Principles of Accounts MC

1

1. X sends back $800 of faulty goods to Y in which book of prime entry would Y record this transaction?

(A) General Journal(B) Purchases Journal(C) Sales Journal(D) Sales Returns Journal

2. If the following lists of assets found on the Balance Sheet of a retail trader were to be arranged in order of liquidity; the sequence would be

(A) Motor Van, building, bank, fixtures, cash, debtors(B) Cash, fixtures, debtors, bank, building, motor van(C) Cash, bank, fixtures, debtors, motor van, building(D) Cash, Bank, debtors, fixtures, motor van, building

3. Which of the following are real accounts?

I. Furniture A/cII. Debtors A/cIII. Capital A/cIV. Motor Van A/c

(A) I and II only(B) I and IV only(C) II and III only(D) II and IV only

4. The assets of a business total $3 200 and the liabilities total $820. What is its capital?

(A) $2 038(B) $2 380(C) $4 000(D) $4 020

5. Which of the following states the correct order of the stages in the accounting cycle?

(A) Journalizing, Posting to the ledger, Trial Balance, Final Accounts

(B) Journalizing, Trial balance, Posting to the ledger, Final Accounts

(C) Posting to the ledger, Journalizing, Trial Balance, Final Accounts

(D) Posting to the ledger, Trial Balance Journalizing, Final Accounts

6. A retailer purchases goods worth $3 000. He receives 30 per cent trade discount and 5 per cent cash discount. How much should he pay for the goods?

(A) $1 995(B) $2 095(C) $2 100(D) $2 850

7. On December 31, 1978, the Balance Sheet of Mr. J. W. Ward showed the following:

Fixed Assets $80 000Current Assets $35 000Liabilities $30 750

What was his capital?

(A) $45 250(B) $65 000(C) $80 000(D) $84 250

8. An article is subject to a 20% trade discount. Its list price is $600. What is the sale price?

(A) $120(B) $480(C) $580(D) $720

9. Mrs. Green is a dry goods merchant. Which of the following transactions would result in a debit to her Cash Account?

(A) Sold goods for cash(B) Paid cash to office cleaner(C) Bought goods for cash(D) Paid installment on loan

10. The trial balance is a statement which helps us to

(A) Discover all types of errors(B) Determine the arithmetical accuracy of postings(C) Prove that transactions have been recorded in the

proper accounts(D) Prove that transactions have been correctly analysed

11. Which of the following statements describes real accounts?

(A) The return accounts which appears in the Trading Account

(B) Purchases and Sales Accounts which appears in the Trading and Profit and Loss Account.

(C) Records of property which appear in the Balance Sheet(D) All debtors’ and creditors’ accounts shown in the

subsidiary ledgers

12. A trader received an invoice for $4 000 less 25% trade discount. Subsequently he returned one-eighth of the value of the goods. What amount would be entered in his Returns Outwards Account?

(A) $375(B) $400(C) $450(D) $500

2

13. Which of the following transactions should be debited in the Cash Account?

(A) Bought goods for cash from J. Jones(B) Paid office cleaner by cash(C) Sold goods for cash (D) Paid on loan account

14. A businessman bought a new typewriter for $6 000. He paid $4 000 in cash and traded in his old typewriter. What is the entry to record this transaction?

DR CR(A) New typewriter $6 000 Old typewriter 2 000 Cash 4 000(B) Old typewriter 2 000 Cash 4 000 New typewriter 6 000(C) New typewriter 4 000 Cash 2 000 Old typewriter 6 000(D) Old typewriter 2 000 Cash 4 000 New typewriter 6 000

15. Which of the following groups would be regarded as examples of current assets?

(A) Vehicles, equipment, machinery, typewriter(B) Debtors, stocks, creditors, cash at bank(C) Bank overdraft, machinery, debtors, stock(D) Stock, cash at bank, debtors, cash in hand

16. Goods previously bought for $90 are returned by the buyer to D. Fine. How should this be recorded in the buyer’s journal?

(A) Dr. D. Fine’s A/c Cr. Returns Outwards A/c(B) Dr. D. Fine A/c Cr. Returns Inwards A/c(C) Dr. Returns Inwards A/c Cr. D. Fine’s A/c(D) Dr. Returns Outwards A/c Cr. Goods A/c

Item 17 –18 refer to the Balance Sheet belowBalance Sheet of Boot’s Sports Store as at Dec. 31, 1992.

$ $Capital 12 000 Land & Buildings 9 000+ Net Profit 4 000 Motor Van 5 000

16 000 Fixtures & fittings 600- Drawings 500 Stock 450

15 500 Debtors 250Creditors 2 100 Bank 2 000

Cash 300 17 600 17 600

17. The amount for total fixed assets is

(A) $ 9 000(B) $14 000(C) $14 600(D) $15 050

18. The amount for the total current assets is

(A) $2 550(B) $3 000(C) $3 600(D) $8 600

Item 19 refers to the following information

Cash A/c

Opening balance1.5.94 Sales7.5.94 Sales

$40015075

625

3.5.94 Rent7.5.94 Wages9.5.94 TaxClosing balance

$5020

150405625

19. From the account above, which of the following figures will be posted to the trial balance?

(A) $150(B) $400(C) $405(D) $625

20. An increase in drawings will result in

(A) An increase in long-term liabilities(B) A decrease in capital(C) A decrease in current liabilities(D) An increase in capital

21. A credit balance in the Cash Book indicates that

(A) There is a balance in the bank(B) Too much cash is paid out of the office(C) The bank balance is overdrawn(D) Too many discounts are allowed

22. Which of the following are functions of a bookkeeper?

I. AnalysingII. InterpretingIII. PostingIV. Recording

(A) II and III only(B) III and IV only(C) I, II and III only(D) I, II and IV only

3

23. Which of the following sets of accounts will contain only debit entries in the Trial Balance?

(A) Discount received, stock, purchases returns, salaries(B) Sales returns, wages paid, machinery, discount

allowed(C) Wages due, rent, sales returns, discount allowed(D) Salaries due, discount received, sales returns, stock

24. The accounting cycle entails the following procedures:

I. Posting to the ledgerII. Making adjusting and closings entriesIII. JournalizingIV. Preparation of final accountsV. Extracting a trail balance

(A) III, I, II, V, IV(B) III, I, V, II, IV(C) I, III, V, II, IV(D) III, I, V, IV, II

25. The gross profit of a firm is $3 600, bad debts $100, rent paid $120, rent prepaid $20, general expenses $80 and discount received $110. The net profit is

(A) $3 400(B) $3 410(C) $3 430(D) $3 710

26. Which of the following expresses the balance sheet equation?

(A) Capital = Assets + Liabilities(B) Assets = liabilities – Capital(C) Liabilities = Assets + Capital(D) Liabilities = Assets – Capital

27. Which of the following are nominal accounts?

I. WagesII. CreditorsIII. PurchasesIV. Furniture

(A) I and III only(B) I and IV only(C) II and III only(D) II and IV only

28. On January 1, a trader bought 100 articles at $5 each. During the month, 70 of the articles were sold at $8 each and the remainder were sold on January 31 at the market value of $3 each. What was the gross profit for the month.

(A) $150

(B) $190(C) $210(D) $300

29. The proprietor of a business took home an old office desk valued on the books at $450. How should this transaction be recorded in his books?

(A) Dr. Office Furniture A/c; Cr. Drawings A/c(B) Dr. Profit & Loss A/c; Cr. Office Furniture A/c(C) Dr. Drawings A/c; Cr. Office Furniture A/c(D) Dr. Office Furniture A/c; Cr. Capital A/c

Item 30 refers to the following information.

30. What is the cost of purchases entered in the ledger?

(A) $360(B) $390(C) $410(D) $440

31. A Supplier offers the following discounts. Trade discount 12.5% off list and cash discounts of 3%. What is the lowest amount that will be paid for goods with a list price of $1 600?

(A) $1 358(B) $1 400(C) $1 552(D) $1 600

32. When a company declares a dividend of 15%, the dividend warrant sent to the shareholder owning 1 500 $1 ordinary shares is

(A) $100(B) $225(C) $1 500(D) $1 515

33. A bookkeeper discovers that an amount paid to a supplier has been wrongly entered in another supplier’s account. What book of original entry will the bookkeeper use when correcting this error?

(A) Cash book(B) General Journal(C) Purchases Day Book(D) Sales Day Book

34. A supplier’s account in a customer’s books has a credit balance of $8000. What does this mean?

(A) The customer owes the supplier $8000(B) The customer has paid the supplier $8000

Cost of stock purchases $400Trade discount 10%

4

(C) The supplier has paid $8000(D) The supplier owes $8000

35. At the end of the year, the capital of a business was $33 000. At the beginning of the year, the capital was $28 000. During the year, the owner withdrew for personal use $2 000. What is his net profit for the year?

(A) $5 000(B) $7 000(C) $30 000(D) $61 000

36. The maximum capital a company can issue to the public is called

(A) Authorised capital(B) Issued capital(C) Subscribed capital(D) Paid up capital

37. A limited liability company is owned by

(A) The state(B) Private shareholders(C) The public at large(D) A limited number of partners

38. Which of the following tasks would NOT normally be carried out by a book-keeper?

I. Keeping the journalII. Extracting the trial balanceIII. Drawing up the balance sheetIV. Auditing the accounts

(A) I and II only(B) I and III only(C) II and IV only(D) III and IV only

39. When comparing the books of a company with the books of a sole trader, which of the following items on a Balance Sheet would differ MOST in presentation?

(A) Capital(B) Current Assets(C) Current Liabilities(D) Fixed Assets

40. Which of the following transactions will NOT be recorded in the Purchases Day Book of a grocery shop?

(A) Bought from K. Leen goods $500(B) Purchased goods on credit $975(C) Bought chicken on credit $100(D) Purchased cash register on credit $1 200

41. What is the working capital?

(A) $5 000(B) $6 500(C) $7 200(D) $11 300

42. A trader had an opening capital of $3 900. His drawings were $900 and his closing capital was $4 860. What was the net profit?

(A) $900(B) $960(C) $1 860(D) $3 000

43. An employee works for 45 hours each week. He is paid $4 per hour for a basic 40-hour week and $6 per hour for overtime. His gross weekly wage is

(A) $180(B) $190(C) $240(D) $270

44. What would be the effect on a firm’s Balance Sheet of the purchase of equipment on credit?

(A) Asset increased; liability decreased(B) Asset increased; liability increased(C) Asset decreased; liability increased(D) Asset decreased; liability decreased

45. Mr. Jones business began the month with an overdraft of $1 200. During the month, total deposits were $2 000 and total payments were $600. What was the Cash Book balance at the end of the month?

(A) Credit balance of $200(B) Debit balance of $200(C) Credit balance of $600(D) Debit balance of $1 400

46. A business operates its petty cash on the imprest system. At the beginning of the month, the petty cashier was given $200 out of which she spent $152. How much will she be reimbursed?

(A) $48(B) $152(C) $200(D) $352

Cash at bank and in hand 5 000Trade debtors 2 400Stock in hand 4 600Accrued expenses 700Trade creditors 4 800

5

47. On January 12, 1994, a merchant purchased goods amounting to $120 on the following terms: 5% cash discount if paid within 30 days. He settled his debt on February 28, 1994. How much did he pay?

(A) $112(B) $114(C) $120(D) $126

48. Morris purchased $1 000 worth of furniture for office use and entered it in the journal as purchases. How will this error affect his Balance Sheet?

(A) Fixed assets and net profit will be decreased by $1000

(B) Fixed assets and net profit will be decreased by $1000

(C) Current assets and net profit will be increased by $1000

(D) Current assets and net profit will not be affected

Items 49 - 50 refer to the following information.

DR.$

CR.$

Balance$

Dec. 1 Balance b/f 5 Cheque 14 Unit Trust: Standing order 20 P. Palmer: Credit Transfer 29 Bank charges

100

85

90

30

60

49. The balance as per bank statement was a

(A) Credit balance of $5(B) Debit balance of $65(C) Credit balance of $125(D) Debit balance of $5

50. Which of the following does this Bank Statement balance represent?

(A) An overdraft(B) A direct debit(C) A credit transfer(D) A dishonoured cheque

51. When a proprietor withdraws cash or other assets from a business, what effect does it have on capital?

(A) Drawings are decreased(B) Capital is increased(C) Neither drawings nor capital is affected(D) Capital is decreased

52. Which of the following accounts does NOT have a credit balance

(A) R. Smith (Supplier)(B) Rent Received(C) Bad debts recovered(D) Purchases

53. Closing stock at year end is incorrectly valued. Which of the following will be affected?

I. Cost of salesII. Gross profitIII. Net purchasesIV. Working capital

(A) I and II only(B) III and IV only(C) I, II and IV only(D) II, III and IV only

54. H. Stone has a manufacturing business: His expenses are as follows:

How much is his total direct expenses?

(A) $1 000(B) $2 000(C) $3 000(D) $4 000

Items 55 – 56 refer to the following balances taken from the books of Sherida’s Ltd. on April 30, 1997.

55. What is the working capital of Sherida’s Ltd?

(A) $2 000(B) $2 400(C) $3 600(D) $3 800

56. What is the Current Ratio of Sherida’s Ltd?

(A) 1:1(B) 1.5:1(C) 2.1:1(D) 3.1:1

57. In a factory, raw materials used amounted to $4 000, manufacturing wages $1 200 and other direct

Factory lighting 1 000Factory wages 2 000Office salaries 2 500General Administrative expenses 4 000

BALANCES $Rent owing 200Cash 3 500Creditors 1 200Prepaid insurance 300Bank overdraft 400

6

expenses $400. What was the prime cost of articles produced?

(A) $4 400(B) $4 800(C) $5 200(D) $5 600

58. When 5% is added to the production cost, the value transferred to the Trading Account is $26 250. The gross trading profit is $6 500 and the expenses total $5 500. Under which of the following conditions would the net profit be $2 250?

(A) Inclusion of production profit(B) Exclusion of production profit(C) Inclusion of production cost(D) Exclusion of gross profit

59. Which of the following would NOT be considered part of the prime cost of manufactured goods?

(A) Office Manager’s wages(B) Machine operator’s wages(C) Raw material used(D) Freight on raw material


60. What is the cost of goods manufactured?

(A) $7 000(B) $8 000(C) $9 000(D) $11 000

61. The following deductions are made from the salary of an employee:

What is the total amount which should be deducted from the employee’s salary of $1 800 per month?

(A) $486(B) $648(C) $684(D) $846

62. A club’s Income and Expenditure Account performs the same functions as a firm’s

(A) Petty cash book(B) Trading and Profit and Loss Account(C) Cash and Bank Accounts(D) Balance Sheet

63. A non-trading organisation is MAINLY concerned with.

(A) Making maximum profit for the proprietor (B) Providing various services for its members(C) Importing goods for resale(D) Trading only with wholesalers

64. A businessman incurred the following expenses:

What is the total capital expenditure?

(A) $6 000(B) $7 000(C) $8 000(D) $10 000

65. The net profit of a firm was shown as $1 600 and was later discovered that discounts received were undercast by $10 and purchases were understated by $36. What was the corrected net profit?

(A) $1 574(B) $1 610(C) $1 636(D) $1 646

Item 65 refers to the following information:

- The provisions for bad debts for the year is to be 8% of closing debtors.

- Closing debtors totaled $9 000.- The balance presently in the Provision for Bad Debts

Accounts is $900.

65. What is the correct entry required to reduced the Provision for Bad Debts Account?

(A) Dr. Profit & Loss A/c $180 Cr. Provision for Bad Debts A/c $180(B) Dr. Provision for Bad Debts A/c $720 Cr. Profit & Loss A/c $720(C) Dr. Provision for Bad Debts A/c $180 Cr. Profit & Loss A/c $180(D) Dr. Provision for Bad Debts A/c $900 Cr. Profit & Loss A/c $900

DEDUCTIONSIncome TaxNational HousingEducation Tax

35%2%1%

Opening stock of raw materials 500Purchases 2 000Closing stock of raw materials 1 000Direct labour 3 000Factory overheads 4 500Opening stock of work in progress 2 000 Closing stock of work in progress 3 000

Factory Repairs $6 000Machinery Repairs $2 000New Machine $3 000New Vehicle $7 000

7


IPurchasesCarriage inwards

To record the closing and transfer of the Purchases and carriage inwards Account at the end of the period

$7 300

$

7 000300

66. Which account is represented by I?

(A) Income and expense(B) Profit and Loss(C) Trading(D) Suspense

Item 67 refers to the following information.Insurance A/c

1998Jan 2 15

Balance b/dBank

$700

8 000

8 700

1998Dec 31 31

Profit & Loss A/cBalance c/d

$8 100

600

8 700

67. What is the amount of insurance prepaid?

(A) $600(B) $700(C) $8 000(D) $8 100

68. A suspense account shows a debit balance. Which of the following could give rise to such a balance?

(A) The discount received was undercast in the Cash Book(B) The figure taken from an invoice is incorrect but the

postings are correct(C) The bookkeeper cannot find a sales invoice.(D) Cash received has been credited twice to the

debtor’s account

Item 69 refers to the following information below:

69. What is the gross pay for V. Jones?(A) $850(B) $950(C) $1 450(D) $1 550

Item 70 – 71 refer to the following data:

I. Jones utilizes a Cash Book to record all transactions. An analysis of the Cash Book for the year ended December 31, 1999 shows:

Receipts from customersCash to begin the businessPayments for goods boughtElectricityRentInterest on loanLoan for the businessCash withdrawn to fix Jones’ house

$200 000300 00090 00010 0005 0001 000

100 0008 000

70. What is Jones’ balance at December 31, 1999?

(A) Credit balance of $296 000(B) Debit balance of $296 000(C) Credit balance of $486 000(D) Debit balance of $486 000

71. What figure would appear in Jones’ balance sheet as at December 31, 1999, as capital introduced during the year?

(A) $100 000(B) $292 000(C) $300 000(D) $400 000

72. Personal accounts are found in the

(A) Debtors and creditors ledger(B) Creditors accounts(C) Debtors account(D) Private ledger and journal

73. The ABC Company deposited a cheque received from Mr. Murray for $300. How must this transaction be recorded in ABC’s books?

I. Credit the Cash Book $300II. Credit Murray’s AccountIII. Debit The Bank AccountIV. Debit the Cash Account


74. A machine costs $10 000. It has an expected life of six years and a residual value of $400. Using the straight-line method, what is the depreciation per annum?

(A) $1 600(B) $2 400(C) $9 600(D) $10 400

75. Control accounts are kept so as to assist management in

Extract from the pay slip of V. JonesNet Pay $1 200Income tax 300National Insurance 50

8

(A) Limiting expenditure(B) Locating errors(C) Increasing profits(D) Limiting drawings

76. What is the balance of cash at the end of the month for a club which showed the following Summary of Receipts and Payments at the end of the month?

(A) $180(B) $280(C) $320(D) $620

Item 77 refers to the following extract from T. Armand’s Balance Sheet

77. What was his opening capital?

(A) $2 500(B) $4 000(C) $5 000(D) $6 500

78. Tom, Percy and John formed a partnership and agreed that profits were to be shared in the ration 1:1:2 respectively. The net profit for the year was $18 900. What was John’s share of profit?

(A) $4 725(B) $9 450(C) $14 175(D) $18 900

79. A business has total assets valued at $225 000 and total liabilities at $ 97 000. The owner values the business at $150 000. What is the goodwill?

(A) $22 000(B) $53 000(C) $75 000(D) $128 000

80. Which of the following would cause the Cash Book to disagree with the Bank Statement?

I. Bank charges were not entered in the Cash BookII. Cheques were drawn and presented for payment on

the same dates

III. Bank transfer was not entered in the Cash BookIV. Bank deposit was not shown on the Bank Statement

(A) I, and III only(B) III and IV only(C) I, III and IV only(D) II, III and IV only

81. Under which of the following conditions would a trial balance still balance?

I. A transaction was completely left out.II. Both a debit and credit entry were overstated by the

same amountIII. A debit entry was left out.IV. Both a debit and a credit entry were understated by

the same amount.

(A) I, II and III only(B) I, II and IV only(C) I, III and IV only(D) II, III and Iv only

82. A trader sent Mr. Jones an invoice charging him for 10 articles at $68 each instead of $65 each. Which type of note should the trader subsequently send to Mr. Jones?

(A) Promissory note(B) Advice note(C) Debit note(D) Credit note

83. Total interest on capital is

(A) $50(B) $100(C) $250(D) $400

84. Robinson’s share of the net divisible profit is

(A) $800(B) $1 600(C) $4 000(D) $6 400

85. Smith’s current account is credited with

(A) $1 175

Subscription received $300Rent paid 60Purchase of games and Equipment 150Postage of circulars 20Proceeds from book sale 250

Closing capital $4 500Net Profit 1 250Drawings 750

Smith, Brown and Robinson are partners who share profits in the proportion of their capitals of $5000, $2000 and $1000 respectively.

Net Profit is $7 100Interest on capital is 5%Robinson is paid a salary of $300

9

(B) $1 700(C) $4 250(D) $6 400

86. What adjusting entry is necessary to record provision for bad debts?

(A) Dr. Profit & Loss A/c; Cr. Provisions for Bad (Doubtful) Debts A/c

(B) Dr. Cash A/c; Cr. Provisions for Bad (Doubtful) Debts A/c

(C) Dr. Provisions for Bad (Doubtful) Debts a/c; Cr. Profit & Loss A/c

(D) Dr. Trading A/c; Cr. Provisions for Bad (doubtful) Debts A/c

87. Which journal entry is required in the books of B. Jones who started a business by depositing $8000 into the business bank account?

(A) Debit Bank Account Credit Capital Account(B) Debit Bank Account Credit B. Jones Current Account(C) Debit Capital Account Credit Bank Account(D) Debit B. Jones Account Credit Capital Account

88. P Hawk has a manufacturing business, his raw materials cost $1 900; rates and rent total $2 000 and factory wages amounted to $2 500.

The number of units produced is 640. What is the

cost of one unit?

(A) $4(B) $6(C) $10(D) $13


89. What is the year’s cost of production of finished goods?

(A) $14 000(B) $18 000(C) $21 000(D) $24 000

90. Which of the following should be done when preparing income and expenditure accounts?

I. Debit expensesII. Exclude capital itemsIII. Include all receipts and paymentsIV. Credit income

(A) I, II and III only(B) I, II and IV only(C) I, III and IV only(D) II, III and IV only


91. What is the rate of stock turnover?

(A) 2 times(B) 3 times(C) 6 times(D) 9 times

92. At the start of the financial year, a trader owed his creditors $3 200. He paid cash of $14 900 to them during the year, and at the end of the year the balance due to his creditors was $2 800. What is the trader’s credit purchases for the year?

(A) $12 100(B) $14 500(C) $15 300(D) $17 700

93. A public limited company issued a prospectus offering the following shares for sale at par value.

Type Amount Par ValueOrdinary5% Preference

20 00010 000

$2.00$5.00

If the issue was fully subscribed, how much capital did the company raise?

(A) $30 000(B) $40 000(C) $50 000(D) $90 000

94. The information below was extracted from the Cash Book of Dandy Dare.

Total unpresented chequesLodgement not entered on bank statementBalance per Cash Book

$120$150$560

Which is the balance per Bank Statement?

(A) $120(B) $150(C) $340

Prime Cost 10 000Overheads 16 000Work in progress January 1 3 000Work in progress December 31 5 000

Stock January 1 $300Purchases 3400Gross Profit 1500Sales 4500Stock December 31 700

10

(D) $53095. Which of the following items are related to a

consumer cooperative?

I. Patronage DividendsII. Ordinary DividendsIII. Dividends on capitalIV. Preference Dividends


96. On May 1, a petty cashier received an imprest of $150. During the month, petty cash expenses amounted to $77.00 and $2.00 was received from a member of staff who made a personal telephone call. How much cash is needed to restore the imprest on May 31?

(A) $73.00(B) $75.00(C) $77.00(D) $150.00

97. Which of the following must be filed with the Registrar of Companies to establish a PRIVATE Joint Stock Company?

I. Articles of AssociationII. Memorandum of AssociationIII. Share CertificatesIV. Prospectus

(A) I and II only(B) I and IV only(C) II and III only(D) III and IV only

98. In the trading account, returns outwards is deducted from

(A) Carriage outwards(B) Carriage inwards(C) Purchases(D) Sales

Item 99 refers to the following information.ASSETS LIABILITIES CAPITAL

IIIIII

$100 000250 00015 000

$50 000

100 00022 000

$40 000

150 0008 000

99. In which of the cases above does a ‘loss’ exist?

(A) I and II only(B) II and III only(C) III only

(D) I, II and III100. Which of the following tasks must be completed in

payroll accounting before a trial balance can be prepared?

I. Providing the payroll registerII. Posting the payroll totalsIII. Recording payment of employees and payroll returnsIV. Preparing employees income-tax returns


101. The process of putting financial records in their analysis form is called

(A) Accounting(B) Adjusting(C) Record keeping(D) Decision making

102. Joanne Barrett is a dressmaker. She buys 100 metres of material from S. Wright for $100 cash. The correct double entry for this transaction in Barrett’s ledger would be to

(A) Dr. Materials A/c; Cr. S. Wright’s A/c(B) Dr. Materials A/c; Cr. Cash A/c(C) Dr. Cash A/c; Cr. S. Wright’s A/c(D) Dr. Cash A/c; Cr. Materials A/c

103. Mr. Harry, a grocer, bought a typewriter on credit from Tan Company. Which of the following journal entries will be made for this transaction in Mr. Harry’s books?

(A) Dr. Purchases A/c; Cr. Tan A/c(B) Dr. Typewriter A/c; Cr. Cash A/c(C) Dr. Tan A/c; Cr. Purchases A/c(D) Dr. Typewriter A/c; Cr. Tan Company

104. The account which discloses the gross profit or loss is called the

(A) Profit and Loss A/c(B) Appropriation A/c(C) Trading A/c(D) Cash A/c

105. Which of the following claims are ranked in order of priority, if a company is liquidated?

(A) Ordinary Shares, preference shares, debentures(B) Debentures, ordinary shares, preference shares(C) Preference shares, ordinary shares, debentures(D) Debentures, preference shares, ordinary shares

11

106. Which of the following accounts are NOT grouped according to the classes to which they belong?

(A) Rent received, interest received, commission received

(B) Machinery, building, cash(C) Capital, creditor, land(D) Rent owing, salaries payable, mortgage payable

Item 107 refers to the following information which was taken from a club’s records.

107. How much would be entered for the locker rental in the Income and Expenditure Account for the year ended December 31, 1994?

(A) $360(B) $380(C) $400(D) $420

108. Mr. Allen invested $20 000, Mr. Brown invested $5 000 and Mr. Cable invested $5 000. The loss sustained during the year was $1 000. The partnership agreement is silent on the item of losses. Although profits are to be split 2/5, 2/5,1/5 respectively. How much of the loss must be borne by Mr. Cable?

(A) $400(B) $300(C) $240(D) $200

109. When a company issues new shares at a price above face value, the increase is

(A) Gross profit(B) Net profit(C) Capital profit(D) Normal profit

110. Joyce and Keller are in partnership having capital of $14 000 and $18 000 respectively. Before admitting a new partner, Wong with $10 000 into the business, they agreed that the partnership be valued at $42 000. The goodwill is therefore

(A) $1 000(B) $2 000(C) $8 000(D) $10 000

111. P admits Q in partnership on the following terms:

I. Q brings $5 200 in cash into the business

II. $300 is to be paid out to P and is to appear in the books of the partnership as goodwill.

The entry in the Cash Book would be

(A) Cash Book

Q’s Capital 4 900 Goodwill 300

(B) Cash Book

Q’s Capital 5 200 Goodwill 300

(C) Cash Book

Goodwill 300 Q’s Capital 5 200

(D) Cash Book

Goodwill 300 Q’s Capital 4 900

112. In partnership accounting each Partner’s share of profits is post to the

(A) Appropriation Account(B) Capital Account(C) Current Account(D) Drawings Account

113. Which of the following transactions will NOT affect the capital?

(A) Owner takes money out of the business bank account for his own use

(B) Owner pays creditor from private money outside the firm

(C) Owner buys additional shop premises, paying by cheque

(D) Owner introduces more money into the firm

Item 114 refers to the following Journal entries.

Machine A/cJohn Brown 500

John Brown’s A/cMachine 500

Machine A/cJohn Brown 500

Sales A/cJohn Brown 500

1994 $Jan. 01 Locker rental outstanding 30Dec. 31 Locker rental collected 400Dec. 31 Locker rental prepaid for 1995 10

Dr CrJuly 1 John Brown’s A/c 500 To Machine A/c 500 Being credit sale of machine

I

II

III

IV

12

114. What are the corresponding ledger entries?

(A) I and III only(B) I and IV only(C) II and III only(D) III and IV only

115. A and B had a partnership and shared profits and losses 2/3 and 1/3 respectively. They admitted C to partnership. In addition to capital, C had to pay for Goodwill $3 600. How much did A and B receive as their respective share of Goodwill?

(A) A receives $1 200 B receives $2 400(B) A receives $2 400 B receives $1 200(C) A receives $1 800 B receives $3 600(D) A receives $3 600 B receives $3 600

116. Mr. A. Jones paid $250 for repairs to machinery. This transaction was entered in the Cash Book and posted to the ledger. How was this transaction recorded?

(A) Debit Cash A/c; Credit Repairs A/c(B) Debit Cash A/c; Credit Machinery A/c(C) Debit Repairs A/c; Credit Cash A/c(D) Debit Machinery A/c; Credit Cash A/c

Item 117 refers to the information below which was taken from the books of John Smith, a grocer.

117. Whose account would appear in the ledger of J. Smith as a debtor?

(A) J. Smith A/c(B) T. Samm A/c(C) W. Wallace A/c(D) A. Blackie A/c

Item 118 refers to the following information:

118. How much would be provide for depreciation this year using the reducing balance method?

(A) $1 000(B) $1 900(C) $2 000(D) $2 100

Items 119 – 121 refers to the following informationJ. Baynes Manufacturing A/c for the period ending Dec. 31, 1992

Stock of Raw materials 1.1.92Purchases of raw material during the year

Less closing stock of raw materials 31.12.92

Production wagesFuel and powerLubricantsRent and ratesInsurance

800

45005300

120039001300900100400200

6800

Balance c/d 6800

6800

119. What is the cost of raw materials available for production?

(A) $800(B) $3 900(C) $4 500(D) $5 300

120. What is the cost of raw materials consumed?

(A) $800(B) $1 200(C) $3 900(D) $4 500

121. What is the prime cost?

(A) $3 900(B) $5 200(C) $5 300(D) $6 800

Item 122 refers to the following figures taken from a manufacturing accountPrime costsFactory overheadsDirect manufacturing wages

29 95011 25022 000

122. What is the cost of raw materials consumed?

(A) $7 950(B) $8 700(C) $11 750(D) $33 000

123. P is to join X and Y in partnership. P brings to the partnership as capital, furniture valued $3 000 and a motor van $5 000. In addition, he is to pay a premium of $1 000 to be shared between X and Y. How much would be the amount of P’s capital?

(A) $4 000(B) $6 000(C) $8 000(D) $9 000

T. Samm owed J. Smith $75J. Smith owed W. Wallace $40A. Blackie loaned J. Smith $75

Fixed Assets at cost 20 000Accumulated depreciation to date 1 000Rate of depreciation per annum 10%

13

Item 124 refers to the information below.

124. What is Mr. Smith’s capital?

(A) $55(B) $205(C) $405(D) $495

Item 125 refers to the correcting entries in John Brown’s Debtors Ledger shown below:

B. Scott A/cA. Scott 20

A. Scott A/cB. Scott 20

125. Which of the following is a satisfactory reason for making the correcting entries?

(A) B. Scott paid A. Scott(B) An error was made in debiting B. Scott’s A/c

instead of A. Scott’s(C) John Brown paid A. Scott(D) An error was made in crediting B. Scott’s A/c

instead of A. Scott’s

126. John Smith is employed at $8 per hour. He is paid time and a half for hours of work in excess of 44 hours per week. Last week he worked for 50 hours. His gross earnings were:

(A) $324(B) $400(C) $424(D) $600

127. The term ‘capital expenditure’ refers to

(A) Expenses paid from the sum invested(B) Money spent for purchasing fixed assets(C) All the expenses for a particular period(D) The amount used to repay long-term liabilities

128. A club had 50 members, each subscribing $4 per year. On December 31, 1995 subscriptions outstanding were $16. During the year 1996, the total subscription collected was $180, and this included the amount outstanding from 1995. What was the outstanding subscription at December 31, 1996?

(A) $20(B) $24(C) $32(D) $36

129. A company purchased $1 500 worth of paint and was told that if the amount was paid within ten days, it would only have to pay $1 350. The reduction in cost represented a

(A) 10% cash discount(B) 10% trade discount(C) 15% mark down(D) 20% quantity discount

130. Under which of the following circumstances can an asset (furniture) be increased?

I. Liability is creditedII. Capital is creditedIII. Purchase of more furnitureIV. Owner brings in more furniture

(A) I and II only(B) I and III only(C) II and III only(D) III and IV only

131. Brown sold a motor vehicle worth $2 000 to Smith. Smith was allowed a 2% cash discount. How much would smith have to pay Brown?

(A) $1 950(B) $1 960(C) $2 002(D) $2 040

132. Because of an error in posting, the Purchases Account was understated by $100 in respect of goods purchased on credit. What are the journal entries necessary to correct this error?

(A) Debit Supplier Credit Purchases(B) Debit Purchases Credit Supplier(C) Debit Debtors Credit Purchases Returns(D) Debit Purchases Returns Credit Debtors

133. While postings to the ledger you noticed C. Huck entered on the debit side of the three-column Cash Book. Which of the following entries to the ledger would you make?

(A) Debit Cash Account(B) Debit Account of C. Huck(C) Credit Cash Account

The Assets and Liabilities of Mr. Smith $Cash 320Stock 410Creditors 500Debtors 75Bank overdraft 100

14

(D) Credit account of C. Huck

134. A proprietor wins a motor van valued $10 000 and decides to put it into the business. The entry should be

(A) Debit Motor Vehicles Account; credit drawings account(B) Debit capital account; credit motor vehicles account(C) Debit motor vehicles account; credit capital account(D) Debit bank account; credit capital account

135. In a business, the total assets were $9 000 and the total liabilities were $3 000. A vendor offered $10 000 for the business. What amount was given for goodwill?

(A) $1 000(B) $2 000(C) $4 000(D) $16 000

136. Red and Blue trading in partnership decide to admit Green as a partner, on condition that he pays them a premium of $1 200. Profits were shared equally before the admission of Green. Premium is to be shared in the same proportion in which they shared profits. What entries would be made to record the sharing of the premium between the partners?

(A) Debit Partners’ Capital account; Credit Cash(B) Debit Red $600 and Blue $600; Credit Premium $1 200(C) Debit Cash; Credit Green’s Capital account(D) Debit Cash $1 200; Credit Red $600 and Blue $600

Item 137 refers to the following information:Mohammed Ali

Statement of AffairsAs at December 31, 1998

Fixed Assets

Current Assets

$

2500

3000

5500

Capital at Beginning

+ Net Profit

- Drawings

Capital at end

Liabilities

$

3000

?

300

$

?

1500

5500

137.What is his net profit for the year?

(A) $1 300(B) $1 500(C) $1 600(D) $1 800

138. Goods bought on credit from X and Y are returned before they are paid for. X keeps a full double entry system. Where will X record the return of goods?

(A) Cash Book and Sales Ledger(B) General Ledger only(C) General Ledger and Purchase Ledger(D) Purchase Ledger only

139. A firm buys goods on credit. Which document does the firm use to record this?

(A) Credit note(B) Purchase invoice(C) Sales invoice(D) Supplier’s statement

140. Another name for authorized capital is

(A) Liquid capital(B) Working capital(C) Fixed capital(D) Nominal capital

141. The Imprest system saves time in the posting of expenses to the nominal accounts because

(A) A small number of payment is involved(B) An analysis system is involved(C) The Imprest position is always restored(D) Petty cash vouchers are used

142. John Jones pays his employees by cash. How will he record this payment in his books?

(A) Debit Wages A/C Credit Employees’ A/c(B) Debit Employees’ A/c Credit Wages A/c(C) Debit Cash A/c Credit Wages A/c(D) Debit Wages A/c Credit Cash A/c

143. Louis and Mein are in partnership and share profits equally. Louis capital is $2 000 and Mein capital is $3 000. Nat, who is admitted to the partnership, brings in a capital of $3 000 and a premium of $2 000 to remain in the business. What will be the capitals of Louis, Mein and Nat respectively after Nat’s admission to the partnership?

(A) $2 000; $3 000; $5 000(B) $2 000; $3 000; $3 000(C) $3 000; $4 000; $3 000(D) $2 800; $4 200; $5 000


Kelly B. Hind borrows $2 000 from the credit union. The rate of interest is 1% per month on the outstanding balance. Mr. Hinds installment are $120 per month payable at the end of the each month.

144. For the first month his interest payment is

(A) $1.00(B) $2.00

15

(C) $10.00(D) $20.00

145. Which of the following when overcasted would result in a fall in the cost of production?

(A) Purchase of raw materials $20 000(B) Closing stock of raw materials $10 000 (C) Direct labour $30 000(D) Factory overheads $45 000

146. The purpose of book-keeping in business is to

(A) detect financial difficulties in the business(B) record transactions in a prescribed manner(C) design a system for records in the business(D) interpret financial statements of the business


147. The table above shows a list of balances. What is the total of the assets?

(A) $12 000(B) $13 000(C) $14 000(D) $15 000

Items 148 - 150 refer to the balance sheet below.Balance Sheet of Beta Shoe Store

As at September 30, 1990 $ $Capital at start 24 000Less loss for the year 2 200 21 800Less Drawings 1 800 20 000Creditors 2 100Accrued Expenses 1 200 3 300

23 300

$ $Leasehold Premises 10 000Furniture, Fittings andEquipment 14 500

Inventories (Stock) 2 500Debtors 3 700Bank Current A/c 2 100Cash in Hand 500 8 800 23 300

148. The total assets are

(A) $11 200(B) $14 500(C) $20 000(D) $23 300

149. The working capital is

(A) $2 600(B) $5 500 (C) $6 200(D) $6 800

150. The closing capital is

(A) $20 000(B) $20 700(C) $21 800(D) $22 800

151. Which of the following is entered in the Purchases Account of a grocery?

(A) Goods for sale(B) Duplicating machines(C) Typewriters(D) Office stationery


(A) Machinery and plant(B) Stock and debtors(C) Creditors and fixtures(D) Wages and rent

153. Two methods of stock evaluation, Last in First Out and First in First Out, were compared after calculating a closing stock of 50 units. L.IF.O. gave a closing stock of $350 and F.I.F.O. gave a closing stock of $400. What conclusion can be drawn from this?

I. Prices were rising.II. Prices were falling.III. Prices were neither rising nor falling.IV. Profit will be understated if L.I.F.O. is used.

(A) I only(B) II only(C) II and IV only(D) III and IV only

154. If closing stock is 900 units, the purchases 7 000 units, the sales 6 500 units, the cost price per unit $1.50 and the selling price per unit is $2.00, then the cost of the closing stock is

(A) $1 400(B) $1 600(C) $2 100(D) $2 800


Using the information above, what is the cost of goods sold?

Motor Vehicle $2 000Creditors 3 000Debtors 2 000Capital 11 000Buildings 10 000

Carriage Inwards 125Sales 5 500Returns Inwards 365Purchases 4 520Closing Stock 920

16

(A) $3 620(B) $3 745(C) $4 645(D) $4 985

156. If the closing stock is undervalued, which of the following would result?

(A) Net profit overvalued; gross profit undervalued(B) Cost of goods sold overvalued; gross profit

undervalued (C) Gross profit overvalued; net profit undervalued(D) Goods available for sale undervalued; gross profit

overvalued

157. How should the totals of the Discount Allowed and Discount Received columns be posted when the Cash Book is ruled off?

(A) Debit Discount Allowed Credit Discount Received(B) Debit Discount Allowed Credit Cash(C) Debit Discount Received Credit Discount Allowed(D) Credit Discount Received Debit Cash

158. Mr. Rouse accepted from Ms. Smith $150 as full settlement of the $200 owing to him for purchases. In which account would Ms. Smith record the difference of $50?

(A) Discount Allowed(B) Cash Received(C) Discount Received(D) Suspense

159.Which of the following documents should be used to inform a customer of an undercharge on an invoice?

(A) Credit note (B) Advice note (C) Debit note(D) Pro forma invoice

160.Which of the following entries should be used to post Sales Returns?

(A) Debit Sales Returns Account, Credit Sales Account.(B) Debit Sales Returns Account, Credit the account of the person retuning the goods(C) Debit Sales Account, Credit Sales Returns Account.(D) Debit the account of the person returning the goods Credit Sales Returns Account

161. An item of $50 for goods sold to L. Harry was posted from the Sales Journal to the credit of L. Harry’s account. What effect will this have on the Balance Sheet of the business?

(A) Debtors overstated by $50(B) Debtors understated by $50(C) Debtors overstated by $100(D) Debtors understated by $100

Item 162 refers to the following information.M. Peter

$Purchases Returns 1.50162. Which of the following documents would provide

information for recording the above entry?

(A) Credit note(B) Debit note(C) Purchase invoice(D) Cheque

163. The time card of M. Haynes shows 40 regular hours at $4 an hour and 7 hours overtime at $5 per hour. How much is his total earnings?

(A) $160(B) $195(C) $200(D) $600

164. The balance in the cash account indicates

(A) How much profit was made(B) The true worth of the business(C) How much is owed to the business(D) The cash held by the business

165. Which of the following errors will affect the totals of the trial balance?

(A) Payment of $35 cash to R. Cee & Co. Ltd entered in the Cash Book only

(B) A machine sold for $300 entered in Sales Account instead of Machinery Disposals

(C) $40 goods bought from C. Forte entered in G. Forte’s Account

(D) Sale of $78 to R. Phillips entered as $87 in the books

166. Which of the following is neither capital nor revenue expenditure?

(A) The sum disbursed for typewriters(B) The secretary’s salary(C) A donation of $200 to charity(D) The Payment of $250 telephone bill

167. A business carried on by two or more persons with a view to sharing profits is called a

17

(A) Private company(B) Public limited company(C) Partnership(D) Proprietorship

168. In converting from ‘single entry’ to ‘double entry’, the source from which details will be extracted is the

(A) General Ledger(B) Subsidiary Books(C) Statement of Affairs(D) Bank Reconciliation Statement

169. Which of the following accounts show how profits and losses are shared among partners?

(A) Profit and Loss Account(B) Appropriation Account(C) Current Account(D) Income and Expenditure Account

170. When a company issues new shares at a price above face value, the increase is

(A) Gross Profit (B) Net Profit(C) Capital Profit(D) Normal Profit

171. The reward of profit received by a shareholder in a limited company is called

(A) Commission(B) Interest(C) Drawings(D) Dividends

Item 172 refers to the extract from the records of a business, shown below.

172. According to the information given above, the resulting position is a

(A) Profit of $1 000(B) Loss of $1 000(C) Profit of $800(D) Loss of $800

173. A credit balance b/f in the Sales Ledger Control A/c represents an overpayment(A) To creditors(B) By debtors(C) To debtors

(D) By creditors

174. Employees of a business are entitled to annual profit sharing bonus of 20%. Profit for the year was $10 000 before tax and bonus. If tax is to be 30%. What is the amount for bonus?

(A) $1 400(B) $2 000(C) $4 400(D) $7 000

Item 175 refers to the following information:Stock at Jan. 1, 1994 $ 500Purchases during the month $1 200Cost of goods sold $1 400175. What is the stock at the end of January?

(A) $ 300(B) $ 700(C) $ 500(D) $1 200

176. The purpose of an appropriation account is to

(A) Change capital expenditure as agreed upon in the Articles of Association

(B) Show how the net profit is distributed in a partnership or co-operative

(C) Make appropriate changes related to net profit as agreed upon in the Articles of Association

(D) Enter all capital and revenue expenditure as stipulated in the Partnership Act

177. In which book would a trader enter the writing-off of a debt of a bankrupt customer?

(A) Sales Journal (B) General Journal (C) Returns Journal(D) Purchase Journal

178. Credit notes issued for goods returned by customer will be entered firstly in the

(A) Returns outwards book(B) Returns inward book(C) Sales returns and allowances account(D) Purchases returns and allowances account

179. A Suspense Account was opened for an error of $30 found in the trial balance. Later it was observed that sales were understated by $30. This item would be corrected in the journal by

(A) Dr. Trading, Cr. Suspense(B) Dr. Suspense, Cr. Goods

Opening Capital 1 000Closing Capital 2 000Drawings 400Additional Capital 600

18

(C) Dr. Sales, Cr. Suspense(D) Dr. Suspense, Cr. Sales

180. Goods were purchased from M. Smith on credit for $2 400 but posted to N. Smith’s Account. The item would be corrected in the journal as follows

(A) Dr. M. Smith $2 400, Cr. Purchases $2 400

(B) Dr. M. Smith $2 400, Cr. N. Smith $2 400

(C) Dr. Purchases $2 400, Cr. M. Smith $2 400

(D) Dr. N. Smith $2 400, Cr. M. Smith $2 400

181. Which of the following is a Book of Original Entry and also a part of the General Ledger.

(A) Cash Book(B) Journal(C) Sales Day Book(D) Purchases Day Book

182. On January 1, a firm’s capital is $4 600. On December 31, of the same year, the following information was provided: Drawings $850, Total assets $10 000, Loan outstanding $950, Creditors $4 000. What was the net profit that year?

(A) $ 450(B) $1 300(C) $1 400(D) $1 700

183. Which of the following is NOT a nominal account?

(A) Carriage inwards(B) Commission(C) Furniture(D) Discount allowed

184. In preparing the accounts of a club, the account which is used to record expenses and income is called the

(A) Revaluation Account(B) Income and Expenditure Account(C) Appropriation Account(D) Manufacturing Account

185. A club treasurer, found, on closing his books, that $50 subscription had been paid in advance. Where would this amount appear?

(A) On the debit side of the Income & Expenditure Account

(B) On the credit side of the Income and Expenditure Account

(C) Among the Liabilities on the Balance Sheet(D) Among the assets on the Balance Sheet

186. Which of the following are NOT cash transactions?

I. Bought goods paying by chequeII. Sold goods receiving payment on deliveryIII. Paid balance owed to M. MerchandannyIV. Sold motor lorry on two years terms

(A) I and III only(B) II and III only(C) II and IV only(D) II, III and IV only

187. A plant valued at $4 000 is depreciated at 10% per annum using the diminishing balance method. What is its value after TWO years?

(A) $3 200(B) $3 240(C) $3 920(D) $3 980

188. The balances of the asset accounts of the Bayroe Club as at June 30, 1994 were:

The amount of his accumulated fund was

(A) $1 640(B) $4 497(C) $8 185(D) $9 897

189. To record a credit sale to S. John, which of the following entries must be made?

I. Debit Sales AccountII. Credit Sales AccountIII. Debit S. John’s AccountIV. Credit S. John’s Account


Premises $5 400Equipment $1 825Furniture $ 960Bank and cash $1 640Stock of refreshments $ 72

19

Item 190 refers to the following Appropriation Account:

190. What conclusions could be drawn from the above Appropriation Account?

I. The company has recently come into existence.II. The company is engaged in profitable enterprise.III. The company is not doing too well.IV. More dividends can be given to the ordinary shareholders.

(A) II and IV only(B) III and IV only(C) I, II and IV only(D) I, III and IV only

191.

From the factory expenses given in the above table what is the production cost of goods manufactured?

(A) $29 000(B) $30 000(C) $39 000(D) $40 000

192. Prime Cost is $79 110 and overheads is $4 720. What is the cost of production?

(A) $ 4 720(B) $74 390(C) $79 110(D) $83 830

193. B. Black purchased goods for $400 and received 10% discount. Later he returned goods worth $100, because they were faulty. How much did he receive for the goods returned?

(A) $ 10(B) $ 40(C) $ 90(D) $1 000

194. A statement that gives the financial position of a business at a specific date is a

(A) Trial balance(B) Balance Sheet(C) Trading Account(D) Working Paper

195. An invoice is a document made out when goods are

(A) Overcharged(B) Returned(C) Undercharged(D) Sold

196. Which of the following assets is the MOST liquid?

(A) Cash(B) Debtors(C) Equipment(D) Stock

197. The petty cash system saves time in the posting of expenses to the nominal accounts because

(A) A small number of payments is involved(B) An analysis system is involved(C) The imprest position is always restored(D) Petty cash vouchers are used.

198. What are the functions of a book-keeper?

I. AnalysingII. InterpretingIII. PostingIV. Recording

Appropriation Account$ $

Taxation reserve 10 000 By balance 894.50Preliminary 250 Net profit 26 106.50Transfer to general reserve 4 000Preference share dividend 1 200Ordinary share dividend 6 000

Cost of raw materials $ 7 800Manufacturing wages $21 000Rent and taxes $ 1 000Indirect wages $ 9 000Royalties $ 200Machinery depreciation $ 600General Expenses $ 400

20

(A) I, II and III only(B) I, II and IV only(C) I, III and IV only(D) II, III and IV only

199. Overtime rate is calculated at the regular rate plus half the regular rate. The regular rate is $3.00 per hour for a 40-hour week. David worked for 48 hours. His gross pay was therefore

(A) $120(B) $144(C) $150(D) $156

200. When money is taken from cash and paid into a bank account the recoding is referred to as

(A) Personal drawings(B) The imprest(C) Cash takings(D) Contra entry

201. Prepaid rent will appear on the Balance Sheet of the paying company among the

(A) Current Assets(B) Current Liabilities(C) Fixed Assets(D) Long-term Liabilities

202. Which of the following does NOT have a credit balance?

(A) R. Smith (Supplier) A/c(B) Rent Received A/c(C) Purchases A/c(D) Salaries Owing A/c

203. A club bought a tennis table for $400 cash. It should be entered in the club’s books in the

(A) Receipts and Payments accounts only(B) Receipts and Payments and the Statement of Affairs(C) Receipts and Payments and the Income and

Expenditure accounts(D) Income and Expenditure and the Statement of Affairs

204. The Denvor Company hired you as an account clerk. On April 3 you received an invoice along with goods from D. Kamin & Co. Ltd. for $600. Where should you record this entry?

(A) Sales Day Book(B) Purchases Return Day Book(C) Purchases Day Book(D) Sales Return Day Book

205. Closing entries are prepared for

(A) Real Accounts only(B) Personal and Real Accounts(C) Nominal and Drawings Accounts(D) Nominal and Personal Accounts

206. When balancing the bank column of the Cash Book a credit balance indicates

(A) An overdraft(B) That an error has been made(C) A loss over the trading period(D) That cheques have been dishonoured

207. The totals of a payroll register for an employee are given below:

The net pay would be

(A) $2 460.50(B) $3 593.50(C) $2 658.30(D) $3 056.50

208. The following information relates to the wages for June 30, 1986:

June 1June 15June 30

Balance still outstanding $ 50Paid wages by cash $200Paid wages by cheque $150

The total wages to be written off to the Profit and Loss Account for June 1986 is

(A) $ 50(B) $150(C) $300(D) $350

209. If Mr. Grey returns goods to a supplier, how should Mr. Grey record this in his books?

I. Enter transaction in Sales Returns Day Book (Sales Returns Journal)

II. Enter transaction in Purchases Returns Day Book (Purchases Returns Journal)

III. Post to debit side of Supplier’s AccountIV. Post to the credit side of Supplier’s Account


Gross salary $3 000.00Union dues 10.00Income tax 430.60National insurance 32.40Pension 66.50

21

210. Which of the following gives a correct definition of the ‘double entry’ system of accounting?

(A) Every account is recorded twice.(B) Every transaction is concerned with at least two

accounts(C) Every entry is recorded twice.(D) Every two entries are recorded in the same account.

211. The excess of the income over the expenditure of a non-profit-making organisation is called

(A) Gross Profit(B) Net Profit(C) Accumulated Fund(D) Surplus

212. John Jones paid his employees’ wages in cash. How will he record this payment in his books?

(A) Debit Wages A/c Credit Employees’ A/c(B) Debit Employees’ A/c Credit Wages A/c(C) Debit Wages A/c Credit Cash A/c(D) Debit Cash A/c Credit Wages A/c

213.

From the table above, what is the maximum amount that could be used for dividends?

(A) $ 6 000(B) $ 9 000(C) $12 000(D) $15 000

214.

W, X, Y and Z are partners sharing profit and loss in proportion to their capital. What is Z’s share of profit of $72?

(A) $ 8(B) $12(C) $18(D) $24

215. For a firm, which of the following performs the same functions as a club’s Income and Expenditure Account?

(A) Petty Cash Book(B) Profit and Loss Account(C) Cash and Bank Account(D) Balance Sheet

Item 216 – 217 refers to the following information.

The table below gives the assets and liabilities of A. Jackman, a sole trader, at a certain time.

216. His current assets is 217. His capital is

(A) $2 625 (A) $13 750(B) $3 125 (B) $13 850(C) $4 005 (C) $14 750(D) $4 125 (D) $14 850

These general instructions refer to item 218 – 225.

For each group of items below, there is a common set of options labeled (A), (B), (C), and (D). In answer to EACH item an option may be used more than once, once or not at all.

Item 218 – 220 are based on the information below.

(A) $ 7 000(B) $ 9 000(C) $24 000(D) $30 000

218. What is the Cost of goods sold? C

219. What is the stock available? D

220. What is the average stock held? A

Cost of goods sold $ 68 000Sales 100 000Selling Expenses 8 000Administrative Expenses 12 000Reserves appropriated for the Current year 3 000

W’s Capital: $300X’s Capital: $200Y’s Capital: $100Z’s Capital: $300

Assets $ Liabilities $Cash in hand 55 Bank overdraft 1 750Prepaid rent 120 Creditors 1 250Furniture & Fittings 800 Wages due 75Debtors 1 650Land & buildings 8 000Cash at bank 1 500Motor Vehicles 4 000Stock 800

Extract from Trading Account of a trader

Sales $36 000Purchases 22 000Gross Profit 11 000Closing Stock 6 000Sales Returns 1 000Opening Stock 8 000

22

Items 221 – 223 are based on the information below.

Company X is legally allowed to sell 40 000 shares at $5 par value. 30 000 of those shares were taken up by the public, but the company only collected $100 000 initially.

All shares are sold at par value.

(A) $200 000(B) $150 000(C) $100 000(D) $ 50 000

221. How much is the paid-up capital? C

222. How much is the issued capital? B

223. How much is the authorized capital? A

Items224 – 225 refer to the information below.

Capital

Long-term liabilitiesBank Loan

Current liabilitiesCreditors

$50 000

15 000

5 000

70 000

Fixed AssetsMachineryVehicles

Current AssetsStockDebtorsBank

$

25 00020 000

4 0006 000

15 000

$

45 000

25 00070 000

(A) $70 000(B) $50 000(C) $25 000(D) $20 000

224. What is the working capital? D

225. If $2 000 worth of stock is purchased on credit, what would be the new working capital? D

226.

The table above shows how R & H Winsome have combined their interests into a partnership. If interest on capital was agreed at 5 per cent, what is the total amount of interest on capital earned by them?

(A) $1 500(B) $2 500(C) $3 000(D) $4 500

227. A book-keeper by mistake posted $64.00 to the Sales Account instead of $54.00. Which of the following entries in the General Journal would correct the mistake?

I. Debit Sales A/cII. Credit Sales A/cIII. Debit Suspense A/cIV. Credit Suspense A/c

(A) I and II only(B) I and III only(C) I and IV only(D) II and III only

228. The purchase of a motor van on credit from Things Caricom Motors Co. for use in the business should be recorded as

(A) Debit Motor Van Expense Account, Credit Bank Account(B) Debit Purchases Account, Credit Things Caricom

Motors Co. Account(C) Debit Motor Vehicle Account, Credit Bank Account(D) Debit Motor Vehicle Account, Credit Things

Caricom Motors Co. Account

229. Which of the following statements describe the purpose of accounting?

I. Keeping proper records of business transactionsII. Keeping proper control of the finances of a businessIII. Assisting management in making decisions IV. Using the accounting transactions to make proper

decisions

(A) I and II only(B) II and IV only(C) I, II and III only(D) I, III and IV only

230. The book of original entry used to record the purchase of fixed assets on credit is the

(A) General Journal(B) Sales Journal (C) Purchases Journal(D) Return Inward Journal

231. Mr. Henry’s book disclosed the following details:

What is the cost of goods sold?

(A) $3 030(B) $4 530(C) $4 750(D) $6 270


Capital R. Winsome $60 000Capital H. Winsome $30 000

Opening stock $ 760Purchases $3 890Returns on purchases $ 750Closing stock $ 870

23

(A) Machinery and plant(B) Stock and debtors(C) Creditors and fixtures(D) Wages and rent

233. Which of the following is NOT classified as direct material?

(A) Lumber in a furniture shop(B) Fuel oil for furniture workshop engine(C) Carriage inwards on limestone in a cement factory(D) Transistors purchases for radio assembly plant

234. The principal document to be registered with the Registrar of Joint Stock Companies, which would determine the rights of the members in a private company is the

(A) Memorandum of Association(B) Prospectus(C) Certificate of Incorporation(D) Articles of Association


235. The above information was provided by a trader. How much were his credit sales for the year?

(A) $16 300(B) $18 500(C) $25 600(D) $26 700

236. The assets in the Balance Sheet of a sole trader are listed in

(A) Order of liquidity(B) Order of permanence(C) Alphabetical order(D) Chronological order

237. Invoices sent to customer are entered in the

(A) Sales Journal(B) Purchases Journal(C) Return Inwards Journal(D) Return Outwards Journal

238. A partner has a “one sixth (1/6) interest” in a consult-

ing partnership. This means one sixth (1/6) of the

(A) Profits only

(B) Losses and profits(C) Capital only(D) Profits, losses and capital

237. Given the following information for a firm, what is the closing capital?

(A) $1 400(B) $2 500(C) $3 000(D) $3 500

238. A club had 100 members and the subscription is $1 per year. However, three members paid $2 each because they owed for the previous year and one member paid for the next member paid for the next year. The others paid the annual subscription. What is the income from subscription for that year?

(A) $ 96(B) $100(C) $103(D) $104

239. The summarized position of Foster and Scott Limited at March 6, 1996 was:

Current liabilities 60 000Current assets 100 000Fixed assets 200 000Long term liabilities 150 000

What was the capital of Foster and Scott Limited at March 6, 1996?

(A) $ 40 000(B) $ 90 000(C) $150 000(D) $190 000

240. Which of the following BEST describes a trial balance

I. A list of balances of accountsII. A financial statementIII. An accountIV. A check on the accuracy of the double entry system

(A) I and II only(B) I and IV only(C) I, II and III only(D) I, III and IV only

Debtors at start of the year $8 200Cash received from debtors During the year 17 400Debtors at the end of the year 9 300

Opening capital $ 500Total closing assets $4 000Total closing liabilities $1 000

24

Item 241 refers to the following information.$ $

Bank balance August, 1994 700 Stocks July 31, 1995 2 000Purchase of refreshments 500 Donations to charity 200Purchase of furniture 500 Depreciation of furniture 50Sale of equipment 600 Proceeds from raffle 1 500

241. What is the bank balance in the Receipts and Payments Account for the year ended July 31, 1995?

(A) $ 900(B) $1 600(C) $2 850(D) $3 950

242. Patrick is to join Dennis and Tony in partnership. Patrick brings to the partnership as capital, furniture valued at $3 000 and a motor van worth $5 000. In addition, he is to pay a premium of $1 000 to be shared between Dennis and Tony. How much would be the amount of Patrick’s capital?

(A) $4 000 (B) $6 000(C) $8 000(D) $9 000

243. K. Khan, a debtor of A and B Enterprises settles his debt of $120 less 2 ½% discount, by cheque. The double entry in the books of A and B Enterprises should be

(A) Dr. K. Khan $117 Dr. Discount Received $ 3 Cr. Bank $120(B) Dr. K. Khan $117 Dr. Discount Allowed $ 3 Cr. Bank $120(C) Dr. Bank $117 Dr. Discount Allowed $ 3 Cr. K. Khan $120(D) Dr. Bank $117 Cr. Discount Received $ 3 Cr. K. Khan $120

244. Company X is legally allowed to sell 40 000 shares at $5 000 par value. 30 000 of those shares were taken up by the public, but the company only collected $100 000 initially. All shares were sold at par value.

How much was the authorized capital?

(A) $ 50 000(B) $100 000(C) $150 000(D) $200 000

245. Goods were bought from James Holt for cash. Which of the following is the correct double-entry to record the transaction?

(A) Debit Purchases A/c Credit James Holt A/c(B) Debit Purchases A/c Credit Cash A/c(C) Debit James Holt A/c Credit Cash A/c(D) Debit Cash A/c Credit James Holt A/c

246. Peter, Gail and John formed a partnership. When the partnership deed was drawn up no mention was made as to how profits and losses were to be divided. How should the profits be shared among them?

(A) In proportion to their capital contributed(B) In ratio to how much work is done by each partner(C) Divided equally among the three partners(D) Divided in accordance with each partner’s age

Principles of Accounts MC

Documents

petty cash

credit james

sales day

raw materials

purchases

gross profit

discount received

petty cash