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1

Which task would be carried out by a book-keeper?

5. Preparation of financial statements  →  5.1. Sole traders

5. Preparation of financial statements  →  5.3. Limited companies

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

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2

The following ledger account appeared in the books of Leah, a trader. Amraz account $ $ April 26 purchases returns April 1 balance b / d bank purchases discount balance c / d ____ Which statement is correct?

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

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

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3

Sarah sold goods on credit to Zafar. How was this recorded in Sarah’s ledgers?

3. Verification of accounting records  →  3.4. Control accounts

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

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4

Omar sent a credit note to Miriam for goods returned. How would Miriam record this transaction?

3. Verification of accounting records  →  3.4. Control accounts

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

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

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5

Ben sold goods to David for $900 cash. In which book of prime entry would David record this transaction?

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

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6

A petty cashier received $100 from the chief cashier and $10 from an employee who had made private calls on the business telephone. How would these amounts be recorded in the petty cash book and the cash book?

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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7

What is an example of a compensating error?

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

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

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8

After the preparation of Abdul’s draft financial statements, two errors were discovered. The purchase of a machine by bank transfer, $5000, was omitted from the accounts. The purchase of a motor vehicle, $15 000, was entered in the motor vehicle repair account. What effect will correcting these errors have on the non-current assets and the working capital?

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

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

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9

Why is a sales ledger control account usually prepared by a different member of staff than the person who maintains the sales ledger?

3. Verification of accounting records  →  3.4. Control accounts

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10

What would be recorded on the credit side of a sales ledger control account?

3. Verification of accounting records  →  3.4. Control accounts

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

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11

Maria’s draft income statement for the year ended 31 March 2022 showed a profit for the year of $38 750. On 31 December 2021, Maria received a 5% bank loan of $4800 which was incorrectly treated as a revenue receipt. In error, a whole year’s interest on the bank loan was included in the draft income statement for the year ended 31 March 2022. What was the correct profit for the year ended 31 March 2022?

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

5. Preparation of financial statements  →  5.6. Incomplete records

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12

Which statement about the reducing balance method of depreciation is not correct?

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

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13

The financial year of Yeung ends on 31 March. On 1 April 2021, he purchased a machine for $4000. He estimated that it would have a useful working life of 3 years and a residual value of $100. Yeung uses the straight-line method of depreciation. The machine was sold on 1 April 2022 for $1500. What was the loss on disposal?

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

5. Preparation of financial statements  →  5.6. Incomplete records

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

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14

On 1 April 2021, commission receivable, $210, was outstanding. Commission received during the year ended 31 March 2022 amounted to $4850. Which journal entry should have been made at the end of the financial year on 31 March 2022?

5. Preparation of financial statements  →  5.6. Incomplete records

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

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15

Nula’s financial year ends on 31 December. She maintains a provision for doubtful debts of 5% of trade receivables. On 1 January 2021, the provision amounted to $800. On 31 December 2021, trade receivables owed $13 400, of which $600 was regarded as irrecoverable. How much was the provision for doubtful debts on 1 January 2022?

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

5. Preparation of financial statements  →  5.1. Sole traders

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16

After the financial statements for the year ended 30 April 2022 had been prepared, a trader discovered that the closing inventory had been over-valued. What will be the effect of this error?

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

4. Accounting procedures  →  4.5. Valuation of inventory

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17

Mariam owns a business providing accounting services. She provided the following information for the financial year ended 31 March 2022. $ fees owed by clients on 1 April 2021 4 500 fees received from clients during the year ended 31 March 2022 22 500 fees owed by clients on 31 March 2022 1 500 What was the amount of fees shown...

5. Preparation of financial statements  →  5.6. Incomplete records

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

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

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18

Which item would not appear in the appropriation account of a partnership?

5. Preparation of financial statements  →  5.2. Partnerships

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19

Carol and Denise are in partnership sharing profits and losses in the ratio 2 : 1. Denise’s current account balances were as follows. at 1 May 2021 $2000 debit at 1 May 2022 $7000 credit She had made no drawings during the year. What was the total profit made by the partnership in the year ended 30 April 2022?

5. Preparation of financial statements  →  5.2. Partnerships

5. Preparation of financial statements  →  5.6. Incomplete records

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20

Which statements are correct?

5. Preparation of financial statements  →  5.1. Sole traders

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

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21

The draft financial statements of a limited company showed retained earnings of $31 820. It was then found that no adjustment had been made for the following. $ commission receivable accrued insurance prepaid What was the correct amount of the retained earnings?

5. Preparation of financial statements  →  5.3. Limited companies

5. Preparation of financial statements  →  5.1. Sole traders

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

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22

Which statement about club accounts is correct?

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

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

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23

A sports club provided the following information for the financial year ended 31 December 2021. $ 1 January 2021 subscriptions paid in advance 31 December 2021 subscriptions outstanding subscriptions received during the year What was the total of the subscriptions that related to the year ended 31 December 2021?

5. Preparation of financial statements  →  5.6. Incomplete records

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

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

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24

The work in progress of ZT Manufacturers on 1 January was valued at $6200. At the end of the year it was valued at $5400. What was the effect on the cost of production for the year?

5. Preparation of financial statements  →  5.5. Manufacturing accounts

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

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25

A manufacturing company provided the following information. $ cost of production 345 000 finished goods 1 January 2021 42 000 31 December 2021 36 000 purchases of finished goods 15 000 What was the cost of sales?

5. Preparation of financial statements  →  5.5. Manufacturing accounts

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26

Tahir provided the following information for his first year of trading. $ sales 170 000 sales returns 6 000 purchases 129 000 Tahir’s gross margin was 25%. What was the value of closing inventory?

4. Accounting procedures  →  4.5. Valuation of inventory

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27

A business provided the following information. opening inventory $6800 closing inventory $6000 rate of inventory turnover 5 times What were the purchases for the year?

4. Accounting procedures  →  4.5. Valuation of inventory

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

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28

A trader provided the following information at the end of the financial year. $ revenue 80 000 gross profit 20 000 expenses 12 000 What was the profit margin?

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

5. Preparation of financial statements  →  5.6. Incomplete records

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29

A trader provided the following information. $ profit for the year 24 000 working capital 20 000 capital 120 000 non-current liability 30 000 What was the return on capital employed?

5. Preparation of financial statements  →  5.6. Incomplete records

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

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

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30

Samuel, a trader, decided to issue statements of account each month. Which ratio does Samuel hope to improve by doing this?

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

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

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31

John’s rate of inventory turnover was 10 times in year 1 and 8 times in year 2. What may have caused the change in the rate of inventory turnover?

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

4. Accounting procedures  →  4.5. Valuation of inventory

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32

Maya had annual revenue of $100 000. In year 1, her gross margin was 45% and her profit margin was 5%. In year 2, her gross margin was 40% and her profit margin was 3%. What happened to Maya’s cost of sales and expenses in year 2?

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

5. Preparation of financial statements  →  5.6. Incomplete records

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

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33

Why would a bank manager be interested in the financial statements of a business?

5. Preparation of financial statements  →  5.1. Sole traders

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

6. Analysis and interpretation  →  6.4. Interested parties

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34

‘Revenue should only be regarded as earned when the legal title of goods and services passes from the seller to the buyer.’ To which accounting principle does this statement refer?

7. Accounting principles and policies  →  7.1. Accounting principles

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

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35

‘The information provided in financial statements should be capable of being independently verified.’ To which accounting policy does this statement refer?

7. Accounting principles and policies  →  7.2. Accounting policies

5. Preparation of financial statements  →  5.3. Limited companies

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