TOTAL MARKS : 100 PASSING MARKS :50 TIME ALLOWED : 2 HOURS

1. The net asset of Musawar , a trader , at 1 january 2012

amounted to $128000 . During the year 31 december 2012
Musawar introduced a further $50000 of capital and made
drawings of $48000 . At 31 december 2012 Musawar net assets
totalled of $184000.

What is Musawar total profit or loss for the year ended 31

december 2012 ?

 $54000 loss
 $42000 loss
 $58000 profit
 $54000 profit

2. A suspense account shows a credit balance of $130 . Which of

the following could be due to?
 Omitting a sale of $130 from the sales ledger
 Failing to write off a bad debt of $130
 Recording a purchase of $130 twice in the purchase account .
 Recording an electricity bill paid of $65 by debiting the bank
account and crediting the electricity account .

3. Are the following statements about debit entries true or false ?

A. A debit entry in the cash book will increase an overdraft in the
accounts .
 B. A debit entry in the cash book will increase a bank balance in
the accounts .
 Both true
 1 true and 2 false
 Both false
 1 false and 2 true

4. Sarah is trader registered for sales tax and has sales of $2400
exclusive of sales tax for the first quarter of the year . She
makes purchases of $1320 which are exclusive of sales tax .
Sales tax is charged on all sales and purchases at 20%.

How much does she owe/is she owed by the tax authority for the
first quarter of the year ?

 $480 owed to the tax authority

 $480 owed by the tax authority
 $216 owed to the tax authority
 $216 owed by the tax authority

5. A debit entry to a general ledger account can relate to which of

the following ?
 A decrease in expense
 A decrease in an asset
 A decrease in a liability
 A decrease in drawings

6. An employee’s basic pay is $600 for a 40-hour week, income

tax is deducted 20% and there is an employer’s pension
contribution of 5% of basic pay . In addition the employee
 worked overtime of 7 hours which is paid at double the normal
hourly rate . What is the employee’s net pay ?
 $790
 $648
 $810
 $618

7. Which of the following is not a correct statement in relation to

accounting entries required for a credit sale including sales tax?
 The gross amount is debited to accounts receivable
 The net amount is credited to sales
 Sales tax is credited to the sales tax account
 The gross amount is credited to sales

8. Petty cash on hand is currently $234 and the business has an

imprest amount of $750 .
What will be the entry to the petty cash book if the cashier tops
up the petty cash ?
 $750 Credit
 $516 debit
 $750 debit
 $516 Credit

9. Which of the following is/are true in relation to correcting

accounting errors that were not disclosed through the trial
balance?
i) There will need to be an entry to both sides of the
suspense account to correct them
 ii) The effect of the correction will change either the total of
the debits or the total of the credit in the trial balance
 i)only
 i) and ii)
 ii) only
 neither i) nor ii)

10. The entries in relation to the purchase of a inventory for

$7500 have been entered into the correct account , but both
recorded as credits. What entry would be posted to suspense
account to correct ?
 CR $15000
 DR $7500
 DR $15000
 CR $7500

11. Which of the following would not be a reason to adjust

the receivable ledger during a control account reconciliation?
 A credit note was posted to a customer’s account as a debit
 The total column in the sales day book has been miscast
 An invoice to a customer was recorded twice in the
customer’s account
 A cheque received from a customer was debited to the
customer’s account

12. Which of the following occurs as a result of the bank

clearing system?
 Direct debits
 Outstanding lodgements
  Standing order
 Bank charges

13. Employees’s wages vary each week dependent upon the

number of units produced. Which of following describes the
basis on which employee is paid ?
 Overtime
 Piecework
 Unitised
 Piecework hours

14. In the course of the bank reconciliation of a business , the

following comes to light: a cheque written to supplier of $341
has not been cashed and cheques paid in yesterday totalling
$836 have not be cleared into the business account . in addition
a cheque written for $1270 was recorded as $1720 .
If the cash account balance was DR $8923 prior to the
reconciliation , what was the balance on the business bank
statement?
 DR $8878
 CR $9868
 DR $9868
 CR $8878

15. If a business liabilities increases by $20000 and capital

falls by $5000 , what must be the change in total assets?
 Increase of $15000
 Decrease of $20000
 Decrease of $25000
  Increase of $20000

16. The sales day book total of $34562 was posted as 35462
in error , debiting sales and crediting receivables control
account .
What entry would be made to correct this error ?
 DR receivable control account:$70024 , CR sales: $70024
 DR receivable control account:$34562 , CR sales: $34562
 DR receivable control account:$35462 , CR sales: $35462
 DR receivable control account:$69124 , CR sales: $69124

17. A business general ledger contains the following balances:

Sales 10000
Purchases 4000
Irrecoverable debts 500
Receivables 4000
Payables 2000
Non current assets 5000
Wages and salaries 2000
Capital 4450

What will be the total of debit side of the trial balance ?

 $3500
 $7950
 $32900
 $16450
18. When business accountant prepares the trial balance , a
credit of $810 is transferred to the suspense account .
Which of the following would explain the need for this ?
 The entries for a credit sale of $810 were made the wrong
way round
 A cash sale of $1900 was recorded as $1090
 A cash purchase of $810 was omitted from accounting
records
 Both entries in relation to a cash sale of $405 were recorded
as debits

19. Which of the following statement is true about an

effective document policy ?
i) It enables management to analyse past trends
ii) It facilitates preparation of the annual financial
statements
iii) It enables customer complaints to be investigated
iv) It helps to meet legal and regulatory requirements

 i),ii),iii),iv)
 i),ii) and iv)
 i),iii) and iv)
 i) and iii)

20. A company transactions for a day are :

Credit sales $5000,

Cash sales $1000,
Cash received from credit customers $2000,
 Credit note issued $500.

What amount should be recorded in the sales day book and

sales return day book ?
 Sales day book $6000

Sales return day book $500

 Sales day book $5000

Sales return day book $2500

 Sales day book $4000

Sales return day book $500

 Sales day book $5000

Sales return day book $500

21. A business records the following transactions during

March for a customer :

Credit sales (excluding sales tax) $10000,

Cash received $2000.

If sales tax is 10% , and the customer account opening balance

Was $0, what amount will appear as the balance of the

Customer account statement issued to the customer at the

End of March ?

 $9000
  $8000
 $8800
 $8182

22. Which of the following would be the most likely payment

method for a business to pay the rental for its premises?

 Cash
 Standing order
 EFTPOS
 Direct debit

23. At the end of November the brought down balance on the

payables control account recorded an amount owed to
suppliers of $3535. During November the total credits to the
account were $6756 and debits were $5398.
What was the brought-down Balance at the start of November?
 DR $2177
 DR $3535
 CR $2177
 DR $4893

24. A business recorded the credit purchase of office

furniture as an expense and a liability.
Which of the following statement is true ?
i) Assets are overstated
ii) Expenses are overstated
iii) Assets are understated
iv) Expenses are understated
  i) and ii)
 iii) and iv)
 i) and iv)
 ii) and iii)
25. If sales exceed purchases, sales tax in the trial balance will
be which of the following ?
 A credit
 Zero
 A debit
 Either a credit or a debit

26. Business had a balance at the bank of $2500 at the start

of the month . during the following month , it paid for material
invoiced at $1000 less trade discount of 20% and cash discount
of 10% . It received a cheque from a customer in respect of an
invoice for $200 , subject to cash discount of 5%.
What was the balance at the bank at the end of the month ?
 $1970
 $1980
 $1990
 $2000

27. A trial balance extracted from a sole trader’s records

failed to agree , and a suspense account was opened for the
difference.
Which of the followings errors require an entry in the suspense
Account in correcting them ?
 i) Discount allowed was mistakenly debited to discount
received account .
ii) The balance on the rent account was omitted from the
trial balance
iii) Goods taken from inventory by owner had been recorded
by crediting drawings account and debiting purchases
account .
 All three items
 2 and 3
 2 and 1
 Only 2

28. In which book of prime entry will a business record debit

notes in respect of goods which have been sent back to
suppliers ?
 The sale return day book
 Cash book
 Purchase return day book
 Journal
29. A business sells 20 items with a list price of $10 each to a
customer . The customer receives a trade discount of 5% and a
settlement discount of 2% is offered for payment within 30
days, which the customer is expected to take up.
How much should the business record in the sales day book for
the sale ?

 $200
 $190
 $186.20
  $196

30. Which of the following statements is / are true ?

i) Control account reconciliations are necessary in order to
prepare a trial balance
ii) The receivables control account is reconciled to the cash
book
 Neither i) nor ii)
 i) only
 ii) only
 Both i) and ii)

31. Faiza tahir is a second-hand car dealer . She uses a coding

system to record her business transactions .

First number
100 sales
200 non current assets

Second number

300 payables
400 recievables
500 cash

She needs to know how to code the invoice she has received
for a computer bought on credit.
What code will be used ?
 100400
 200500
 100500
  200300

32. A business registered for sales tax at 20% sells goods at a

list price of $5600 to a credit customer . They grant a trade
discount of 5% , and account for the sale accordingly.
The customer returns half of the goods . what is the journal
entry to record the return of the goods ?
 DR sale return : $2660, Dr Sales tax : $532, CR Recivables
control account : $3192
 DR sale return : $2800, Dr Sales tax : $560, CR Recivables
control account : $3360
 DR Receivables control account : $3192, CR Sales tax : $532,
CR Sales return $2660
 DR Receivables control account : $3360, CR Sales tax : $560,
CR Sales return $2800

33. Which of the following statement is/are correct about

data handled by an organisation ?
i) Data from the accounting software should be backed up
reguraly and stored securely and separately from the
system itself
ii) Employee records must be kept in accordance with data
protection procedure
iii) Access to the accounting software system should only be
given to authorised employee
 1,2,and 3
 1 and 2
 2 and 3
 None of them
34. A business has non-current assets of $ 26000, total
liabilities of $32000 and capital of $8500 .
What is the value of Current assets ?
 $15500
 $40500
 $6000
 $14500

35. The following payroll calculations have been made for

April 2018:
$
Gross pay 162383
Employer pension contribution 19481
Employee benefit contribution 17857
Employer benefit contribution 8116
Employee pension contribution 9741
Income tax 4383

What is the total payroll cost for the employer for the month?
 $189980
 $130402
 $189981
 $221961

36. Which of the following is/are recorded in a purchase day

book ?
i) Input sales tax
ii) Output sales tax
 iii) Discount received
iv) Credit purchases

 1 only
 1 ,3 and 4
 1 and 4
 2 and 4

37. A business payables ledger had a total balance of $5400

at the start of May . During May the business purchases goods
to the value of $8200 , half of which is for cash , and sends
cheques to suppliers totalling $3000 only $2500 of which have
been presented at the month end .
What is the balance of the Payable ledger at the end of May?
 $11100
 $10600
 $7000
 $6500

38. Which of the following is /are false ?

i) All reconciling items in a bank reconciliation represent
errors
ii) The figure for cash from the bank statement is included in
the trial balance and financial statements
 1 only
 2 only
 None of them
 Both
39. Business owes a supplier $6400 for goods supplied , the
supplier is also a customer of the business and owes them
$3850.
What entries would be required in the general ledger of the
business to reflect they have agreed to net off their debts ?
 DR Payables control account : $3850 , CR Receivable
control account : $3850
 DR Receivable control account : $3850 , CR Payable
control account : $3850
 DR Payables control account : $6400 , CR Receivable
control account : $6400
 DR Receivable control account : $6400 , CR Payable
control account : $6400

40. A suspense account was opened when a trial balance

failed to agree . The following errors were later discovered .
- A Rent of $420 had been recorded in the Rent account as
$240
- A discount of $50 given to a customer had been credited to
discount received
- Interest received of $70 had been entered in the bank
account only .
What was the original balance on the suspense account ?
 CR $210
 DR $160
 DR $210
 CR $160
41. One of a business customer Osama has gone into
bankruptcy and the outstanding debt of $500 is now
considered irrecoverable .
What entries would be made in the general ledger to reflect
this ?
 DR Receivables control account , CR irrecoverable debts
 DR receivable control account , CR Payable control
account
 DR Irrecoverable debt , CR Payable control account
 DR Irrecoverable debt , CR receivable control account
42. A company sells goods to a customer for $5000 at the
beginning of the month .
The customer immediately returns half of the goods as faulty
and pays half of the remaining balance within 7 days . What is
the balance outstanding on the statement of account issued by
the company to the customer at the end of the month ?
 $5000
 $1250
 $2500
 Nil

43. Which document is sent with a payment to a supplier in

order to identify the invoice being paid
 Credit note
 Supplier statement
 Invoice
 Remittance advice
44. Which of the following are examples of payables of a
business
1) Interest owed from the bank
2) Loans and advances to employee
3) Money owed from customers
4) Tax owed to the tax authority
 1, 3 and 4
 2, 3 and 4
 2 and 4 only
 4 only

45. A business has received a statement of account from a

supplier showing a balance of $10000 . The business records
shows a balance of $10500 .
Which of the following could account for the difference ?

 The business has recently paid the supplier $500 which he

has not yet recognised
 The business has failed to recognise a credit note which
the supplier is issued
 The supplier has failed to recognise goods the business
has returned
 The business has failed to recognise an invoice issued by
the supplier

46. Which of the following statements is/are true in relation

to an aged receivables analysis?
i) It indicates when a supplier requires payment
 ii) It shows how long invoices for each customer have been
outstanding
 1 ony
 None of them
 2 only
 Both

47. According to the till , today’s cash receipts total $5215 . At

the end of today the till float is $74.32 and yesterday it was
$67.87 . Assuming no cash difference how much will be banked
from till receipts today ?
 $5215
 $5287.87
 $5208.55
 5140.68

48. If a business takes advantage of an early settlement

discount , which of the following is true ?
1) It reduces purchases
2) It increase net assets
 i) only
 i) and ii)
 ii) only
 neither i) nor ii)

49. Ammar is reconciling the total of the list of balances from

her receivable ledger to the balance on the trade receivable
control account . The total of list of balances is $25627 . she
discovered two errors:
 i) A customer’s account has been overcast by $99
ii) An invoice for $89 has been treated as credit note

What is the corrected total of the list of balances from her sales
ledger ?

 $25617
 $25706
 $25350
 $25439

50. Which of the following correctly explain(s) why a trial

balance is prepared ?
1) To summarise the balance prior to preparation of the final
accounts
2) To provide a basic check on the accuracy of bookkeeping
entries
 Both 1 and 2
 1 only
 2 only
 Neither 1 nor 2