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1

Why does the accountant of a business analyse its financial statements?

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

6. Analysis and interpretation  →  6.4. Interested parties

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2

Padma started a business on 1 April 2022 with $30 000 of her own money. On 31 March 2023, her assets and liabilities were as shown...

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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3

A trader credited the income statement and debited his capital account. What does this double entry record?

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

5. Preparation of financial statements  →  5.6. Incomplete records

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4

Ted, a manufacturer, purchased a machine on credit from T Limited. How did Ted record this?

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

3. Verification of accounting records  →  3.4. Control accounts

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5

The following account appeared in the books of Abdul. Hanif account $ $ Jan 18 returns Jan 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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6

Which items are shown...

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

5. Preparation of financial statements  →  5.1. Sole traders

3. Verification of accounting records  →  3.4. Control accounts

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7

A trader issues an invoice for goods sold on credit. The full price of the goods is $2500. The trader allows a trade discount of 15%, and offers a cash discount of 4% for prompt payment. Which amount is recorded in the sales journal?

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

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

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8

A trader prepared a trial balance at 31 December. Which statement about this trial balance is correct?

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

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9

After completing the trial balance, it was found that an amount of $4000 for motor vehicle repairs had been entered in the motor vehicle account. Which type of error is this?

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

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

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10

At the end of his financial year, Zane opened a suspense account. Why was it necessary to open this account?

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

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

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11

Jack has opened a suspense account. He has found that rent paid of $250 has been correctly entered in the rent account but credited to the bank account as $520. Which entries will correct this 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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12

Naila provided the following information at 31 August. $ debit balance in cash book at 31 August uncredited deposits unpresented cheques interest charged in error by the bank What was the credit balance on the bank statement at 31 August?

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

3. Verification of accounting records  →  3.3. Bank reconciliation

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13

Which statement about a sales ledger control account is not correct?

3. Verification of accounting records  →  3.4. Control accounts

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14

The following partly completed account appeared in Candy’s ledger. Purchases ledger control account $ $ Dec 31 bank 42 000 Dec 1 balance b / d discount received purchases 48 000 The following entries still need to be made in the account. Interest of $15 was charged by credit suppliers for overdue payments. Balances owing in the purchases ledger totalling $450 were set off against balances in the sales ledger. What will be the closing balance on the purchases ledger control account after these entries are made?

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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15

A trader’s expenditure during the year includes the following amounts. $ redecoration of premises 5 000 insurance of motor vehicles 2 000 purchase of machinery 10 000 How much should the trader charge to her income statement for the year?

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

5. Preparation of financial statements  →  5.1. Sole traders

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16

Which statement about depreciation is correct?

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

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17

Rashid provided the following balances at 31 December. $ machinery at cost 52 000 provision for depreciation of machinery 23 000 Depreciation for the year was calculated at 20% on cost and is included in the balance for the provision. After the balances had been extracted, it was found that machinery repairs costing $2000 had been debited in error to the machinery account. What is the correct balance on the provision for the depreciation of machinery account?

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

5. Preparation of financial statements  →  5.1. Sole traders

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

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18

Annual rental income due from Kumar, a tenant, is $3600. At the start of the year, Kumar had prepaid rent of $900. At the end of the year, he owed two months’ rent. How much rent was received from Kumar during the year?

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

5. Preparation of financial statements  →  5.6. Incomplete records

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19

At the end of the financial year, Gina had the following items of clothing in her inventory. 100 t-shirts: cost price per unit $15, selling price per unit $30 200 dresses: cost price per unit $40, selling price per unit $30 What was the value of Gina’s inventory?

4. Accounting procedures  →  4.5. Valuation of inventory

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20

Which error causes the gross profit to be overstated?

5. Preparation of financial statements  →  5.6. Incomplete records

4. Accounting procedures  →  4.5. Valuation of inventory

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21

Which group consists of only intangible assets?

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

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22

At the end of the financial year, Karim decided to increase his provision for doubtful debts. How will this affect his income statement and the statement of financial position?

5. Preparation of financial statements  →  5.1. Sole traders

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

5. Preparation of financial statements  →  5.3. Limited companies

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23

What is included in an appropriation account of a partnership?

5. Preparation of financial statements  →  5.2. Partnerships

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24

X and Y are in partnership with capital of $50 000 and $30 000 respectively. The partnership agreement provides that profits are to be shared in proportion to capital invested and each partner is entitled to 10% interest on capital. Profit for the year was $37 000. What was the total amount credited to Y’s current account at the end of the year?

5. Preparation of financial statements  →  5.2. Partnerships

5. Preparation of financial statements  →  5.6. Incomplete records

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25

What is an advantage of being a member of a limited company?

5. Preparation of financial statements  →  5.3. Limited companies

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26

A limited company provided the following information. $ issued share capital (50 000 ordinary shares of $1 each) 50 000 profit for the year ended 31 December 2022 13 000 transfer to general reserve during the year 6 000 interim ordinary share dividend paid during the year 3 000 On 31 December 2022, it was decided to use the remaining profit to pay a final ordinary share dividend. Which percentage final dividend would the ordinary shareholders receive?

5. Preparation of financial statements  →  5.3. Limited companies

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27

P Limited maintains a provision for doubtful debts account. On 1 April 2022, this account had a balance of $6200. The provision should have been increased to $7400 on 31 March 2023, but this adjustment was not made. What was the effect of this error on the retained earnings in the statement of financial position on 31 March 2023?

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

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

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28

What is included in the income and expenditure account of a tennis club?

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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29

Tim started a manufacturing business on 1 January. He provided the following information about his first year in business. $ closing inventory of finished goods 2 060 closing work in progress 1 840 factory overheads 15 530 prime cost 70 570 What was Tim’s cost of production?

5. Preparation of financial statements  →  5.5. Manufacturing accounts

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30

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

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31

A trader provided the following information. credit sales $36 000 cash sales 10% of total sales net profit margin 30% How much is the net profit?

5. Preparation of financial statements  →  5.6. Incomplete records

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

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32

The table shows the gross margin and profit margin for four businesses. Which business controls its overheads most efficiently?

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

5. Preparation of financial statements  →  5.6. Incomplete records

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33

Ramiz works as a sales manager in a car showroom. He is paid on the basis of the number of cars sold. Which accounting ratio will be relevant to Ramiz?

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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34

Manvinder started a business and paid a cheque for $1000 into a business bank account. He recorded this in the books of the business by debiting the bank account and crediting the capital account. Which accounting principles did he apply?

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

A trader always records assets and expenses in his ledger at the price he paid for them. Which accounting principle is he applying?

7. Accounting principles and policies  →  7.1. Accounting principles

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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