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1

Which transaction will increase both assets and capital by the same amount?

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

5. Preparation of financial statements  →  5.2. Partnerships

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2

On 1 June 2021, Sue’s capital account had a credit balance of $120 000. During the year ended 31 May 2022 she withdrew goods costing $1800. The loss for the year was $14 200. What was the credit balance on Sue’s capital account on 1 June 2022?

5. Preparation of financial statements  →  5.6. Incomplete records

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

Bilal purchased goods on credit from Asim. Where should Asim record this transaction?

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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4

Abdul sells goods to Rekha on credit. Some goods were damaged in transit. Which document would Rekha send to Abdul?

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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5

What is not shown...

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

On 1 September, Peter sent a cheque to his credit supplier, John. This was correctly entered in John’s books. On 10 September, the cheque was returned unpaid due to lack of funds. Which entries should be made in John’s books on 10 September?

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

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7

Which entries should be made to post the monthly totals of the discount allowed and discount received columns of the cash book?

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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8

Jasvinder maintains a petty cash book using the imprest system. The monthly imprest of $100 is restored on the first day of each month. In September the petty cash book showed the following. $ total expenses total receipts How much cash did Jasvinder need to restore the imprest on 1 October?

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

Saddique’s trial balance failed to balance. The debit column totalled $12 250 and the credit column totalled $12 200. The following errors were discovered. No entry had been made for cash sales, $150. The total of the discount received account, $50, had been omitted from the trial balance. What were the totals of the trial balance after the errors had been corrected?

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

$68 paid by credit transfer for insurance was entered in the accounting records as $86. Which double entry will correct this error?

3. Verification of accounting records  →  3.3. Bank reconciliation

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

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11

After the preparation of her income statement, Emma discovered the following errors. A debt, $1500, should have been written off as irrecoverable. No adjustment had been made for rent prepaid by Emma of $2800. The draft profit for the year was $35 000. What was the corrected profit for the year?

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

5. Preparation of financial statements  →  5.6. Incomplete records

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

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12

Hamid purchased a motor vehicle from an overseas motor manufacturer. Which expenditure relating to the motor vehicle is capital expenditure?

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

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13

Wentile purchased a motor vehicle for $35 000. He estimated it would be used for five years and then sold for $5000. Wentile depreciated the motor vehicle using the straight-line method at a rate of 20% per annum. What was the accumulated depreciation on this motor vehicle at the end of year 2?

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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14

On the first day of his financial year, Jason purchased a new machine costing $20 000. On that date his old machine had a book value of $6000. Jason was allowed $4500 for the old machine in part exchange. He paid the balance by cheque. Machinery is depreciated at 20% per annum. How much should be charged to Jason's income statement for 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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15

Martha rents out part of her business premises. On 1 September 2021, she was owed rent of $1500 and on 31 August 2022 she was owed $1800 rent. During the year ended 31 August 2022, Martha received rent of $6000. How much was transferred to Martha’s income statement for the year ended 31 August 2022?

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

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

5. Preparation of financial statements  →  5.6. Incomplete records

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16

Parker received cash from Alexi for a debt that had been written off as irrecoverable. How should Parker record this in his accounts?

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

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17

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

4. Accounting procedures  →  4.5. Valuation of inventory

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18

How would current assets be listed if they are arranged in decreasing order of liquidity?

4. Accounting procedures  →  4.5. Valuation of inventory

5. Preparation of financial statements  →  5.6. Incomplete records

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19

During the year, Sam paid advertising expenses, some of which related to the following financial year. Sam made an adjustment for this when preparing his financial statements for the current year. What was the effect on Sam’s financial statements of making this adjustment?

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

5. Preparation of financial statements  →  5.6. Incomplete records

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

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20

Members of a limited company have limited liability for the debts of that company. What does this mean?

5. Preparation of financial statements  →  5.3. Limited companies

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21

A limited company provided the following information. $ non-current assets 35 000 ordinary share capital 40 000 5% debentures 10 000 net current assets 30 000 What were the retained earnings?

5. Preparation of financial statements  →  5.3. Limited companies

5. Preparation of financial statements  →  5.1. Sole traders

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22

What is included in the equity of a limited company?

5. Preparation of financial statements  →  5.3. Limited companies

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23

The financial year of a club ends on 30 September. During the year ended 30 September 2022, the club received an interest-free loan from a member. In which of the club’s financial statements will this appear?

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

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24

A club had an accumulated fund at the start of the year of $18 000 and at the end of the year of $16 200. New equipment costing $1100 was bought during the year. Total expenses for the year were $9550. The only income came from subscriptions. How much were subscriptions for the year?

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

5. Preparation of financial statements  →  5.6. Incomplete records

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25

Dan makes t-shirts which are stamped with a design using fabric paint. He provided the following information. $ fabric for t-shirts 10 000 factory heating and lighting 5 000 fabric paint 4 000 factory rent 8 000 wages of machine operators 16 000 What was the total of the direct costs?

5. Preparation of financial statements  →  5.5. Manufacturing accounts

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26

In a manufacturing account, carriage on raw materials was incorrectly treated as a factory overhead. How did this error affect the prime cost and the cost of production?

5. Preparation of financial statements  →  5.5. Manufacturing accounts

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

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27

Chan provided the following information. 1 October 2021 $ 30 September 2022 $ non-current assets 10 000 12 000 inventory 2 500 2 000 trade receivables 1 500 1 300 bank overdraft trade payables 1 000 1 900 What was Chan’s profit or loss for the 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

Aruna does not maintain a full set of double entry records. She provided the following information. $ trade payables on 1 August 2021 23 450 trade payables on 31 July 2022 27 290 cash purchases made during the year 16 000 payments made to credit suppliers 168 000 What was the cost of her purchases for the year ended 31 July 2022?

5. Preparation of financial statements  →  5.6. Incomplete records

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

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29

Thabo provided the following information. revenue $250 000 gross margin 20% rate of inventory turnover 5 times What was the average inventory 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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30

Naeema provided the following information. $ revenue 28 000 gross profit 11 900 profit for the year 3 500 What was her profit margin?

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

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

5. Preparation of financial statements  →  5.6. Incomplete records

Open

31

When calculating the liquid (acid test) ratio, what is compared to the liquid assets?

5. Preparation of financial statements  →  5.1. Sole traders

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

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

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32

A trader provided the following information. year 1 year 2 gross profit $40 000 $75 000 gross margin 35% 35% profit margin 11% 22% What would explain these changes?

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

5. Preparation of financial statements  →  5.6. Incomplete records

Open

33

A business renewed an insurance policy. The total amount paid was charged as an expense in the income statement for the year even though half related to the next financial year. Which accounting principle has not been applied?

7. Accounting principles and policies  →  7.1. Accounting principles

5. Preparation of financial statements  →  5.6. Incomplete records

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

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34

What is meant by the business entity principle?

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  →  5.2. Partnerships

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35

Which statement is not correct about reasons for using international accounting standards?

7. Accounting principles and policies  →  7.2. Accounting policies

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

5. Preparation of financial statements  →  5.6. Incomplete records

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