WACE Accounting and Finance Practice Questions
The 64 practice questions inside the WACE Accounting and Finance Mastery Pack, grouped by area of study. Every question comes with a full worked solution.
- Financial institutions and systems
- Multiple choice × 12
- Describe × 1
- Recording, using and evaluating financial information
- Multiple choice × 28
- Prepare × 6
- Calculate × 6
- Comment on × 1
- Government and the community
- Multiple choice × 8
- Discuss × 1
- Outline × 1
Mandurah Marine Supplies is a fictional boating-goods retailer run by sole trader Tessa Roe. GST is ignored. Budgeted total sales are:
| May 2026 | June 2026 | July 2026 | August 2026 |
|---|---|---|---|
| $50,000 | $60,000 | $55,000 | $70,000 |
- 20% of sales are for cash and 80% are on credit.
- Credit customers are expected to pay 40% in the month of sale (these customers receive a 2% discount), 50% in the month after sale and 8% in the second month after sale. The remaining 2% will be written off as bad debts in the second month after sale.
- Accounts receivable at 1 July 2026 are expected to be $32,800, all from May and June credit sales.
- The bank balance at 1 August 2026 is expected to be $3,500 (favourable).
- Expected August items: payments to creditors $38,500; wages $12,400; rent $3,000; loan repayment $2,500 (including $400 interest); cash purchase of display shelving $9,000; drawings by Tessa $4,000; depreciation of shop fittings $900.
(a) Prepare the debtors' schedule for July and August 2026. (5 marks)
(b) Prepare the cash budget for August 2026. (5 marks)
Show the worked answer
Answer: Worked solution
(a) Debtors' schedule
Credit sales: May $40,000; June $48,000; July $44,000; August $56,000 (80% of total sales).
| July | August | |
|---|---|---|
| Opening balance | $32,800 | $31,200 |
| Add credit sales | $44,000 | $56,000 |
| $76,800 | $87,200 | |
| Less cash received | $44,448 | $47,792 |
| Less discount allowed | $352 | $448 |
| Less bad debts | $800 | $960 |
| Closing balance | $31,200 | $38,000 |
Workings: cash received. July: current month $44,000 × 40% = $17,600 less 2% discount $352 = $17,248; June $48,000 × 50% = $24,000; May $40,000 × 8% = $3,200; total $44,448. August: $56,000 × 40% = $22,400 less $448 = $21,952; July $44,000 × 50% = $22,000; June $48,000 × 8% = $3,840; total $47,792. Bad debts: May $40,000 × 2% = $800 (July); June $48,000 × 2% = $960 (August).
Check: closing August = July sales 10% outstanding ($4,400) + August sales 60% outstanding ($33,600) = $38,000.
(b) Cash budget for August 2026
| Opening bank balance | $3,500 | |
| Receipts | ||
| Cash sales ($70,000 × 20%) | $14,000 | |
| Receipts from debtors | $47,792 | $61,792 |
| Payments | ||
| Creditors | $38,500 | |
| Wages | $12,400 | |
| Rent | $3,000 | |
| Loan repayment (principal and interest) | $2,500 | |
| Display shelving | $9,000 | |
| Drawings | $4,000 | $69,400 |
| Net cash flow | ($7,608) | |
| Closing bank balance | ($4,108) overdraft |
Depreciation ($900) is left out because it is a non-cash expense. Discount allowed and bad debts are also left out because no cash moves. The full $2,500 loan repayment is a cash outflow, even though only the $400 interest would be an expense.
Mark allocation (10): (a) credit sales at 80% 1; July cash received 1; August cash received 1; discount allowed and bad debts rows 1; closing balances 1. (b) cash sales and debtor receipts 1; payments correct with depreciation excluded 2; net cash flow 1; closing balance shown as an overdraft 1. Consequential errors from (a) are not penalised again in (b).
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