Bangladesh International School Dammam ACCOUNTING BASICS =Dept of commerce qu. Which item is entered in the general journal? ‘A cash discount given to a customer ‘The correction of an error made in the ledger The sale of an asset for cash vom > ‘The withdrawal of cash for private use by the owner (Nov 16 /13/Q1) Qe. ‘A company pays rates annually in advance on 1 Apri each year. $4000 is paid on 1 Apri 2014 ‘and $4800 on 1 April 2015, The company’s accounting year end is 31 December. What s the charge for rates inthe 2015 income statement? A s4000 B 54200 © 84600 D s4a00 (Nov 16 /13/99) Q3. ‘Accompany pays or receves the following amounts onthe ast day fits financial year. s deposit paid to a supplier 6500 rental income received in advance 2000 loan repayment 3000 payment for ast month's sales commission 900 Which of these amounts will be included as other receivables in the statement of financial position? A $6500 B $14500 © $17500 D- ste4o0 (Nov 16 /12/99)a. Which action leaves the value of working capital unchanged? A. disposal of a non-current asset B__ issuing shares for cash purchasing goods for resale on credit D__ writing off an irrecoverable debt (Nov 16 /12/920) Qs. Ryan sells goods on credit to Sumit. Sumit also supplies goods to Ryan. It is decided to make a set-off of the purchases ledger and sales ledger balances. In which books of prime entry is this set-off recorded? in Ryan’s books | in Sumit's books A | general journal general journal B_ | general journal | purchases journal © | sales journal general journal D | sales journal sales journal (Nov 16 /11/04) Q6. 'A business paid $5750 during its trading year for advertising, This amount included $500 in respect of the next financial year. How would the correct treatment of the $600 affect the financial statements? Profitfor the year | net current assets A decrease decrease B decrease increase c increase decrease D increase increase (Nov 16 /11/Q11)Q7. The following balance appeared on a trial balance at 31 December 2015, after the preparation of the company's financial statements $ stationery | 8000 debit What did this represent? ‘Aan amount due to the company's stationery supplier for 2015 Ba prepayment made to the stationery supplier at 31 December 2015 c inventory of stationery at 31 December 2014 the annual stationery charge for 2015 Gune16 /13/Q10) Qs. A business provides the following information. [ s accrued expenses 9350 accrued income 24750 prepaid expenses | 14250 prepaid income 32650 What is the total amount to be included in current liabilities? A $34100 B $39000 c $42000 D $46900 Gunei6 /13/Q13) Qo. ‘What might stop financial statements showing a true and fair view? ‘A changes in depreciation methods from year to year B changes in dividend policy © creation of a general reserve D__ inclusion of purchased goodwill in a statement of financial position (Qunet6 /12/Q1)Quo. In which book of prime enty is the contra between the sales ledger contol account and the purchase ledger control account recorded? A cash book B general journal © purchases journal (une16 /12/Q6) qu. ’A company received intrest of $8800 during the financial year. Interest of $700 was due atthe beginning ofthe year and $850 atthe end of the year Which entry appeared in the interest received account to make the transfer to the income statement?’ $8650 crecit $8650 debt {$8050 erect $8950 debt coo Gunet6 /12/99) Qu2. ‘The following information is available for rent and rates. $ prepaid rent at the start of the year 1250 accrued rates at the start of the year 1380 rent and rates income statement amount 8750 prepaid rent at the end of the year 1104 accrued rates at the end of the year 1000 What is the amount paid for rent and rates during the year? A $8516 B $8854 $8880 D s8984 Gunet6 /12/Q11)Q13. ‘Omar wishes to become a trader. He decides to buy an existing business in a good location. He pays more for the business than its net asset value. How is the extra amount paid shown in the books of the new business? account to | account to be debited | be credites A] capita goodwill B | goodwa bank | gocawat capital D | premises | goodwill (March16 /12/Q4) Qu4. ‘The statement of the financial position of a company shows the following: s tangible non-current assets | 20600 intangible non-current assets | 6700 trade receivables 8600 trade payables 3200 loan repayable in three years | 4000 bank balance 5200 credit inventory 6900 ‘What is total working capital? A. $3100 B $7100 © $1750 DB _-$29400 (March16 /12/Q8) Qs. ‘An inexperienced bookkeeper calculated a draft proft for the year ended 31 December 2015 of '$578500. He had not accounted forthe following January 2015 | 31 December 2015 s $ provision for doubtful debis. 12800 41300 provision for depreciation ‘95000 126200 What was the revised prof for the year? A sa41000-—«B«$463600 «$545800 © $548800 (Marchi6 /12/Q9)Que. Abusiness makes up its financial statements to 30 April each year. Included in the ledger account balances on 1 May 2014 was insurance (debit) $800. (On 31 October 2014 an insurance premium of $2100 was paid for the year ended 31 October 2018, ‘Which amount was charged for insurance in the income statement for the year ended 30 April 20157 A $1050 B $1850 © s2100 D 2900 (Marchi6 /12/Q11) qu7. Sanjay maintains a sales ledger in which Pardeep’s account has a debit balance of $850. What does this show? ‘A Pardeop has paid Sanjay $850. B_Pardeop owes Sanjay $850 © Sanjay has paid Pardeep $850. D Sanjay owes Pardeep $850. (Nov 15 /13/Q1) Qqis. (On 1 March a sales company has prepaid $3600 for 12 months’ travel costs. It also has an outstanding hotel bil of $180. During March it pays the outstanding hotel bill and a further $700 for aitine tickets. ‘ALS1 March it has an outstanding hotel bill of $220, Whats the correct cost af travel inthe incame statement for March? A $920 B $1220 $1400 D $4520 (Nov 15 /13/Q2) qu. ‘A book-keeper failed to record accrued rent payable of $12000 at the year end, What is the effect of this on the financial statements? net assets profit for the year A overstated overstated B overstated understated c understated overstated D understated understated (Nov 15 /13/Q3)Q20. Which books of prime entry are used in preparing a disposal account? ‘A. cash book and general journal B__ cash book and sales journal © cash book, general journal and sales journal D general journal and sales journal (Nov 15 /13/Q4) qa. Peter, a credit customer of John, settles his account of $200, He pays by cheque and receives a cash discount of 8% Which enities are made in John’s books of account to record this transaction? ‘account 10 ; ‘account 10 : be debited be credited A | bank 190. | Peter 200 iscount alowed | 10 8 | bank 190 | Peter 200 discount received | 10 ¢ | Peter 200 | bank 190 ‘scount alowed | 10 D | Peter 200 | bank 190 ‘iscount received | 10 (Nov 15 /13/Q7) Q22. What is the advantage of keeping a full set of double entry books of account? Account balances are available through the year. B Business assets and owner's assets can be kept separate, _Itenables the book-keeper to check the bank statement for errors and omissions. D_ It stops the value of assets being overstated. (Nov 15 /13/Q11)Q23. Draft financial statements showed revenue of $106 000 and closing inventory of $2100, ‘There were 100 items which had cost $10 an item but which were for sale at $6 an item. At the year end these were with a customer on a sale or return basis. These items were treated as having been sold although no sale had been agreed. What were the values of revenue and inventory when the principle of prudence is applied? revenue | inventory $ $ A | 105000 2700 B | 105000 3100 c | 105400 2700 D | 105400 3100 (Nov 15 /13/Q14) Q24. A business has two departments, profit revenue | numberof | floor space forthe year | forthe year | staff ‘occupied! $ 8 8 square metres department x | 25000 84000 2 1500 department Y | 65000 | 204000 4 2500 g0000 | “288000 é 4000 Total rent expense in the income statement is $72000. What is the rent cost apportioned to each department? department X | department Y $ s a | 20000 52000 B) 21000 51000 © | 24000 48000 D | 27000 45000 (Nov 15 /13/Q18) Q2s Why does a trader account for accrued income? A so that current liabilities are not overstated B so that current liabilties are not understated C so that profit is not overstated D so that profit is not understated (Nov 15 /12/Q1Q26 AA trader sends his staff on a training course costing $100 per person. 10 staff attended in April ‘and 4 in May. Half the total cost had to be paid atthe start of April and the balance at the end of May, Which entry for taining was made inthe statement f financial patton on 30 Apr? A $300 acerval B $400 accrual © $800 prepayment D_ $700 prepayment (Nov 15 /12/Q2) eX busness aid $10000 for motor expenses in the year. ‘The opening prepayment was $1500 and the closing accrual was $2000. ‘What was the charge for motor expenses for the year? A $6500 B $9500 © $10500 D $1350 (Nov 15 /12/Q3) Q2s. Att January 2014 a business had prepaid rent of $700. In July it paid an invoice for $9300 and fon 31 December it transferred an expense of §9000 to the income statement Which value appeared in the statement of financia position at 31 December 2014? ‘A $400 other payabies, B $400 other receivables © $1000 other payables D $1000 other receivabies (Nov 15 /12/Q8) 29. ‘When is working capital most likely to increase? ‘A when the business increases its selling prices when the credit period allowed to customers is reduced B © when the credit period taken from suppliers is increased D when the value of inventory decreases (Nov 15 /12/Q22)Q30 ‘A business receives a $50000 deposit from 2 customer for a product which is to be delivered after the end of the financial year. How should this be shown in the statement of financial postion atthe year end? A. current assets, B current liabilties non-current assets D_non-current liabilities (Nov 15 /11/Q1) Q31. Derek places advertisements in monthly magazines. In September 2014 Derek paid $200 for advertisements to appear in the October 2014 to March 2015 editions of one magazine. In December 2014 he paid a further $880 for advertisements to appear in the January 2016 to ‘April 2018 editions of another magazine, Which amount was shown for advertisements under other receivables in Derek's statement of financial position at 31 January 20157 A 8520 B $620 © $960 D $1260 (Nov 15 /11/Q2) Q32. A business prepared its draft financial statements. It was later discovered that an adjustment for prepaid rent was required ‘What is the effect ofthis adjustment? expenses | current assets A| decase decrease B | decrease increase c | increase decrease D | increase increase (Nov 15 /11/Q3)Q33. A trader purchased thtures and fitings on credit from a supplier. These were faulty and were retuned tothe supplier ‘Which entry in the trader's books of account recorded the return? ‘account to debit | account te credit A | fixtures and fitings supplier B | purchases retums | fotures and fitings c supplier ‘oxtures and fitings > supper purchases returns (Nov 15 /11/04) Q34. A business had a draft loss for the year of $4650. Further adjustments were required. 1 awrite off of $165 for bad debts 2a reduction of $300 in the provision for doubtful debts, What was the loss for the year after these adjustments? A $4185 B $4515 Cc $4785 D $5115 (Nov 15 /11/Q5) Q35. Which entries are made to transfer cash discount obtained fram suppliers to the financial statements at the end of the year? debit entry credit entry ‘A | trade payables account | income statement B | discount received account | income statement | income statement | rade payabies account D | income statement | discount received account (Nov 15 /11/Q6)Q36. ‘The following information is extracted from the records of a business, s ‘At 31 December 2004: Rent paid in advance 4000 During the year ended 31 December 2008: Rent paid 41.000 ‘At 31 December 2005: Rent paid in advance 7000 How much will be debited for rent in the Profit nd Loss Account for the year ended 31 December 20082 A $3400 = B $38000 «= ««$41000 «© $44.00 une 06/1/98) Q37. 7 Armotor vehicle retailer has the following transactions. 1 Issue of shares 2. sale of motor vehicles 3. sale of surplus premises Which transaction(s) are capital income? A tonly B tand3 © 2only D 2and3 (Nov 15 /11/Q7) Q38. ‘A trader depreciates fixtures and fitings at the rate of 10% a year on cost. On 1 January 2014 a purchase of new fixtures and fittings, $5000, was posted to the advertising account in error. What was the effect ofthis errr on the trader's capital account on 31 December 20142 A overstated $4500 B_ overstated $5000 © understated $4500 understated $5000 (une 15 /13/Q2)Q39. ’An electricity accrual of $375 was treated as a prepayment in preparing a trader's income statement What was the effect on profi? A overstated by $375 B overstated by $750 © understated by $375 D understated by $750 (une 15 /13/Q9) Q40. The following information is taken from the rent account of a business. s rent prepaid at the beginning of the year | 1400 rent paid during the year 13900 rent accrued at the end of the year 800 What is the rent expense for the year? A $1170 B $1330 © $1450 D $1610 (une 15 /13/Q10) Qa. A business has the following assets and liabilities at the start of the year. ‘a motor car valued at $2500 inventory which cost $4000 with a sale value of $5800 bank overdraft of $500 loan to a friend from the business bank account $1000 What is the capital account balance at the start of the year? A $5000 B $7000 c $8000 D $8800 (une 15 /13/Q11)42. Which statement contains the correct accounting treatment for accrued income? ‘A added to income and shown as a current asset B added to income and shown as a current liability © deducted from income and shown as a current asset D_ deducted from income and shown as a current liability une 15 /12/Q1) 43. trader made the following transactions, ‘cash withdrawn from bank for business use | 200 ccash banked 120 ‘What was the total effect on ledger accounts? increase —«§ | decease S ‘| bank account 80 | cashaccount €0 B | bank account 320 | cash account 320 © | cashaccount 80 | bankaccount 80 D | cashaccount 320 | bank account 320 une 15 /12/Q2) Qs. Rent is paid by a business monthly in advance on the first day of each month. The payments, during this financial year have been as follows. Upto and including 1 June $500 per month from 1 July '$600 per month Which amount(s) will appear in the financial statements for the year ended 31 October? ‘come statement | statement of financial expense position A $6400 ‘$600 other receivables B $6400 ‘$600 other payables c $6400 - D $7000 7 (une 15 /12/Q3)Qs. ‘The table shows information for a business at 31 March in Year 4 s inventory 16100 trade payables, 5200 other payables 2000 ‘The information excludes the purchase of $3700 of goods, These goods were delivered on 31 March Year 1, but the invoice states that legal tte to the goods does not pass unti payment is received. Which values should appear in the statement of financial position on 31 March Year 1? inventory | trade payables | other payables 8 s s A| 16100 5200 2000 B| 16100 5200 5700 c | 19800 5200 700 p | 19800 8900 2000 (une 15 /12/Q7) Q46. ‘A. business has extracted the following information from its books of account at 31 December 2014, its first year of trading 3000 cartiage inwards 12 camiage outwards | 15 losing inventory | 86 purchases 286 returns inwards 10 rolurns outwards 2 revenue 524 ‘What's the gross profitfor the year ended 31 December 20147 ‘A szo1000 «BB «$304000 «ee «$2000 =D «28000 une 15 /12/Q9)Q47. How are closing inventory and loss for the year treated? closing inventory loss for the year A | debit in statement of financial position debit in capital account credit in income statement credit in income statement 5 | debit in statement of financial position ebit in income statement recit in income statement credit in capital account c debit in income statement debit in capital account credit in statement of financial position credit in income statement ® debit in income statement debit in income statement credit in statement of financial position credit in capital account (une 15 /12/Q11) Qs. DEC Limited has produced the folowing information for the current fnancial year. department x | department Y 8 $ revenue 54000 26000 cost of sales, 23700 16600 ress profit 30300 9400 ‘The rent and insurance of buildings total is $1300. Heating and lighting total is $1200, The floor area occupied by each department: X 60%, ¥ 40%. What isthe profit or loss forthe year for department Y? ‘A. $800 loss B_ $5900 loss © $1500 profit D_ $20100 profit une 15 /12/Q15)Q49. {An invest is looking atthe nancial statements ofa company in which he may decide to invest Which item helps him to rely onthe financia statements? ‘A. consistency of accounting poices from one period tothe next B estimation of accounting provisions re'ying on the opinion of managers © inflation inthe currency in which the financia statements are prepared D lapse of time since the date of the statement offnancial postion (une 15 /12/Q22) Q50. A trader, whose year end was 31 December 2014, paid business rates of $3000 on ‘1 November 2014, The business rates were for the six months ending 31 March 2015, but no adjustment had been made for the prepayment. Which effect does this omission have on the profit for the year? A overstated $1500 B overstated $2000 understated $1500 D understated $2000 une 15 /11/Q2) Qs1. Closing inventory of $5000 at 31 December 2014 has been incorrectly entered in the financia statements as $3000 How does this affect the financial statements at 31 December 20147 profit forthe year | net assets A | nocffect understated B | overstated overstated © | understated no effect D | understated understated Qune 15 /11/Q3)Qs52. ‘Acompany has two departments, X and Y. The following data is available for the year. Sales for the two departments are $25000 and $3500 respectively. Both departments apply the same mark up and total gross profit amounts to $24000, Expenses are split 55% to X and 45% to Y. Total profit for the year amounts to $8000. ‘What is department X's profit for the year? A $1200 B $2800 c $5200 D $6800 une 15 /11/Q6) 953. ‘A trader buys and sells two products for cash. The following information is available. product X | product ¥ 8 s carriage outwards 3700 - goods taken for own use at cost = 2500 payments to suppliers 44500 | 38200 discount received 900 = What is the total value of ordinary goods purchased? A $80200 B 81100 c $83600 D $8480 (june 15 /11/Q12) Q54. Petra supplies goods on credit to Ashy Limited. What is Petra’s main interest in considering Ashy Limited's financial statements? A to discover its historic trend in profitability B to establish its level of liquidity to examine its capital structure D to find out about its dividend payments une 15 /11/Q21)Q55. ‘A business provides the following information. debit | credit $ s prepaid expenses | 4620 accrued expenses 8125 bank balances 14920 | 3612 trade payables 18148 loan (10 years) 15000 ‘What is the total for current liabilities? A $26273 B $26380 c $29885 D s4aaes (Nov 14/13/Q1) Qs56. (On 1 January a business has prepaid $800 for four months’ motor insurance. It also has an ‘outstanding invoice for fuel of §140, During January it pays the fuel invoice and 2 further $600 for fuel ‘AL 21 January it has an outstanding fuel invoice of $160. What isthe charge for motor expenses in the income statement for January? A $760 B $960 © s1t00 D $1580 (Nov 14/13/04) Qs7. sole trader recovers a debt that had previously been writen off as irrecoverable. How is this accounted for in his income statement? ‘A credit in the profit and loss account B credit in the trading account debit in the profit and loss account D_ debitin the trading account (Nov 14/13/Q16)Q58. A businass sells some of its inventory for $500 on credit to a customer. The inventory originally ‘cost $600, What isthe effect of this transaction on the statement of financial position? ‘current assets | owner's capital A | decrease by $100 | decrease by $100 B | decrease by $100 | increase by $100 © | increase by $100 | decrease by $100 D | increase by $100 | increase by $100 (Nov 14/12/08) Q59. ‘What is the purpose of providing for depreciation? ‘A. toapply the matching principle B to calculate the true value of non-current assets © to ensure that money is available for repair of non-current assets D to provide cash in the business for replacement of non-current assets (Nov 14/12/Q10) Q60. A trader decides to prepare departmental accounts. Which statements explain the reason for his decision? 1 Tobe able to calculate inventory for each department. 2 Toestablish haw to improve service to customers, 3. To have a basis for calculating staff bonuses. 4 To know the profit for each department, A tand2 B tand4 © 2and3 D 3and4 (Nov 14/12/Q11)Q61. Anon-current lability has been included as a current liability. ‘What will be the effect when this is corrected? A B c > increase net assets increase net current assets 1no effect on net current assets reduce nat currant assets (Nov 14/11/Q1) Q62. In preparing the financia’ statements, an accrual for rent payable was treated as a prepayment. What effect does this have on the profit and the current abilities? profit current bites A | overstated overstated B | overstated Understated | understated overstated D | understated | understated (Nov 14/11/93) 963. Which item will not appear in the income statement of a sole trader? A accounting charges B bank joan interest © director's fee D__ hire charge for leased machinery (Nov 14/11/Q11)Q64. In departmental accounts, which overhead might be apportioned according to floor space? A. advertising B depreciation of machinery C office wages D rent (Nov 14/11/Q13) Q65. The following financial information is available, $ inventory at 1 January 2013 800 inventory at 31 December 2013. | 1010 ordinary goods purchased 9260 carriage inwards 130 revenue 18000 discount received 700 other costs 3880 What are the values of gross profit and profit for the year? gross profit | profit for the year 8 $ A 8820 4240 B 8820 5640 c 9080 5900 D 9520 5640 (Nov 14/11/Q17)66. The interest receivable account shows interest of $17500 received during the year. interest of {$1600 is due at the year end. How wil this be shown in the income statement? ‘statement 5 a | creait 17500 B | credit 19100 ¢ | debit 47500 D | debit 19100 une 14/13/92) Q67. ‘A company sells goods at a mark up of 25%. ‘The following information is available at the end of the financial year. goods in warehouse '$300000 (cost) goods sent on sale or return | $200000 (at invoice price) ‘What was the value of closing inventory in the financial statements? A $300000 B $450000 (une 14/13/04) Q68. © $460000 D $500000 A sole trader withdraws goods for his own use. How does this affect his financial statements? income statement statement of financial position ‘A | increase closing inventories, decrease drawings B | increase cost of goods sold decrease drawings c decrease closing inventories increase drawings D | decrease cost of goods sold increase drawings une 14/13/Q15)969. Hedley has 100 items of inventory in his warehouse and five more with a customer on a sale or return basis. He provides the folowing information. ‘Sper unit historic cost paid 60 selling price a5 current replacement cost 65 Which value should appear in the statement of financial position for inventory? ‘A 6000 B $6200 © seazs D_ sas00 une 14/12/Q1) Q70. When preparing a sole trader's annual accounts, no adjustment was made for a prepayment at the end of the year. What is the effect ofthis omission? A | current assets overstated covers capital overstated B | currentassets understated | owner's capital understated © | profit or the year overstated | trade payables understated D | proftforthe year understated | trade payables understated une 14/12/Q2) q71. A trader took out a 6% bank loan of $30000 on 1 November 2013, to be repaid in full in 10 years’ time. Interest is to be paid annually. No interest had been paid by 30 April 2014. How should this be recorded in the statement of financial position at 30 April 20147 current liabilities | non-current liabilities s $ A ° 30000 B 900 30000 c 1800 30000 D 30900 o une 14/12/94)Q72. Which items will be debited to accounts in the purchases ledger? 1 discount allowed 2 payments to suppliers 3 purchases 4 purchases returns A tand2 B 2and3 Cc 2and4 D 3and4 une 14/11/Q1) Q73. ‘The accounting year end of a business is 31 October, (On 1 April the business rents out part of its warehouse for an annual rent of $8000. Payments were received in equal instalments on 1 April, 1 July, 1 October and 1 January. ‘At 31 October what would the financial statements show? statoment of income Sibert financial position s s ‘A | rental income 3500 |curent asset 1000, B | rentalincome 3600 | current iabilty 1000 | rental income 4500 | current ability 1000 D | rentalincome 6000 | current asset 1500 (une 14/11/92) Q74. Which transaction would increase the current assets of a business? A paying invoices $950, after receiving $50 cash discount B purchasing a machine on credit for $1200 © _ purchasing inventory for $1100 cash and selling it on credit for $1500 D__ selling inventory with an original cost of $800 at below cost price une 14/11/93)Q7s. A business had current assets and curentibites a follows s inventories 1600 trade recewvabies | 3200 trade payables 2700 rent recsivable 800 A fire destroyed the inventories, but 75% of the oss is covered by an agreed insurance ciaim, What are the net current assets after the fire? A $900 B $1300 © $2500 $2900 une 14/11/96) Q76. ‘The accounting year end for a company is 31 October. ‘The table shows the company’s telephone bill received on 2 December for the three months ‘ended 30 November. $ telephone cals to 30 November, 4041 rental of equipment for the period from 1 September to 30 November_| 156 Which accrual should the company make in the financial statements for the year ended 31 October? A $503 B $798 © $1093 D i197 une 14/11/97) Q77. ‘Which basis should be used to calculate the amount of advertising to be charged to a store with two departments? ‘area of floor space cost of non-current assets number of sales staff som> value of sales revenue (une 14/11/Q13)Q78. ‘A company provides the following information about is product. selling price $100 variable cost per unit $40 fixed costs $21600 break even point 360 units If the business changes its production method, contribution will increase by 10% and fixed costs will increase by 5%. ‘What would be the effect on the break even point? ‘A decrease by 16 units B decrease by 36 units C increase by 6 units D increase by 18 units (Nov/13/Q1) Q79 ‘A company calculates a draft profit for the year of $9800. This includes the profit margin of $3000 on goods sold on credit but not yet paid for. It also includes $500 profit taken on goods sold to @ customer on a sale or return basis. What is the correct gross profit? A 394500 B $9500 © $97500 D_ s98000 (Nov/13/Q2) Q80 A trader provides the following information, $s Prepaid rates at 1 October 2012 400 rent and rates paid during the year | 16200 accrued rates at 30 September 2013 | 600 prepaid rent at 30 September 2013 | 1200 Which charge for rent and rates appears in the income statement for the year ended 30 Septambar 20137 A $15200 B $1600 © $16400 D $17200 (Nov/13/93)81. ° business wishes to record the following transactions in its books of account contra between sales ledger control account and purchases ledger control account epreciation charge for the year increase in provision for doubtful debts purchase of non-current asset on credit How many transactions require an entry in the general journal? Ad B2 3 D4 (Nov/13/Q4) 982. ‘On 30 September 2012 a manufacturer's current assets totalled $28000. The next day, only two transactions took piace. 1 Inventory was bought for cash. The price of $2000 was subject to a trade discount of 20% and a cash discount of 5%. Payment was made immediately 2 Abad debt of $400 was written of. What was the tatal of current assets on 2 October 2012? A $27680 B $28080 © $29520 D $29600 (Nov 13/13/08) Q83. ‘The table shows information from the books of a business at 30 April 2013, details $ credit sales invoiced during financial year 79000 ‘goods sent to customers on 28 April 2013 and invoiced 4May 2013 | 6100 ‘goods sent to customers during April 2013 on sale or return basis but | 8300 not sold by 30 April 2013 What is the value of sales for the year ended 30 April 20137 A $76800 B $8510 © $8730 D_ $9340 (Nov 13/13/Q9)Qs. The following information is taken from a trader's statement of financial position. non-current assets 80000 capital at start of year | 75000 drawings 16000 profit for the year 13000 non-current liability 6000 current assets 12700 What is the amount of trade payables? A $8700 B st1700 © $14700 D $2670 (Nov 13/12/Q1) Q85. ‘A business wishes to create a new provision for doubtful debts. Which effect will this have in the financial statements of the business? in the income in the statement of statement financial position A increase profit increase current assets, 8 increase profit reduce current liabilities c reduce profit increase current liabilities D reduce profit reduce current assets (Nov 13/12/02) Q86. An item can be converted easily into cash. In which section of the statement of financial position would this item appear? A capital B current assets © current liabilities D__non-current assets (Nov 13/12/06)987. ‘Acompany's financial year ends on 31 December. ‘At 31 December Year 1 the company carried forward a debit balance of $36200 on the rent account. During Year 2 payments made for 12 months’ rent, to 31 March Year 3, were $157200. ‘What is the amount of rent to be charged in the income statement in Year 2? A $i21000 = B$154100 + -«-$160300 © D_«$193400 (Nov 13/12/97) 88. A trader buys inventory costing $6000. He is entitled to trade discount at 10% and cash discount of 5%. On the same day he discovers that he can only sell the inventory for $5000, ‘Which amount should he record as the purchase price of the inventory? A $5000 B $5130 © $5400 D $6000 (Nov 13/12/08) 989. Goods that had previously been purchased on credit have been retumed to the supplier. How should this be recorded in the purchaser's books of account? account to be debited | account to be credited a bank purchases returns B trade payable bank c creditor purchases returns. D | _ purchases returns trade payable (Nov 13/11/Q2)Q90 ‘Gn 1 January 2012 a business had prepaid rent of $60. During 2012, it made throe rent payments of $250 each. On 31 December 2012, the business owed §200 rent for 2012 ‘The business owner only charged the rent payments made during 2012 in the income statement. What is the effect on profit for the year? A. $200 overstated B_ $200 understated © $250 overstated 1D $250 understated (Nov 13/11/Q3) gor "A computer used for demonstration to customers was treated as capital expenditure. “The following year a customer purchased the computer in the ordinary course of business. Which entries are needed to adjust the cost of sales? ‘account tobe debited | account tobe credited A inventory computers 8 purchases computers c sales inventory D | _ soling expenses sales (Nov 13/11/04) Q92. The following information is extracted from the statement of financial position ofa business. $ bank loan (repayable 2019) 16200 bank loan interest owing 1880 bank overdraft 14600 capital 20710 srawings 19100 inventory 14610 prepayments 1420 trade payables 14110 trade receivables 9050 What is the value of the net current labilties? A. $1590 B s2510 © s1e710 =D $20320 (Nov 13/11/Q6)Q93. ‘A business prepares its financial statements on 31 December. Insurance premiums paid were as follows. ate period covered s January 2012 | 1 July 2011 to 31 December 2011 940 July2012 | 4 January 2012 to 30 June 2012 1120 January 2013. | 1 July 2012 to 31 December 2012 1245 March 2013 _| 1 January 2013 to 30 June 2013 1880 ‘Which amount should be shown in the income statement for the year ended 31 December 20127 A $1120 B $2060 c $2365 D $3305 une 13/13/Q2) 94. TG tavie SHOWS LalaiveS at ule e11U OI a yea. expenses prepaid | 6000 expenses accrued | 4000 bank overdraft 11500 trade payables 13.400 trade receivables | 10500 loan (2017) 20000 ‘What is the total of current liabilities? A $16500 B $17400 ¢ $28900 D $48900 une 13/13/95) Q95. (On 1 July 2012, a business shows an accrval on the rent account of $600. During the following year, payments were made for rent as detailed below. $ 26 July 2012 pid 3 months rent to 31 July 2012 900 11 November 2012 | paid 4 months rent to 30 November 2012 | 1200 18 March 2013 _| paid 4 months rent to 31 March 2013, 1200 In preparing the rent account for the year ending 30 June 2013, which amourt Is to be shown as ‘a prepayment or accrual for rent at that date? A $600 accrual B $600 prepayment © $900 accrual D $900 prepayment une 13/13/96)96. Closing inventory has been overvalued. What is the effect on the financial statements? net current assets | profit for the year A no effect understated B overstated no effect c overstated overstated D | understated understated (une 13/13/Q7) Qo7. A business allocates the following expenses to departments on the basis either of sales or floor advertising carriage out heating rent Which expenses are allocated on the basis of floor area? A tand2 B tand3«G 2endé =D Sanda une 13/13/Q12) Qos In the books of account of ¥, how could a credit entry of $500 in X's account have arisen? AX bought goods from Y. BX retuned goods to ¥. © Ymade a payment to X D__Yreturned goods to X une 13/12/Q1)Q99. 'A business paid $5750 during its trading year for advertising. Part of this amount included $500 in respect of the next financial year. Which effects would the correct treatment of the $500 have on the financial statements? profit for] net cucent the year aesels A | decrease | decrease 8 | decease | increase ¢ | increase | decrease | increase | increase une 13/12/Q2) Q100. ‘Arentsits building o 8 ‘At 31 December 2011, 8 owed $4500 for rent. At 31 December 2012, B had paid $3200 in ‘advance. During the year A had received $17 100 in rental from B. What is the rental income to be shown in A’s income statement for the year ended 31 December 20127 ‘A $9400 B $1580 © $8400 © $2400 une 13/12/93) qu01. ‘The draft financial statements of a business show a profit for the year of $64 000 before taking account of the folowing 1 the reduction ofthe provision for doubtful debts by $300 2 the purchase of office stationery costing $2400 which has not been entered in the records; oniy one sixth ofthis stationery was used by the year end ‘What isthe corrected proft forthe year? A 861900 B_ $6300 © $6410 D $6430 (June 13/12/Q4) 102. ‘Who is mast likely to use an age analysis of debtors? cashier o credit controller ° sales ledger supervisor ° sales manager (une 13/12/99)Q103. ‘A business sells some inventory for $80 on credit. This originally cost $50 How does this affect the statement of financial position? current assets | owner's capital A | decrease by $30 | decreases by $30 B | decrease by $30 | increases by $30 ¢ | increase by $30 | decreases by $30 D_| increase by $30 _| increases by $30 (une 13/12/Q17) Qos. ‘A payment from a credit customer has been credited to cash sales Which entries correct this error? ‘account to be debited | account to be credited A customer bank 8 customer sales c sales bank > sales customer (June 13/11/Q2) Q105. Which transaction would increase the current assets of a business? A. paying credit suppliers $750 cash B__ purchasing a non-current asset on credit for $5000 © _ purchasing inventory on credit for $1000 and selling immediately for $2000 cash D selling inventory of $1000 at cost price on credit une 13/11/98) Q106 ‘A business has a bank balance of $4800. It pays for materials invoiced at $3000 loss trade discount of 30% and cash discount of 10%. A cheque for $450 is received from a customer. What is the bank balance after these transactions? A $2250 B $2460 © $3360 D $3450 (une 13/11/Q9)Q107. A trader has two departments in his clothes store — men’s and women’s, ‘The following information is available. men's women’s sales staff (number) 7 13 floor space Bim? 99m? value of non-current assets | 90000 | $135000 annual sales $2a7000 | $403000 ‘The cost of advertising and distribution is $68 100. ‘What is the cost for advertising and distribution for the men’s department? A $23835 B $25878 © $27240 D $30645 (June 13/11/Q16) Qu08. Abbusiness maintains a sales journal, a purchases journal, a cash book and a general journal Which items would be posted to the ledger accounts from the journal? increase by $100 | increase by $100 une 09/1/Q11)Qusz. ‘Aloan due for repayment in 20 months’ time has been included as a current liability. What wil be the effect when this is corrected? A increase net assets B increase net current assets Cnoeffect on net current assets D reduce net current assets (Nov 08/1/92) Qis3. Interest receivable account shows interest of $17 500 received during the year. Interest of $1600 How will this be shown in the final accounts? mroftandicss 5 | balance shot § A | creat 17 500 | sundry debtors 1600 B | creat 19 100 | sundry debtors 1600 © | debit 17 800 | sundry creditors 1600 D | debit 19 100 | sundry creditors 1600 (Nov 08/1/04) Qis4. Closing stock has been undervalued What is the effect on the financial statements? net current assets net profit A no effect understated B overstated overstated c understated no effect D understated understated (Nov 08/1/99)Quss. A business sells some of its stock for $80 on credit to @ customer. The stock originally cost $50. Which statement reflects the effect of this transaction on the balance sheet? current assets | owner's capital A | decrease by $30 | decreases by $30 B | decrease by $30 | increases by $30 ¢ | increase by $30 | decreases by $30 D | increase by $30 | increases by $30 (Nov 08/1/Q13) Q156. A business has the following assets and liabilities. $ short-term investment 6.000 loan interest owing 1500 loan repayable within one year 12.000 deposits from customers for orders | 4500 creditors 27 000 debtors 39.000 prepayments 3.500 ‘What is the amount of net current assets? A $3500 B $4500 © $8000 D $1550 (Nov 08/1/Q17)Qis7. Rent is paid by a business monthly in advance on the first day of each month. The payt during this financial year have been as follows: —up to and including 1 June $500 per month ~from 1 July thereafter $600 per month ‘Which amount(s) will appear in the accounts for the year ended 31 October? profit and loss expense balance sheet $6400 $600 prepayment 6400 $600 accrual s6400 - 7000 - vom > une 08/1/92) Q158. ‘When preparing a sole trader's annual accounts, no adjustments were made for prepayments at the end of the year. What isthe effect of thase omissions? net profit overstated creditors understated net profit understated creditors understated A 8 © | currontassets overstated | owner's capital overstated D | curent assets understated | owner's capital understated (Nov 07/1/Q2) Q159. A business prepares its accounts to 31 December. Insurance premiums paid were: ate paid s January 2008 | paid for 6 months to 31 December 2005 | 940 July 2006 | paid for 6 months to 30 June 2006 1120 January 2007 | paid for 6 months to 31 December 2008 | 1245 March 2007 _ | paid for 6 months to 30 June 2007 +1880 Which amount should be shown in the profit and joss account for the year ended 31 December 20067 A $1120 B $2080 c s2365 D_ $3305 (Nov 07/1/93)Q160. A customer paid a deposit in advance for goods to be supplied at a later date. How should this be recorded in the seller's books? éebit credit A | cash | customer B | cash sales © | customer | prepayment D | customer | _ sales une 07/1/92) qu61 In the books of Y how could a credit entry of $500 in X's account have arisen? A. X bought goods from Y BX retumed goods to Y © Y made. payment to X D__ Yretumed goods to X (Nov 06/1/02)