ACCA Knowledge Level Non-Current Liabilities — practice questions

Explore 3 free Non-Current Liabilities questions in ACCA Knowledge Level Financial Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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Non-Current Liabilities questions and exercises with answers

Showing questions 1–3 of 3.

A company borrows $50,000 for five years at 5% with equal annual installments of $11,549. What is the interest portion of the first annual payment?Read the answer and worked solution →A $50,000, 5% loan is repaid in equal annual installments of $11,549. The year-1 payment includes $2,500 interest. What principal balance remains after the first payment?Read the answer and worked solution →Disposal Steps (ACCA FA)Read the answer and worked solution →

Worked practice questions

A company borrows $50,000 for five years at 5% with equal annual installments of $11,549. What is the interest portion of the first annual payment?

$9,049
$11,549
$2,500
$2,048

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Correct answer: C. $2,500

1. Interest in an installment is the outstanding principal times the rate. 2. At the start of year 1 the full $50,000 is outstanding. 3. Interest: \$50{,}000 \times 5\% = \$2{,}500. 4. The remaining \$11{,}549 - \$2{,}500 = \$9{,}049 (option A) reduces principal, not interest. 5. Option D ($2,048) is year 2's interest on the reduced balance. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §5.3 "Long-Term Note Payable", p.218_

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A $50,000, 5% loan is repaid in equal annual installments of $11,549. The year-1 payment includes $2,500 interest. What principal balance remains after the first payment?

$40,951
$47,500
$38,451
$31,450

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Correct answer: A. $40,951

1. The principal reduction is the payment minus the interest portion. 2. Reduction: \$11{,}549 - \$2{,}500 = \$9{,}049. 3. Remaining balance: \$50{,}000 - \$9{,}049 = \$40{,}951. 4. Option D ($31,450) is the balance after the second payment, not the first. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §5.3 "Long-Term Note Payable", p.218_

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Disposal Steps (ACCA FA)

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Steps

Remove cost from asset account
Remove accumulated depreciation
Record sale proceeds received
Calculate profit or loss on disposal

Instructions

Tap the asset disposal steps in order.

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