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1

Which statement is correct?

1. The fundamentals of accounting  →  1.1. The purpose of accounting

2. Sources and recording of data  →  2.1. The double entry system of book-keeping

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2

The balances remaining on the books of a business after the preparation of the income statement included the following. $ loan from XY Finance 10 000 wages due rent prepaid trade receivables 3 300 trade payables 4 650 motor vehicles 8 000 provision for depreciation of motor vehicles 2 000 What was the total of the liabilities?

1. The fundamentals of accounting  →  1.2. The accounting equation

5. Preparation of financial statements  →  5.6. Incomplete records

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3

On 2 April Nina received a cheque from Zaffar, a credit customer. On 12 April the cheque was returned unpaid by the bank. What entry would Nina make on 12 April?

4. Accounting procedures  →  4.4. Irrecoverable debts and provision for doubtful debts

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4

Ann is a trader. On 1 April Cindy’s account in Ann’s ledger showed a credit balance of $520. The following transactions took place during April. April 2 Ann returned goods, $30, to Cindy. Ann bought goods, $210, from Cindy, and paid in cash. Which statement about the balance on Cindy’s account in Ann’s ledger on 30 April is correct?

5. Preparation of financial statements  →  5.1. Sole traders

3. Verification of accounting records  →  3.1. The trial balance

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5

Goods bought on credit by Tumelo from Tebogo are returned before they are paid for. Tumelo keeps a full double entry system. Where will Tumelo record the return of goods?

2. Sources and recording of data  →  2.1. The double entry system of book-keeping

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6

Dave supplies goods to Peter on credit. On 1 April, Peter owed Dave $440. Dave sent or received the following documents in April. $ April 7 invoice cheque (after deducting $11 cash discount) debit note credit note What was the closing balance on the statement of account on 30 April?

2. Sources and recording of data  →  2.2. Business documents

4. Accounting procedures  →  4.1. Capital and revenue expenditure and receipts

1. The fundamentals of accounting  →  1.2. The accounting equation

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7

What is recorded in the sales journal?

2. Sources and recording of data  →  2.3. Books of prime entry

4. Accounting procedures  →  4.3. Other payables and other receivables

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8

Which statement about a two-column cash book is correct?

2. Sources and recording of data  →  2.3. Books of prime entry

2. Sources and recording of data  →  2.1. The double entry system of book-keeping

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9

Which statements about trade discount are correct?

2. Sources and recording of data  →  2.3. Books of prime entry

5. Preparation of financial statements  →  5.1. Sole traders

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10

Why is a trial balance prepared?

3. Verification of accounting records  →  3.1. The trial balance

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11

The income statement of a business showed a loss for the year of $16 000. On checking the books the following errors were discovered. No adjustment had been made for insurance prepaid, $480. No entry had been made for bank charges, $620. What was the correct loss for the year?

5. Preparation of financial statements  →  5.6. Incomplete records

3. Verification of accounting records  →  3.2. Correction of errors

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12

Peter’s bank statement showed a debit balance of $600 on 1 April. The following transactions took place in April. $ total cheque deposits total cheque payments direct debit for insurance premium credit transfer from customer What was the bank statement balance on 30 April?

3. Verification of accounting records  →  3.3. Bank reconciliation

4. Accounting procedures  →  4.1. Capital and revenue expenditure and receipts

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13

A sales ledger control account had a debit balance of $10 000. It was found that a $2000 contra entry to the purchases ledger control account had been entered on the wrong side of the sales ledger control account. What was the correct debit balance on the sales ledger control account?

3. Verification of accounting records  →  3.4. Control accounts

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14

A business had a new extension to its workshop premises. It incurred the following expenditure. $ building cost 65 000 legal fees 1 800 air conditioning system for the original workshop 2 300 air conditioning system for the new workshop extension 1 100 decorating the original workshop 1 400 decorating the new workshop extension What was the total capital expenditure of the business?

4. Accounting procedures  →  4.1. Capital and revenue expenditure and receipts

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15

A non-current asset was depreciated at the end of the first year of ownership using the straight-line method based on the following information. cost $20 000 working life 4 years residual value $4000 It was then found that the reducing balance method at 30% per annum should have been used. What was the effect on the profit for the year of correcting this error?

4. Accounting procedures  →  4.1. Capital and revenue expenditure and receipts

4. Accounting procedures  →  4.2. Accounting for depreciation and disposal of non-current assets

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16

A company’s financial year ended on 31 December 2019. On 1 December 2019 it paid rent, $8000, for the four months ending 31 March 2020. What was the opening balance on the rent account on 1 January 2020?

4. Accounting procedures  →  4.1. Capital and revenue expenditure and receipts

1. The fundamentals of accounting  →  1.2. The accounting equation

Open

17

Alice’s financial year ends on 31 December. The balances on her books on 1 January 2020 included the following. $ commission receivable 250 debit rent receivable 500 credit What do these balances represent?

5. Preparation of financial statements  →  5.4. Clubs and societies

5. Preparation of financial statements  →  5.1. Sole traders

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18

Joseph sells goods on credit and maintains a provision for doubtful debts. He wants to increase his provision for doubtful debts by $250. Which journal entry records an increase in the provision for doubtful debts?

4. Accounting procedures  →  4.4. Irrecoverable debts and provision for doubtful debts

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19

Which items are deducted from the gross profit when calculating the profit for the year?

5. Preparation of financial statements  →  5.6. Incomplete records

4. Accounting procedures  →  4.1. Capital and revenue expenditure and receipts

Open

20

On 31 December 2019 John had net assets of $2000 and capital of $2000. On 1 January 2020, goods costing $140 were sold on credit for $220. What was the effect of this transaction on the statement of financial position?

4. Accounting procedures  →  4.1. Capital and revenue expenditure and receipts

5. Preparation of financial statements  →  5.1. Sole traders

3. Verification of accounting records  →  3.2. Correction of errors

Open

21

At the end of his financial year, Raminder made an adjustment for rent owed by a tenant. How did this affect Raminder’s financial statements?

4. Accounting procedures  →  4.1. Capital and revenue expenditure and receipts

5. Preparation of financial statements  →  5.6. Incomplete records

Open

22

The owner of a business took goods for his own use but forgot to make an entry in the accounts. What was the effect of this error?

4. Accounting procedures  →  4.1. Capital and revenue expenditure and receipts

3. Verification of accounting records  →  3.2. Correction of errors

Open

23

Rajid and Sunil formed a partnership on 1 January 2019 but did not prepare a partnership agreement. They provided the following information. Rajid Sunil capital introduced 1 January 2019 $40 000 $20 000 during the year ended 31 December 2019 drawings $5 000 $3 500 share of work 50% 50% They decided to draw up a partnership agreement for future years. Which item would be most beneficial to Rajid in 2020?

5. Preparation of financial statements  →  5.2. Partnerships

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24

Harry and Jane are in partnership. The following information relates to Harry for the financial year. $ salary drawings share of profit The opening credit balance on Harry’s current account was $28 200. What was the closing balance on his current account?

5. Preparation of financial statements  →  5.2. Partnerships

1. The fundamentals of accounting  →  1.2. The accounting equation

Open

25

Which item is shown...

5. Preparation of financial statements  →  5.3. Limited companies

5. Preparation of financial statements  →  5.2. Partnerships

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26

Hassan’s capital decreased by $200 over the year, even though he made a profit of $7000. Which transactions caused this?

5. Preparation of financial statements  →  5.6. Incomplete records

4. Accounting procedures  →  4.1. Capital and revenue expenditure and receipts

Open

27

Ahmed provided the following information. $ trade receivables at 1 January 2019 15 000 for the year ended 31 December 2019: credit sales 85 000 cash sales 12 000 cheques received from trade receivables 65 000 irrecoverable debts 2 000 By how much had the trade receivables increased by the end of the financial year?

5. Preparation of financial statements  →  5.6. Incomplete records

6. Analysis and interpretation  →  6.2. Interpretation of accounting ratios

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28

Gordon provided the following information for the year. revenue $90 000 opening inventory $8 000 closing inventory $2 000 mark up 50% Gordon took goods, $7000, for his own use. What were the purchases?

4. Accounting procedures  →  4.5. Valuation of inventory

5. Preparation of financial statements  →  5.6. Incomplete records

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29

A trader provided the following information. $ for the year ended 31 March 2020 revenue 250 000 purchases: cash 125 000 credit 115 000 at March 2020 trade payables 9 765 What was the trade payables turnover?

5. Preparation of financial statements  →  5.6. Incomplete records

6. Analysis and interpretation  →  6.1. Calculation and understanding of accounting ratios

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30

On 1 January 2019 current assets totalled $16 000 and the current ratio was 2 : 1. On 31 December 2019 the current liabilities had increased by 50% and the current ratio was 1.5 : 1. What was the value of the current assets on 31 December 2019?

1. The fundamentals of accounting  →  1.2. The accounting equation

5. Preparation of financial statements  →  5.1. Sole traders

5. Preparation of financial statements  →  5.2. Partnerships

Open

31

A company provided the following information about its liquid (acid test) ratio. Year 1 1.2 : 1 Year 2 1.4 : 1 Year 3 1.6 : 1 Which would explain the changes in the ratio?

6. Analysis and interpretation  →  6.2. Interpretation of accounting ratios

6. Analysis and interpretation  →  6.1. Calculation and understanding of accounting ratios

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32

Which user of accounting statements is interested in past performance and taking remedial action where necessary?

6. Analysis and interpretation  →  6.4. Interested parties

5. Preparation of financial statements  →  5.3. Limited companies

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33

Rashid’s financial year ends on 31 December. He paid rent on 1 February, 1 May, 1 August and 1 November. An adjustment was made in the income statement for rent prepaid. Which accounting principle was applied?

4. Accounting procedures  →  4.1. Capital and revenue expenditure and receipts

7. Accounting principles and policies  →  7.1. Accounting principles

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34

Which statement describes the going concern principle?

7. Accounting principles and policies  →  7.1. Accounting principles

1. The fundamentals of accounting  →  1.1. The purpose of accounting

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35

Brad purchased a machine for $1000 on 1 January 2019. The machine was expected to last for four years and have no residual value. On 31 December 2019 the same machine cost $1200 to purchase. At which value should the machine be included in the statement of financial position on 31 December 2019?

4. Accounting procedures  →  4.2. Accounting for depreciation and disposal of non-current assets

4. Accounting procedures  →  4.5. Valuation of inventory

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