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1

Which actions are examples of book-keeping?

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

3. Verification of accounting records  →  3.3. Bank reconciliation

3. Verification of accounting records  →  3.4. Control accounts

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2

A trader supplied the following information at her year end. $ non-current assets inventory trade receivables cash at bank 650 debit trade payables What was the trader’s capital?

5. Preparation of financial statements  →  5.6. Incomplete records

5. Preparation of financial statements  →  5.1. Sole traders

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3

A trader, Karim, purchases a new vehicle by cheque. He will use the vehicle to deliver goods to his customers. How should Karim record this transaction in his books?

3. Verification of accounting records  →  3.3. Bank reconciliation

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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4

The following ledger account was in Meena’s sales ledger. $ $ Jan 1 balance b / d Jan 15 bank Jan 31 balance c / d Jan 30 sales returns Feb 1 balance b / d Which statement about the balance on 1 February in Meena’s books of account is correct?

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

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

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5

Which document would a supplier issue to a credit customer if the credit customer had returned goods or had been overcharged?

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

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

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6

Andy was a regular customer of Khalid. He bought goods with a list price of $1000 and later paid $760 in full settlement after receiving a discount for prompt payment of 5%. How much trade discount did Andy receive?

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

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7

The totals of a trial balance agree. What does this mean?

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

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

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8

A cheque received from Joe was credited to Joanna’s account. Which type of error was made?

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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9

A trader’s journal shows the following entry. details debit $ credit $ John Jane correction of error Both John and Jane are credit customers of the trader. Which error is the journal entry correcting?

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

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

5. Preparation of financial statements  →  5.6. Incomplete records

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10

A trial balance does not balance and a suspense account is opened. It is found that a sale of $250 was credited in the sales account as $2500. Which entry 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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11

A cheque received from D Pawson, a trade receivable, was correctly debited to the bank account but was credited to the account of P Dawson, a trade payable. What was the effect of correcting this error?

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

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

5. Preparation of financial statements  →  5.6. Incomplete records

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12

The balance of the bank column in a trader’s cash book was $520 debit. The trader later discovered that the following items did not appear on his bank statement. cheque not yet presented $80 cheque not yet credited $470 What was the balance on the trader’s bank statement?

3. Verification of accounting records  →  3.3. Bank reconciliation

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

Open

13

Why does a trader prepare 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

When preparing a sales ledger control account, what is the source of information for amounts received from credit customers?

3. Verification of accounting records  →  3.4. Control accounts

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

Open

15

Plant and machinery, $2000, was incorrectly posted to the credit side of the purchases account. The draft profit for the year was $63 000. Ignore depreciation. What was the revised profit for the year after the correction of the error?

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

5. Preparation of financial statements  →  5.6. Incomplete records

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

Open

16

Why are non-current assets depreciated?

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

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17

On 1 January, Raheem purchased equipment costing $850. It was estimated to have a working life of 5 years and a scrap value of $50. The asset was depreciated using the straight-line method. At the end of 3 years, the machine was sold for $100. What was the profit or loss on disposal?

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

5. Preparation of financial statements  →  5.6. Incomplete records

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18

Imran maintains a provision for doubtful debts of 5% of the trade receivables at the end of each financial year. The balance on his provision for doubtful debts account on 1 January 2022 was $700. Trade receivables on 31 December 2022 owed $2000 more than they owed on 31 December 2021. How did the change in the provision for doubtful debts affect the profit for the year ended 31 December 2022?

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

5. Preparation of financial statements  →  5.1. Sole traders

Open

19

Ariadne prepares her financial statements to 31 December each year. She valued all her inventory at cost on 31 December 2021, even though some inventory with a cost of $500 had a net realisable value of $350. What was 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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20

A trader has capital of $24 400. His non-current assets are $16 100 and his current liabilities are $4500. There are no non-current liabilities. What is the amount of his current assets?

5. Preparation of financial statements  →  5.1. Sole traders

5. Preparation of financial statements  →  5.2. Partnerships

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

Open

21

At 1 January 2022, there was a credit balance of $800 on the electricity account. Payments made during the year totalled $4900. At 31 December 2022, a further $1800 of electricity had been used since the last invoice was paid. What is the charge to the income statement for electricity for the year 2022?

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

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

Open

22

Josh and Karen are in a partnership sharing profits and losses 3 : 2. Interest on capital is allowed at 5%. Salary payable to Josh is $10 000 per annum. The residual profit after deduction of salary and interest on capital was $20 000. The capital account balances at the start of the year were: Josh $60 000 and Karen $40 000. What was the total amount credited to Josh’s current account at the end of the year?

5. Preparation of financial statements  →  5.2. Partnerships

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

Open

23

A partner is charged interest on the drawings he made during a financial year. How is this recorded in the partner’s accounts?

5. Preparation of financial statements  →  5.2. Partnerships

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24

Which organisation is the most difficult to establish and has to comply with many legal formalities?

5. Preparation of financial statements  →  5.3. Limited companies

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

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25

Z Limited has the following types of equity and liabilities. debentures general reserves long-term bank loan ordinary share capital preference share capital (non-redeemable) retained earnings What is included in the company’s shareholders’ equity?

5. Preparation of financial statements  →  5.3. Limited companies

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26

A sports club operates a shop selling running shoes to members. These shoes are purchased on credit terms from suppliers. Which item is recorded in the receipts and payments account?

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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27

Which cost is a direct factory cost?

5. Preparation of financial statements  →  5.5. Manufacturing accounts

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28

A manufacturing business provided the following information. $ closing work in progress factory overheads 20 945 opening work in progress prime cost 40 750 What was the factory cost of production?

5. Preparation of financial statements  →  5.5. Manufacturing accounts

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29

Elaine is starting a business. She wants to make sure she doesn’t miss out on any cash discount which is offered to her. Which action would help her achieve this?

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

3. Verification of accounting records  →  3.4. Control accounts

5. Preparation of financial statements  →  5.6. Incomplete records

Open

30

Ahmed provided the following information. $ trade receivables at 1 January 2022 15 000 for the year ended 31 December 2022: credit sales 85 000 cash sales 12 000 cheques received from trade receivables 65 000 irrecoverable debts 2 000 By how much had the trade receivables increased by the end of the financial year?

5. Preparation of financial statements  →  5.6. Incomplete records

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

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31

A business provided the following information. revenue $20 000 gross margin 25% profit margin 10% There was no other income. How much were expenses?

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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32

A business has the following assets and liabilities. $ inventory trade receivables trade payables bank overdraft The owner plans to pay some of his own funds into the business bank account to increase the current ratio to 2 : 1. How much does he need to pay into the business bank account to achieve this?

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

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

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33

Lynne provided the following information about her trading business. $ for the year ended 31 August 2023 revenue: cash sales 250 000 credit sales 230 000 at 31 August 2023 trade receivables 19 530 other receivables 2 100 What was Lynne’s trade receivables turnover?

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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34

A trader values his inventory on the same basis at the end of each financial year. Which accounting principle is the trader observing?

4. Accounting procedures  →  4.5. Valuation of inventory

7. Accounting principles and policies  →  7.1. Accounting principles

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35

Jack is a shareholder in a company. He received the company’s financial statements. Why did he find the financial statements relevant?

5. Preparation of financial statements  →  5.3. Limited companies

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

Open