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1

Which action does not reduce the owner’s capital?

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

5. Preparation of financial statements  →  5.1. Sole traders

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2

Which statement correctly describes the accounting equation?

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

5. Preparation of financial statements  →  5.1. Sole traders

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3

What could a credit balance on a ledger account represent?

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

5. Preparation of financial statements  →  5.1. Sole traders

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4

Aiden purchased goods from Jai and paid for them by bank transfer when he received a statement of account. Jai says he has not received the payment. Which document would help Aiden check that he had made the payment?

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

At the end of the month, how is the total from the sales journal recorded in the ledger?

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

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

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6

A customer paid $15 600 to a supplier after receiving a % 2 2 cash discount and a trade discount of 20%. What was the amount of the invoice entered in the purchases 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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7

A trader maintains a petty cash book using the imprest system. The imprest amount is $120. The petty cash transactions during the month of June were: $ receipt from a customer payments stationery postage cleaning payment to a supplier How much was given to the petty cashier on 1 July to restore the imprest?

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

Paula’s trial balance contains errors. debit $ credit $ fixtures and fittings 4 000 light and heat purchases 11 200 insurance 1 200 sales 16 500 trade payables 3 500 trade receivables 5 500 bank overdraft 1 000 capital 3 500 drawings 2 000 23 500 25 500 What is the corrected trial balance total?

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

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9

The following entry was made in a journal to record the correction of an error. debit $ credit $ Wasim bank Which error has been corrected?

3. Verification of accounting records  →  3.3. Bank reconciliation

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

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10

Which statement correctly describes a suspense 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

A trader prepared a draft income statement which showed a profit for the year of $36 000. A check of the books revealed the following information. Drawings made by the owner of $900 had been debited to the wages account. The provision for doubtful debts was increased by $20 at the year-end. The income statement was charged with the total provision of $260. The total of the discount allowed column in the cash book, $140, for one month had not been debited to the discount allowed account. What was the correct profit for the year?

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

5. Preparation of financial statements  →  5.6. Incomplete records

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

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12

Alicia’s cash book showed a debit balance of $100 on her bank account. She compared her cash book to the bank statement and updated the cash book for the following items. $ credit transfer to a credit supplier credit transfer from a credit customer bank interest paid What was the debit balance on the bank account after the cash book 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  →  3.4. Control accounts

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13

The balance of cash at bank shown...

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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14

Jane wished to make a contra entry between a sales ledger account and a purchases ledger account. The credit entry was made correctly but the debit entry was entered in the sales returns account in error. What was the effect of this error?

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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15

Which transaction is capital expenditure?

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

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16

Sales returns were incorrectly recorded as purchases returns in an income statement. What was the effect of this error?

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

5. Preparation of financial statements  →  5.6. Incomplete records

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17

What is a reason for charging depreciation on a non-current asset?

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

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18

Which non-current asset should be depreciated using the revaluation method?

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

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19

A motor van originally cost $11 500 and had been depreciated by $9000. The van was sold for $2750. How should the profit or loss on the sale of the van be shown...

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

5. Preparation of financial statements  →  5.6. Incomplete records

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

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20

Joseph sells goods on credit and maintains a provision for doubtful debts. He wants to increase his provision for doubtful debts by $400. Which journal entry records this increase in the provision for doubtful debts?

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

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21

What is an advantage of operating as a sole trader?

5. Preparation of financial statements  →  5.1. Sole traders

5. Preparation of financial statements  →  5.3. Limited companies

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22

Emma provided the following information at the end of her financial year. $ fees receivable from clients 78 000 rent receivable 11 000 office expenses 20 000 motor expenses 9 000 drawings 2 000 What was her profit for the year?

5. Preparation of financial statements  →  5.6. Incomplete records

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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23

A trader provided the following data. $ total purchases 25 301 purchase returns 1 945 carriage inwards goods taken for own use 1 425 What was the net figure for purchases in the income statement?

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

Pari and Ira are in a partnership, sharing profits and losses equally. Interest on the capital account balances is allowed at 6% per annum. Pari is entitled to a salary of $5000 per annum. The capital account balances at the start of the year were $60 000 for Pari and $40 000 for Ira. The profit for the year was $27 500. How much residual profit was credited to Pari’s current account at the end of the year?

5. Preparation of financial statements  →  5.6. Incomplete records

5. Preparation of financial statements  →  5.2. Partnerships

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

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25

Which item is directly affected by the dividend policy of a limited company?

5. Preparation of financial statements  →  5.3. Limited companies

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26

What are the features of a debenture?

5. Preparation of financial statements  →  5.2. Partnerships

5. Preparation of financial statements  →  5.3. Limited companies

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27

How are subscriptions received and subscriptions written off recorded in a 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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28

Par Golf Club had a shop that sold golfing equipment to its members. The treasurer provided the following information for the shop for the year ended 31 December. $ sales of golfing equipment 5 300 opening inventory of golfing equipment closing inventory of golfing equipment purchases of golfing equipment 2 700 returns from customers carriage on purchases What was the shop’s gross profit for the year?

5. Preparation of financial statements  →  5.6. Incomplete records

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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29

Which option contains only indirect costs?

5. Preparation of financial statements  →  5.5. Manufacturing accounts

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30

The capital of a business is higher at the end of year 2 than it was at the end of year 1. No additional capital has been introduced during year 2. What does this mean?

5. Preparation of financial statements  →  5.6. Incomplete records

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

5. Preparation of financial statements  →  5.2. Partnerships

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31

Rahat has not maintained a full set of double entry records. She has details of her assets and liabilities at the start and end of the year. Which additional information does Rahat need in order to be able to prepare her income statement for the year?

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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32

Toby’s purchases for the year were $13 000. His closing inventory was $1000 more than his opening inventory. Toby’s gross margin is 20%. What was Toby’s revenue for the year?

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

5. Preparation of financial statements  →  5.6. Incomplete records

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33

CD Limited took out a long-term bank loan and used part of the funds to pay some of its credit suppliers early. How did this affect the trade payables turnover and the return on capital employed (ROCE)?

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

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

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

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34

Jimmy made credit sales of $98 550 in each of the years 2021 and 2022. In 2022, his trade receivables turnover was exactly two days shorter than it had been in 2021. What was the change in his total trade receivables in 2022?

5. Preparation of financial statements  →  5.6. Incomplete records

5. Preparation of financial statements  →  5.5. Manufacturing accounts

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35

Which characteristic of financial information requires that financial statements be clearly presented and assumes that the users of the financial statements will have a reasonable knowledge of accounting?

5. Preparation of financial statements  →  5.1. Sole traders

7. Accounting principles and policies  →  7.2. Accounting policies

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