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1

Which task is performed by a book-keeper?

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

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2

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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3

In which book of prime entry does a trader record cash discount received?

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

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4

The analysis columns of a petty cash book show the following totals. $ postage stationery How should these totals be posted to the ledger?

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

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5

Which business documents are not entered in the books of prime entry?

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

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

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6

A trader has the following ledger account. heat and light account $ year 1 year 1 income statement December 31 balance b/d January 1 bank December 31 ____ balance c/d December 31 year 2 balance b/d January 1 What does the balance on 1 January, year 2 represent?

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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7

Which statement about a trial balance is correct?

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

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8

Trevor prepared his financial statements for the year ended 31 December 2020. He then discovered that he had omitted to record a cash payment, $240, for insurance for the 12 months ending 30 November 2021. What was the effect of this error on his statement of financial position?

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

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

5. Preparation of financial statements  →  5.1. Sole traders

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9

A payment of $68 for insurance has been entered in the insurance account as $86. Which double entry will correct this?

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

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

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10

A business has received a bank statement. The bank statement shows the following entries. 1. a cheque issued to a credit supplier 2. a cheque received from a credit customer 3. a monthly rent payment made by standing order 4. charges made by the bank Which items appear in the debit column of the bank statement?

3. Verification of accounting records  →  3.3. Bank reconciliation

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

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11

On 31 May the bank statement of a business showed a positive bank balance of $1790. Comparing the bank statement with the cash book the following items were discovered. The bank had charged $35 in error. Unpresented cheques totalled $550. Uncredited deposits totalled $250. What was the cash book balance?

3. Verification of accounting records  →  3.3. Bank reconciliation

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

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12

What would not be included in a sales ledger control account?

3. Verification of accounting records  →  3.4. Control accounts

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

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13

Nadia provided the following information for the month of July. $ 1 July sales ledger control account balance debit credit For the month of July: total of sales journal total of sales returns journal cheques received from credit customers irrecoverable debt written off interest charged on credit account There was no credit balance on the account on 1 August. What was the debit balance brought down on the sales ledger control account on 1 August?

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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14

Samir runs a car hire business. He received cash payments for car hire. He also received the proceeds from the sale of an old vehicle. Which type of receipts were they?

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

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15

The following ledger account appeared in the books of a trader. Rent receivable account $ $ balance b/d Jan 1 balance c/d Dec 31 bank Dec 31 Which entry was made in the income statement for the year ended 31 December 2020 for rent receivable?

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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16

Mandeep depreciates his motor vehicles at the rate of 20% using the straight-line method. A full year’s depreciation is provided in the year of purchase. Mandeep bought a motor vehicle on 1 January 2017 for $20000. On 1 June 2020 he bought a second motor vehicle for $10000. What was the depreciation charge on motor vehicles for the year ended 31 December 2020?

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

5. Preparation of financial statements  →  5.1. Sole traders

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17

Why does a trader maintain a provision for doubtful debts?

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

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18

Why is inventory valued at the lower of cost and net realisable value?

4. Accounting procedures  →  4.5. Valuation of inventory

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19

At the end of the financial year Cindy valued her inventory at cost. This valuation incorrectly included damaged goods costing $300. Cindy estimated these goods could be sold for $100. What is the effect of correcting the inventory valuation?

4. Accounting procedures  →  4.5. Valuation of inventory

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

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20

Which business is not a service business?

5. Preparation of financial statements  →  5.1. Sole traders

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21

A trader was preparing her statement of financial position at 30 June 2021. She had four bank loans. $ date repayable loan 1 December 2021 1 December 2022 1 September 2023 1 December 2025 What was the total amount of loans that should be recorded as non-current liabilities at 30 June 2021?

5. Preparation of financial statements  →  5.1. Sole traders

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22

What is shown...

5. Preparation of financial statements  →  5.2. Partnerships

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23

Rajid and Sunil formed a partnership on 1 January 2019 but did not prepare a partnership agreement. They provided the following information. Sunil Rajid $20000 $40000 capital introduced 1 January 2019 during the year ended 31 December 2019 $3500 $5000 drawings 50% 50% share of work 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

A company supplied the following information. $ issued and paid up share capital general reserve long-term bank loan retained earnings 6% debentures What is the total equity?

5. Preparation of financial statements  →  5.3. Limited companies

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25

Which apply to both debentures and preference shares?

5. Preparation of financial statements  →  5.3. Limited companies

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26

The AB Sports Club runs a café for the use of members. The treasurer prepared draft financial statements which showed a deficit of $700 and an accumulated fund of $4600. He then discovered that the closing inventory of the café had been overvalued by $50. How much were the deficit and the accumulated fund after the inventory valuation had been corrected?

4. Accounting procedures  →  4.5. Valuation of inventory

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

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27

Which accounting statement prepared by the treasurer of a sports club provides a summary of all the monies received and paid out during the financial year?

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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28

At the end of the financial year, a manufacturing business owed rent on its factory. The business adjusted its financial statements to account for this. What effects did this adjustment have?

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

5. Preparation of financial statements  →  5.5. Manufacturing accounts

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

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29

What is a direct cost for a manufacturer?

5. Preparation of financial statements  →  5.5. Manufacturing accounts

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30

A business uses 20% mark up to arrive at its selling prices. During the year it made purchases of $35000 and the inventory decreased from $7000 to $2000. What was the revenue for the year?

5. Preparation of financial statements  →  5.6. Incomplete records

4. Accounting procedures  →  4.5. Valuation of inventory

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

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31

What is needed for the preparation of a statement of affairs?

5. Preparation of financial statements  →  5.6. Incomplete records

5. Preparation of financial statements  →  5.3. Limited companies

5. Preparation of financial statements  →  5.2. Partnerships

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32

A trader provided the following information. $ cash purchases for the year credit purchases for the year trade payables at the year end What was the trader’s trade payables turnover?

5. Preparation of financial statements  →  5.6. Incomplete records

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

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33

George provided the following information. $ non-current assets inventory trade receivables trade payables His liquid (acid test) ratio was 1.2:1. What was his bank overdraft?

5. Preparation of financial statements  →  5.6. Incomplete records

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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34

The following ratios have been calculated for a trader. year 2 year 1 20% 6% 15% 9% profit margin return on capital employed (ROCE) What explains these changes?

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

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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35

William is a trader. He has received an order from James to supply goods on credit. When should William regard the revenue as earned?

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

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