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2.
3.
The double-entry system of bookkeeping normally results in which of the following balances on
the ledger account: -
A.
B.
C.
D.
4.
Debit
Assets and revenues
Revenues, capital and liabilities
Assets and expenses
Assets, expenses and capital
A trader took goods that had cost Rs 2, 000 from inventory for personal use.
Which of the following journal entries would correctly record this?
Debit (Rs)
5.
Credit
Liabilities, capital and expenses
Assets and expenses
Liabilities, capital and revenues
Liabilities and revenues
Credit (Rs)
A.
Drawings 2,000
Inventory 2,000
B.
Purchases 2,000
Drawings 2,000
C.
Sales 2,000
Drawings 2,000
D.
Drawings 2,000
Purchases 2,000
Consider the following account and ascertain which of the statements below the account is not
true.
Capital Account
20x2
Rs
20x2
Rs
December 31 Drawings
3,000 Jan 1
Balance b/d
5,500
December 31 Balance c/d 4,750 Mar 31 Bank
500
Dec 31 Profit and Loss ?
7,750
7,750
A. Net profits of 1,750 have been earned during the year of 20X2
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Kathy bought goods from Corrine. The goods had a list price of Rs 800. Corrine allowed Kathy
trade discount of 20 % and cash discount of 5 %. In Corrines books, which entries record the
cheque she received from Kathy?
A.
B.
C.
D.
7.
Kathy Rs 640
Kathy Rs 760
Kathy Rs 760
Income statement
Rs 1,300
Rs 1,300
Rs 1,200
Rs 1,200
Balance sheet
Rs 75 Accruals
Rs 75 Prepayments
Rs 125 Accruals
Rs 125 prepayments
A company pays rent quarterly in arrears on 1 January, 1 April, 1 July and 1 October each year.
The rent was increased from Rs90, 000 per year to Rs120, 000 per year as from 1 October 2002.
What rent expense and accrual should be included in the companys financial statements for the
year ended 31 January 2003?
A.
B.
C.
D.
9.
Account to be credited
Kathy Rs 640
The year-end of Lands Ltd is 31 December. The company pays for electricity by a standing order
of Rs 100 per month. On 1 January 2005 the statement from the electricity supplier showed that
the company had overpaid Rs 25. Lands Ltd received electricity bills for the four quarters starting
01 January 2005 and ending 31 December 2005 for Rs 350, Rs 375, Rs 275 and Rs 300 respectively.
Which of the following is the correct entry for electricity in Lands Ltd income statement and
balance sheet for the year ending 31 December 2005?
A.
B.
C.
D.
8.
Account to be debited
Bank Rs 608
Discount Allowed Rs 32
Bank Rs 608
Discount Received Rs 32
Bank Rs 608
Discount Allowed Rs 152
Bank Rs 608
Discount Received Rs 152
Rent expense
Rs
100,000
100,000
97,500
97,500
Accrual
Rs
20,000
10,000
10,000
20,000
Stationery paid during the year amounted to Rs 1,350. At the beginning of the year there was an
inventory of stationery on hand of Rs 165 and an outstanding stationery invoice of Rs 80. At the
end of the year there was an inventory of stationery on hand of Rs 140 and an outstanding
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stationery invoice for Rs 70. The stationery figure to be shown in the income statement for the
year is:
A.
B.
C.
D.
10.
Rs 1,195
Rs 1,335
Rs 1,365
Rs 1,505
James has been advised that one of his customers has ceased trading and that it is almost certain
that he will not recover the balance of Rs 720 owned by this customer.
What entry should James make in the general ledger?
A.
B.
C.
D.
11.
Debit
Receivables
Irrecoverable debt
Receivables
Bank
Credit
Irrecoverable debts
Receivables
Bank
Receivables
At 01 January 2005, Mary has motor vehicles that cost Rs 15,000. On 31 August 2005 she sells a
motor vehicle for Rs 15,000 which had originally cost Rs 8,000 and which had a net book value of
Rs 4,000 at the date of disposal. She purchased a new motor vehicle that cost Rs 10,000 on 30
November 2005.
Her policy is to depreciate motor vehicles at the rate of 25 % per annum on the straight-line basis,
based on the number of months ownership. What is the depreciation charge for the year ended
31 December 2005?
A.
B.
C.
D.
12.
Rs 3,750
Rs 3,292
Rs 4,250
Rs 3,500
Goods are transferred from the Manufacturing account to the Trading account at factory cost of
production plus a mark up of 20 %. The transfer prices of the closing stocks of finished goods
were as follows: Year 1 Rs 39, 600
Year 2 Rs 42,000
Year 3 Rs 45,600
What was the provision for unrealized profit charged against the profit in year 3?
A.
B.
C.
D.
Rs 400
Rs 600
Rs 720
Rs 1,200
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13.
14.
A.
(i) and (ii)
B.
(i) and (iii)
C.
(ii) and (iii)
D.
(ii) and (iv)
The characteristics of a current asset would not include:
A. Not bought for resale
B. Likely to change before the next accounting period is over
C. Liquidity
D. Use as part of the firm's trading operations
15.
Which one of the following expenses would normally be shown in the trading account of the
business?
A.
B.
C.
D.
16.
17.
Carriage outwards
Carriage inwards
Warehouse costs
Bad debts written off.
Bank statements
Petty cash book
Journal
Sales returns day book
Rs 16,000
Rs 29,000
Rs 33,000
Rs 47,000
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18.
Which of the following explanations of the prudence concept most closely follows
that in the IASBs Framework for the Preparation and Presentation of Financial
Statements?
A.
B.
C.
D.
19.
Changing the value of closing stock from cost to expected selling price might be an application of
which accounting concept?
A.
B.
C.
D.
20.
Consistency.
Historical cost.
Prudence.
Going concern
Listed below are five potential causes of difference between a companys cashbook balance and
its bank statement balance as at 30 November 2003:
(1)
Cheques recorded and sent to suppliers before 30 November 2003 but not yet presented
for payment
(2)
An error by the bank in crediting to another customers account a lodgement made by
the company
(3)
Bank charges
(4)
Cheques paid in before 30 November 2003 but not credited by the bank until 3 December
2003
(5)
A cheque recorded and paid in before 30 November 2003 but dishonoured by the bank.
Which of the following alternatives correctly analyses these items into those requiring an entry in
the cashbook and those that would feature in the bank reconciliation?
Cash book entry
Bank reconciliation
A
1, 2, 4
3, 5
B
3, 5
1, 2, 4
C
3, 4
1, 2, 5
D
2, 3, 5
1, 4
21.
Which of the following is not a reason why the bank statement balance and the bank balance on
the cashbook may not be the same after the cashbook has been updated for items found on bank
statement?
A. Errors made by bank
B. Unpresented cheques
C. Credit transfers
D. Lodgements not yet credited by the bank
22.
23.
A limited liability companys trial balance does not balance. The totals are:
Debit $384,030
Credit $398,580
The following receivables ledger control account prepared by a trainee accountant contains a
number of errors:Receivables ledger control Account
2008
Rs
2008
Rs
1 Jan Balance
614,000
31 Jan Credit sales
301,000
31 Jan Cash from credit customers
311,000
Discount allowed
3,400
Contras against amount due to
Bad debts written off
32,000
Suppliers in payable ledger
8,650
Interest charged on overdue account
16,00
Balance
595,650
933,650
933,650
What should the closing balance in the control account be after the errors in it have been
corrected?
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A.
B.
C.
D.
Rs 561,550
Rs 578,850
Rs 581,550
Rs 568,350
25.
Alpha received a statement of account from a supplier Beta, showing a balance to be paid of
$8,950. Alphas payables ledger account for Beta shows a balance due to Beta of $4,140.
Investigation reveals the following:
(1) Cash paid to Beta $4,080 has not been allowed for by Beta.
(2) Alphas ledger account has not been adjusted for $40 of cash discount disallowed by Beta.
(3) Goods returned by Alpha $380 have not been recorded by Beta.
What discrepancy remains between Alphas and Betas records after allowing for these items?
A.
$9,310
B.
$390
C.
$310
D.
$1,070
26.
Which one of the following journal entries is correct according to its narrative?
Debit
$
Mr Smith personal account
100,000
Directors remuneration
A.
B.
Credit
$
100,000
14,000
24,000
38,000
Transferring cost of repairs to buildings carried out by companys own employees, using materials from
inventory.
C.
Discounts allowed
Discounts received
2,800
2,800
Correction of error: discounts allowed total incorrectly debited to discounts received account
D.
Suspense account
Rent receivable
Rent payable
20,000
10,000
10,000
vii
What is the effect on the current ratio and quick ratio of a business if it uses cash to buy stock?
A.
B.
C.
D.
Current Ratio
Decrease
Decrease
No change
No change
Quick ratio
Decrease
Increase
Decrease
Increase
28.
The closing stock of a business was Rs 30,000 and the cost of goods sold was Rs 600,000. Stock
turnover is based on the average of the opening and closing stocks. If stock turnover was 15
times, what was the opening stock?
A. Rs 10,000
B. Rs 40,000
C. Rs 50,000
D. Rs 80,000
29.
Operating profit
Debenture Interest
Profit after interest
Preference dividend
Ordinary dividend
Retained profit
Rs
360,000
24,000
336,000
(16,000)
(200,000)
120,000
Rs 0.32
Rs 0.40
Rs 0.42
Rs 0.45
A companys gross profit as a percentage of sales increased from 24% in the year ended 31
December 2001 to 27% in the year ended 31 December 2002.
Which of the following events is most likely to have caused the increase?
A.
An increase in sales volume
B.
A purchase in December 2001 mistakenly being recorded as happening in January 2002
C.
Overstatement of the closing inventory at 31 December 2001
D.
Understatement of the closing inventory at 31 December 2001.
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