LYCEUM INTERNATIONAL SCHOOL

FIRST SEMESTER EXAMINATION - MARCH 2017

PRINCIPLES OF ACCOUNTS
PAPER I
9 (Cambridge)..........

Duration : 1 hour

[Total = 100 marks]

Instructions : There are thirty questions on this paper.
Answer ALL questions.
Choose ONE of the FOUR answers given and record your choice on the seperate
answer sheet.

Candidate's name : ........................................................... Admission no : ........................

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Grade 9 Principles of Accounts I contd.....
Answer All the questions.
1) Businesses use financial records to prepare final accounts.
Which record is used in the preparation of the Statement of financial position?
A bank statement B Cash book
C purchases journal D sales journal
2) What is calculated in the trading section of the income statement?
A closing inventory B gross profit
C profit for the year D sales revenue
3) Which is current liability?
A capital B cash C trade receivables D trade payables
4) A business provides the following information.
Revenue $ 10,000
Purchases $ 8,000
Opening inventory $ 1,000
Closing inventory $ 1,500
Sales returns $ 200
Purchases returns $ 300
A $ 2,000 B $ 2,100 C $ 7,200 D $ 8,200
5) Employees skills are not recorded in the books of account.
Which accounting principle is involved?
A consistency B money measurement
C prudence D business entity
6) A retailer's capital is $ 40 000. The following payments are made from the business bank account.
$ 5000 for extension to the retailer's shop
$ 2000 for purchase of television for retailer's private house
How much is the retailer's capital now?
A $33 000 B $35 000 C $38 000 D $45 000
7) Sara's sales journal includes the following entry.
date name amount $
April Ali 350
To which accounts will this item be posted in Sara's ledger?
Account debited account credited
A Ali cash
B Ali sales
C cash Ali
D Sales Ali
contd.....to page 2
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Grade 9 Principles of Accounts I contd.....from page 1
8) Nimal, a business consultant, provided the following information.
$
profit for the year 23 400
rent received from tenant 1 520
general expenses 39 760
loan interest paid 1 230

What was the total of the fees received from clients?

A $60 410 B $61 930 C $62 870 D $63 160
9) The following is a list of a builder's expenditure for the year.
$
motor vehicle 10 000
purchases 25 000
wages 20 000
rent of offices 6 000
machinery 7 000
petrol 3 000
What is the amount of capital expenditure?
A $10 000 B $17 000 C $54 000 D $71 000
10) An office machine cost $8500 and is estimated to have a useful life of four years. Its scrap value
at the end of this time is estimated at $1000.
What is the annual charge for depreciation using the straight-line method?
A $1000 B $1875 C $2125 D $2375
11) A sole trader depreciates his motor vehicles at 25% per annum on a reducing balance basis.
The vehicles cost $16 000 at 1 January Year 1.
What is the depreciation for Year 2?
A $3000 B $4000 C $7000 D $8000
12) Which affects both gross profit and net profi?
A carriage inwards B carriage outwards
C discount allowed D discount received
13) Which will give the cost of goods sold?
A opening stock – purchases + closing stock
B purchases + closing stock – opening stock
C opening stock + purchases – closing stock
D purchases – opening stock – closing stock
contd.....to page 3
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Grade 9 Principles of Accounts I contd.....from page 2
14) Karl's trial balance for 31 December 2017 includes the following balances.
$
sales 3 200
inventory at 1 January 2017 200
purchases 1 800
expenses 800

Karl's stock at 31 December 2017 was $300.

What is Karl's profit for the year?
A $400 B $500 C $700 D $1500
15) The same accounting treatment should be applied to similar items at all times.
Which accounting principle is being applied?
A consistency B duality
C money measurement D prudence
16) Amir buys goods with a list price of $1500 from Zainab, who allows a trade discount of 20%.
A cash discount of 5% is also allowed if settlement is made within 30 days.
What amount will be entered in Amir's purchases journal?
A $1125 B $1140 C $1200 D $1425
17) Abdul is a trader in office furniture. He buys furniture on credit from Farad for use in his own
business.
How will Abdul record this transaction?
account debited account credited
A purchases Farad
B Farad purchases
C office furniture Farad
D Farad office furniture
18) A business provides the following information.
$
accrued expenses 9350
accrued income 24 750
prepaid expenses 14 250
prepaid income 32 650

What is the total amount to be included in current liabilities?

A $34 100 B $39 000 C $42 000 D $46 900
contd.....to page 4
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Grade 9 Principles of Accounts I contd.....from page 3
19) Why is depreciation provided on non-current assets?
A so that the cost is allocated to periods that benefit from them
B so that the entity concept is applied
C so that there is enough cash in the business to replace them
D so that they are shown at market value
20) A trader decides to change his provision for doubtful debts from 2% to 3% of trade receivables.
Which entry is made to record this?
debit credit
A bad debts income statement
B income statement bad debts
C income statement provision for doubtful debts
D provision for doubtful debts income statement

21) Bashir maintains a provision for doubtful debts of 3% of the trade receivables at the end of
the year.
On 31 December 2011 trade receivables amounted to $70 000.
On 31 December 2012 trade receivables amounted to $73 000.
Which double entry should Bashir make on 31 December 2012?
debit $ credit $
A income statement 90 provision for doubtful debts account 90
B income statement 2100 provision for doubtful debts account 2100
C provision for doubtful 90 income statement 90
debts account
D provision for doubtful 2100 income statement 2100
debts account

22) Candy purchased a motor vehicle. She also paid for the cost of delivering the vehicle, insurance
and fuel for the vehicle.
Which would be included in Candy's income statement?
A delivery cost, fuel, insurance
B delivery cost, fuel, insurance, motor vehicle
C delivery cost, motor vehicle
D fuel, insurance
23) At the end of its financial year a business had trade receivables of $16 000 and had provision
for doubtful debts of $640. The provision is to be maintained at 5%.
Which amount is shown in the income statement?
A $160 credit B $160 debit C $800 credit D $800 debit
contd.....to page 5
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Grade 9 Principles of Accounts I contd.....from page 4
24) Which item is revenue expenditure?
A cost of painting new office premises during construction.
B cost of repairs to factory plant and machinery.
C legal fees for the purchase of new factory premises
D wages of a company's own workmen for building an office extension.
25) Sara had the following assets and liabilities on 1 August 2012.
$
non-current assets 44 000
non-current liabilities 10 000
inventory 1 500
trade payables 3 300
trade receivables 2 600
What was Sara's capital?
A $34 800 B $36 200 C $44 800 D $46 200
26) What are assets?
A items that are expected to be turned into cash in the near future.
B items that are owned by or owed to a business
C items that are owned by or owed by a business
D items that are purchased for long-term use by a business
27) Sally supplies goods to Jake.
In Sally's books the account of Jake shows a debit balance of $350.
Jake sends Sally a cheque for $75.
What is the balance on Jake's account after this transaction?
A $275 debit B $275 credit C $425 debit D $425 credit
28) Amounts owed by a trader for electricity are given below.
$
1 January 2 000
31 December 2 500
The charge for electricity shown in the income statement for the year ended 31 December was
$ 15 500.
What was the amount paid for electricity during the year?
A$15 000 B $15 500 C $16 000 D$20 000

contd.....to page 5
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Grade 9 Principles of Accounts I contd.....from page 4
29) A business's trial balance included the following.
Dr CR
$ $
machinery at cost 10 000
provision for depreciation of machinery 3000

Depreciation is to be provided at 10% on cost.

What is the net book value of machinery shown in the Statement of financial position?
A $4000 B $6000 C $7000 D $9000

30) A business sends a cheque to a supplier. The transaction is recorded in the cash book and
supplier's account.
Which accounting principle is being applied?
A consistency B duality
C money measurement D prudence

END

Ref : NK