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1

A trader prepares financial statements each year. What do these assist the trader to do?

5. Preparation of financial statements  →  5.1. Sole traders

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2

What is not an example of a book-keeping entry?

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

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3

The following balances appeared in Hussein's books. $ fixtures inventory trade receivables trade payables other receivables other payables loan to Imran bank overdraft What was the total of the liabilities?

5. Preparation of financial statements  →  5.6. Incomplete records

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

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4

What does the owner’s equity consist of?

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

5. Preparation of financial statements  →  5.3. Limited companies

5. Preparation of financial statements  →  5.1. Sole traders

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5

Which entries did Sally make to record the following transaction?

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

3. Verification of accounting records  →  3.4. Control accounts

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6

The following account appeared in the books of Mary. Paul account $ $ April 1 balance b/d April 21 returns sales bank discount balance c/d Which statement is correct?

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

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

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7

In which sections of Zamir’s ledger would the following accounts be maintained?

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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8

Sue allows 2% cash discount to credit customers who settle their account within 28 days. Jane purchased goods, list price $200, on 10 September. She returned these goods on 15 September. Which entry would Sue make on 15 September?

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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9

A transaction was posted to the wrong account of the same class. Which type of error was made?

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

Motor vehicle expenses, $50, were incorrectly debited to the motor vehicles account. Which journal entry corrects this error?

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

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

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11

Kate calculated her draft profit for the year at $28 400. She later discovered the following errors. Rent prepaid by Kate was understated by $1000. Closing inventory was understated by $1500. What was the correct profit for the year?

5. Preparation of financial statements  →  5.6. Incomplete records

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

4. Accounting procedures  →  4.5. Valuation of inventory

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12

A trader’s bank statement showed a credit balance of $2940. The following items had not been entered in the cash book. $ bank interest received credit transfer What was the debit balance in the cash book before it was updated?

3. Verification of accounting records  →  3.3. Bank reconciliation

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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13

What is a purpose of preparing 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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14

George is preparing his purchases ledger control account. Which information would he obtain from his general journal?

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

3. Verification of accounting records  →  3.4. Control accounts

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15

A trader debited the cost of repairing office equipment to the office equipment account. How did this error affect the financial statements?

5. Preparation of financial statements  →  5.6. Incomplete records

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

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16

Rashid provided the following information at 31 December. $ machinery at cost 52 000 provision for depreciation of machinery 23 000 Depreciation for the year is calculated at 20% on cost. After the statement of financial position was prepared it was found that the machinery repairs costing $2000 had been debited 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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17

A machine which cost $32 000 was sold for $14 000. The total depreciation at the date of disposal was $15 000. What was the profit or loss on disposal?

5. Preparation of financial statements  →  5.6. Incomplete records

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

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18

Beena maintains a provision for doubtful debts of 3% of the trade receivables at the end of each financial year. On 1 September 2019 the provision for doubtful debts was $900. On 31 August 2020 the trade receivables amounted to $42 800. Which journal entry did Beena make on 31 August 2020?

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

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19

Nirmal sells two products, product G and product H. The following information is available about his inventory at the end of the financial year. product number of units cost price per unit net realisable value per unit G $2.00 $2.50 H $1.50 $1.20 It was found that 100 units of product G were damaged and were unsaleable. What was the total value of Nirmal’s inventory?

4. Accounting procedures  →  4.5. Valuation of inventory

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20

What is not a service business?

5. Preparation of financial statements  →  5.1. Sole traders

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21

The financial year of Peter ends on 30 September. On 1 August 2020 Peter received rent $1000. This covered the period from 1 July to 30 November 2020. Which entry will be made in Peter’s statement of financial position on 30 September 2020?

5. Preparation of financial statements  →  5.1. Sole traders

5. Preparation of financial statements  →  5.2. Partnerships

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22

In addition to a share of the profit a partner receives interest on capital, a salary and is charged interest on drawings. How are these recorded in the ledger accounts of the partner?

5. Preparation of financial statements  →  5.2. Partnerships

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23

A sports club provided the following information. $ subscriptions for the year 26 800 profit on sale of refreshments 4 200 depreciation 1 500 rent and insurance 12 600 wages 3 200 What was the total income for the year?

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

5. Preparation of financial statements  →  5.6. Incomplete records

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

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24

A club was formed on 1 July 2019. During the year ended 30 June 2020 subscriptions received from members totalled $2500. This included $120 paid in advance for the next financial year. Subscriptions outstanding on 30 June 2020 amounted to $280. How much was recorded for subscriptions in the income and expenditure account for the year ended 30 June 2020?

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

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

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25

Anthony does not keep a full set of accounting records. He knows his opening and closing cash balances and wishes to calculate his cash sales. Which item does Anthony not need in order to calculate his cash sales?

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

5. Preparation of financial statements  →  5.6. Incomplete records

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26

A trader has not maintained a full set of accounting records. How can she calculate the credit sales for the year?

5. Preparation of financial statements  →  5.6. Incomplete records

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

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27

A trader made the following forecasts for the business for the next financial year. average inventory $80 000 rate of inventory turnover 6 times mark-up 25% What are the forecast sales for the next financial 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 company provided the following information about its current ratio. year 1 2.3 : 1 year 2 2.4 : 1 year 3 2.5 : 1 What would explain the changes in the ratio?

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

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29

A trader wants to improve his gross margin. How can this be done?

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

5. Preparation of financial statements  →  5.1. Sole traders

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30

Meesha provided the following information for her first year of trading. $ sales (1000 units at $10 each) 10 000 cost of sales (1000 units at $4.50 each) 4 500 gross profit 5 500 In her second year of trading, Meesha reduced the selling price and sold 1500 units. Her gross profit decreased by $250. There was no change in the cost per unit. What was the total value of sales in the second year of trading?

4. Accounting procedures  →  4.5. Valuation of inventory

5. Preparation of financial statements  →  5.6. Incomplete records

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31

AB Limited and CD Limited both started business on 1 January 2019 with an ordinary share capital of $100 000. Neither company had any debentures or loans. Both companies had the same profit in 2019. Only AB Limited paid a dividend. The return on capital employed (ROCE) was calculated using closing capital employed. Which statement about AB Limited’s ROCE is correct when compared to that of CD Limited?

5. Preparation of financial statements  →  5.3. Limited companies

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

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32

Which interested party uses the financial statements of a business to assess current performance and plan for future activities?

6. Analysis and interpretation  →  6.4. Interested parties

5. Preparation of financial statements  →  5.2. Partnerships

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33

The special skills of the employees are not recorded in the financial statements of a business. Which accounting principle is being applied?

7. Accounting principles and policies  →  7.1. Accounting principles

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

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34

How can a business comply with the accounting principle of prudence?

7. Accounting principles and policies  →  7.1. Accounting principles

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

5. Preparation of financial statements  →  5.6. Incomplete records

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35

What is not an aim of international accounting standards?

7. Accounting principles and policies  →  7.2. Accounting policies

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

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