Class Test MM:35

Time:30 min

1. There are 10 parts to Question 1.

For each of the parts (a) to (j) below there are four possible answers A, B, C and D. Choose the
one you consider correct and place a tick to indicate the correct answer.

(a) A statement of financial position showed the following.

$
Non-current assets 190 000
Non-current liabilities 27 000
Current assets 56 000
Current liabilities 71 000

What was the owner’s capital?

A $90 000 B $148 000 C $178 000 D $232 000

(b) Which is a current asset?

A bank loan repayable in five years

B bank overdraft
C inventory
D Equipment [1]

(c) Which task would not be carried out by a book-keeper?

A posting cash receipts
B preparing financial statements
C recording entries in the purchases ledger
D writing up the sales returns journal
(d) Why does a business prepare a trial balance?
A to calculate the profit or loss
B to check the arithmetical accuracy of the ledger
C to check the cash and bank balances
D to show the financial position of the business

(e) How should the owner of a business use his financial statements?

A to calculate the cash drawings for the year

B to determine the amount due to trade payables
C to measure the change in the bank balance
D to monitor the progress of the business

[1]
(f) Which accounts all have debit balances?
A capital, insurance, purchases
B drawings, sales, purchases returns
C inventory, motor vehicles, cash
D rent received, drawings, wages

(g) Which ledger entries record the purchase of a machine bought on credit from John Smith?

A debit John Smith, credit machinery

B debit John Smith, credit purchases
C debit machinery, credit John Smith

D debit purchases, credit John Smith

(h) What are assets?

A items that are bought for long-term use by a business

B items that are expected to be turned into cash in the near future

C items that are owned by or owed by a business

D items that are owned by or owed to a business

(i) Sami returns goods bought on credit from Javed.

How does Javed record this in his books?

account debited account credited

A purchases returns Sami
B sales returns Sami
C Sami purchases returns
D Sami sales returns

(j) What is the accounting equation?

A assets less liabilities equals capital

B assets plus liabilities equals capital
C capital less liabilities equals assets
D capital plus assets equals liabilities
[Total:10]
2.(a) State what is meant by a Non current liability.

..............................................................................................................................................

....................................................................................................................................... [2]

(b) State the difference between bookkeeping and accounting.

..............................................................................................................................................

..............................................................................................................................................

..............................................................................................................................................

....................................................................................................................................... [2]

(c ) Complete the following table indicating with a tick (✓) whether each item is an asset, liability,
income or expense.

asset liability income expense

bank loan
insurance
equipment
depreciation charge
[4]

Samula is running a small printing press.

REQUIRED

(e) (i) Suggest one item Samula would include in her non-current assets.

...................................................................................................................................... .[1]

(ii) Suggest one item Samula might include in her inventory.

...................................................................................................................................... .[1]
 5

(f) State how each of the following transactions affect the assets and liabilities of Samula .
The first one has been done for you as an example.

Transactions Effect on assets Effect on

Liabilities

(a) Bought Samula for cash Cash Decrease

No effect
Inventory Increase

Malorie Introduced capital for

(b)
further use
(c)
Bought Inventory on credit from
Sabby
(d)
Sold goods to Mr. Goben on
credit
(e)
A loan from bank was arranged
and the funds were transferred
to the business’s bank account
(f)
Malorie withdrew cash for
personal use

[5]
(g) State whether the following sentence is true or false.

true or false

The recording of financial transactions is called accounting.

....................
[1]

[Total:14]
 6

3. (a) State two reasons why a trader may prepare a trial balance.

1 ................................................................................................................................................

...................................................................................................................................................

2 ................................................................................................................................................

.............................................................................................................................................. .[2]

(b) Mention and explain the errors( any 3) not reflected by the difference in a trial balance?[9]

1 ................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

2 ................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

3 ................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

[Total:11]

BLANK PAGE
7