-apportioning part years by months. Its financial year ends on 31 December. What is the depreciation expense for 20X2?

Practice question Unit: Elements of the financial statements: recognition, measurement, valuation, presentation and disclosure

  1. ASAR 19,200

    This figure charges a full year (24,000) in 20X1, so it applies the rate to 96,000 instead of 102,000.

  2. BSAR 24,000

    This figure applies the rate to original cost again; under the reducing-balance method the rate applies to the carrying amount after the previous period's depreciation.

  3. CSAR 20,400 ✓ Correct answer

    Depreciation for 20X1 = 120,000 × 20% × 9 ÷ 12 = SAR 18,000, so the carrying amount at the start of 20X2 is SAR 102,000 and depreciation for 20X2 = 102,000 × 20% = SAR 20,400.

  4. DSAR 18,000

    This is the nine-month charge for 20X1, not the 20X2 charge, which covers a full year.

Reference: IAS 16 Property, Plant and Equipment: depreciation (depreciation methods)

08Direct materials were 40,000 riyals, direct labor 25,000 riyals and manufacturing overhead 15,000 riyals. What is the prime cost?

Practice question Unit: Nature and systems of cost accounting and measurement concepts

  1. A65,000 riyals ✓ Correct answer

    Correct: prime cost = direct materials + direct labor = 40,000 + 25,000 = 65,000 riyals.

  2. B80,000 riyals

    80,000 is the total manufacturing cost, which also includes overhead.

  3. C40,000 riyals

    40,000 is direct materials alone, leaving out labor.

  4. D55,000 riyals

    55,000 adds materials and overhead and omits direct labor.

Reference: Cost accounting principles: cost concepts and classification

09Joint costs of a production process are 80,000 riyals and are allocated on the sales value at split-off basis. The process yields 2,000 units of product (X) selling at 25 riyals, 1,000 units of product (Y) selling at 40 riyals and 500 units of product (Z) selling at 20 riyals, all sold at the split-off point. What share of the joint costs is allocated to product (Y)?

Practice question Unit: Nature and systems of cost accounting and measurement concepts

  1. A26,667 riyals

    This splits the costs equally across the three products and does not use sales values.

  2. B40,000 riyals

    This is the sales value of product (Y) itself, not its share of the joint costs.

  3. C32,000 riyals ✓ Correct answer

    Correct. Total sales value is 50,000 + 40,000 + 10,000 = 100,000; product (Y) is 40%, so its share is 40% × 80,000 = 32,000 riyals.

  4. D22,857 riyals

    This is its share on the physical quantity basis (1,000 ÷ 3,500 × 80,000); the question asks for the sales value basis.

Reference: Cost accounting principles: joint products and by-products (allocation by sales value at split-off)

10The selling price is 60 riyals per unit, variable cost is 35 riyals per unit and fixed costs are 100,000 riyals. How many units must be sold to earn a target profit of 50,000 riyals?

Practice question Unit: Decision analysis

  1. A6,000 units ✓ Correct answer

    Units = (100,000 + 50,000) ÷ (60 − 35) = 150,000 ÷ 25 = 6,000 units.

  2. B4,000 units

    This is the break-even point (100,000 ÷ 25) and ignores the target profit.

  3. C2,000 units

    This comes from subtracting the target profit from fixed costs instead of adding it.

  4. D2,500 units

    This comes from dividing the amount to be covered by the selling price instead of the contribution margin.

Reference: Cost accounting principles: cost-volume-profit analysis

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