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Time:1.5H Q 1. The receivables ledger control account at 1 May had balances of $43,000 debit and $1,000 credit.

During May, sales of $150,000 were made on credit. Receipts from credit customers amounted to $130,000 and discounts allowed totalled $700. Sales returns amounted to $1,400. Refunds of $1,100 were made to credit customers. What is he closing net balance at 31 May? Q 2 . Jack and Mack have been in partnership for a number of years. Mack has provided the following information: Opening current account balance $1,000 (Dr) Drawings $90,000 Salary $12,000 Interest on captal $3,000 Interest on drawings $5,000 Share of profits during the year $110,000 What is the closing current account balance of Mack? A. $119,000 Cr B $31,000 Cr C. $29,000 Cr D. $34,000 Cr Q. 3The petty cash account records all the bank transactions of the business. A. Yes B. No Q. 4 Which of the following errors will result in an adjustment to the suspense account? (i) Error of omission. (ii) Single entry. (iii). Casting error of a ledger account. (iv) Error of reversal. (v) Error of principle. (vi) Two debit entries. A . All of them B. (i), (ii) and (iii) C . (ii), (iii) and (vi) D. (ii), (iv), (v) and (vi) Q.5 The following bank reconciliation statement has been prepared by an inexperienced bookkeeper: $ Balance per bank statement 41,200 Add: Bank error bank incorrectly debited another customer's cheque 1,500 Less: Outstanding cheques presented after date (40,100) Add: Deposits credited after date 28,100 Overdraft per cash book (51,700) Assuming the balance per the bank statement of $41,200 is correct, what should be the balance in the cash book? A. $54,700 overdrawn B $30,700 C. $51,700 D. $30,700 overdrawn Q. 6 Which of the following bodies comprises The Regulatory Framework for International Accounting Standards? (i) International Accounting Standards Committee (ii) Financial Reporting Review Panel (iii) Standards Advisory Council (iv) International Financial Reporting Interpretations Committee A (i), (ii) and (iii) only B (i), (iii) and (iv) only C (i), (ii) and (iv) only Q.7 Bob provides the following information as at 31 December 20X6: $ Receivables (before any adjustments) 269,000 Irrecoverable debts to be written off 9,000 Specific allowances 16,000 General allowances to be 10% Opening allowances at 1January 20X6 41,000 What will be the statement of comprehensive income charge for irrecoverable debts and allowances for receivables for the year ended 31 December 20X6? A. $9,600 debited to the statement of comprehensive income B. $8,600 debited to the statement of comprehensive income C. $8,000 debited to the statement of comprehensive income D. $8,400 debited to the statement of comprehensive income Q 8 .According to IAS 16 Property, Plant and Equipment, when a building is revalued then its revalued amount should be depreciated over its revised remaining useful life. A True B False

Q9 .On 1 September 20X7, William had inventory of $590,000. During the month, sales totalled $2,200,000 and purchases $1,820,000. On 30 September 20X7 a fire destroyed some of the inventory. The undamaged goods were valued at $390,000. The business operates with a standard gross profit mark up of 10%. Based on this information, what is the cost of the inventory destroyed in the fire? A. $40,000 B. $410,000 C. $380,000 D. $20,000 Q 10 Ami, is a sole trader, provides the following information for the month of January: Units Price Value $ $ 1st Opening inventory 100 2.10 210 4th Purchases 700 2.60 1,820 8th Sales 600 15th Purchases 900 2.70 2,430 28th Sales 910 What is the value of the closing inventory at the end of January if Ami adopts the first in first out (FIFO) method of inventory valuation? Q 11. At 1 July 20X6 a business had prepaid $100 for rent in relation to June 20X6. During the year a total of $1,200 was paid. Included within this amount is $360 paid in relation to quarter ending 31 July 20X7. What amount should be shown in the statement of comprehensive income (SOCI) and statement of financial position (SOFP) in respect of rent for the year ended 30 June 20X7? (SOCI) (SOFP) A $1,180 $120 accrual B $1,220 $100 prepaid C $1,180 $120 prepaid D $940 $360 prepaid Q 12 The following summary has been provided by Joe for the year ended 30 September 20X7: Dr Cr $ $ Total 120,000 132,000 Suspense account 12,000 132,000 132,000 Which of the errors below will reduce the suspense account balance? A. Credit sales of $2,000 were not recorded B. A payment received from a credit customer of $280 was correctly recorded in the customer's account but debited to the bank account by $200 C. Discounts received of $198 were recorded by debiting payables by $198 and crediting discounts allowed by $189 D. Motor repair expenses of $150 was debited to the motor van account and credited to the bank account Q 13. Norman, a limited liability company, has been carrying out researching a new product. In the Year ended 30 April 20X7 $720,000 was spent on the project. Included in the $720,000 was $90,000 spent on a new machine, which had an expected life of 5 years. This project was not Successful therefore it was terminated at the year end 30 April 20X7. How should this expenditure be treated in the financial statements of Norman for the year ended 30 April 20X7? A. $810,000 must be written off to the statement of comprehensive income B. $720,000 must be capitalised as an intangible asset and amortised over 5 years. The $90,000 must be written off to the statement of comprehensive income C. $810,000 must be capitalised and written off to the statement of comprehensive income over 5 years D. $630,000 must be written off to the statement of comprehensive income. $90,000 must be capitalised as a tangible asset and depreciated over 5 years
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Q 14 A company receives a settlement discount of $70 from a supplier. The amount is debited to the discounts received account. As a result, gross profit is: A. Understated by $70 B. Understated by $140 C. Overstated by $70 D. Unaffected Q 15Johnson, a limited liability company, has provided the following information: Building cost $780,000 Accumulated depreciation $540,000 The company decided to revalue the building to $500,000. What is the double entry to record the above transaction? A Dr Accumulated depreciation $540,000 Cr Building cost $280,000 Cr Revaluation reserve $260,000 B Dr Revaluation deficit $280,000 Cr Building cost $280,000 C Dr Building cost $260,000 Cr Revaluation reserve $260,000 D Dr Building cost $280,000 Dr Revaluation reserve $260,000 Cr Accumulated depreciation $540,000 Q 16 Shane sells three products: A, B and C. At the company's year end, the inventory held is as follows: Cost Selling price $ $ A .1,200 1,500 B. 6,200 6,100 C. 920 930 At sale, a commission of 5% of the selling price is payable by the company to its agent. What is the total value of the inventory (rounded to the nearest $) in the business accounts? A. $7,879 B. $8,094 C. $8,320 D. $8,545 Q17 In times of rising prices, the historical cost convention: A. Overstates asset values and understates profits B. Understates asset values and overstates profits Q 18 A company receives rent for subletting part of its office block. Rent receivable quarterly in advance, is received as follows: Date of receipt Period covered $ 1 October 20X6 3 months to 31 December 20X6 15,000 30 December 20X6 3 months to 31 March 20X7 15,000 4 April 20X7 3 months to 30 June 20X7 18,000 1 July 20X7 3 months to 30 September 20X7 18,000 1 October 20X7 3 months to 31 December 20X7 18,000 What figures, based on these receipts, should appear in the companys financial statements for the year ended 30 November 20X7? Statement of comprehensive income Statement of financial position A. $84,000 Accrued income (Dr) $3,000 B. $84,000 Prepaid income (Cr) $6,000 C. $68,000 Accrued income (Cr)$3,000 D. $68,000 Prepaid income (Cr) $6,000 Q 19 Joan is in the process of reconciling the total payables ledger control account with that of the total of the individual payables ledger balances. $ Payables ledger control account balance (PLCA) 42,000 Total of the individual purchase ledger balances (LIST) 41,500 The following errors have been discovered: (i) The purchases return day book was under casted by $2,000. (ii) A credit purchase invoice of $2,600 was omitted. (iii) Credit balances of $500 in the list of balances were recorded as debit balances. What are the adjusted balances for the payables ledger control account and the total of the individual list of purchase ledger balances?
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PLCA A. $42,600 B. $43,100 C. $42,600 D. $43,100

LIST $42,600 $43,100 $45,100 $42,600

Q 20 R, S and T are in partnership. The profits of the partnership for the year ended 30 June 20X7
have currently been appropriated as follows: R $120,000 S $50,000 T $50,000 The partnership agreement states that S is entitled to a guaranteed minimum profit share of $65,000. The profit sharing ratio is 2:3:1. What share of the profits is each partner entitled to in the year ended 30 June 20X7 after adjusting for the guaranteed profit share for S? R= S= T=

Q21 Which of the following four statements about accounting concepts or principles are correct? Statement 1 The money measurement concept states that items in accounts are initially measured at their net realisable amounts. Statement 2 Comparability usually implies consistency in accounting policies from one period to another. Statement 3 Information in financial statements needs to be neutral. Statement 4 Gains are increases in ownership interest resulting from contributions from owners. A. Statements 1 and 3 only B. Statements 2 and 4 only C. Statements 2 and 3 only D. Statement 3 only Q 22 All errors of omissions are identified in a computerized accounting system. A. Yes B. No Q23 A company owns a non-current asset which has an expected useful life of four years. The asset originally cost $9,000. What is the depreciation charge in the second year of the asset's life on the straight line basis and on the reducing balance basis at 25%? (Calculations should rounded to the nearest whole number) Straight line Reducing balance $ $ A 1,800 2,250 B 2,250 1,688 C 1,800 1,688 D 2,250 2,250 Q 24 Which of the following statements is true? (i) A revaluation gain/reserve arises when the net book value is greater than the revalued amount. (ii) Revenue is normally recognised when goods are delivered to the customer and they are accepted by the customer. (iii) Irrecoverable debts will arise only if there is a cash sale. (iv) When adjusting for accrued expenditure the profit will increase. A. All the above statements are true B. None of the statements are true C. Only statements (i) and (iv) are true D. Only statement (ii) is true Q 25 A sole trader took some goods costing $2,500 from inventory for his own use. The normal selling price of the goods is $3,000. Which of the following journal entries would correctly record this? A. Dr Drawings $2,500 Cr Purchases $2,500 B. Dr Drawings $3,00 Cr Purchases $3,000 C. Dr Purchases $2,500 Cr Drawings $2,500 D. Dr Drawings $3,000 Cr Sales $3,000
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Q 26 Denise has provided the following information:


Opening cash in till balance $500 Closing cash in till balance $400 Net cash takings banked $21,500 Cash expenses paid $230 Cash drawings $150 What is the amount of cash sales for the period? Q 27 Bill and Jill have been in partnership for a number of years, sharing profits and losses in the ratio of 2:1. They decide to admit Hill as a partner. The profit and loss sharing ratio has been changed to 3:2:1 for Bill, Jill and Hill respectively. The goodwill for the partnership has been agreed at $30,000. Hill has also introduced $80,000 capital into the partnership business. It has been decided not to maintain a goodwill account. What is the capital account balance of Hill after adjusting for the goodwill? A. $85,000 B.$70,000 C. $90,000 D. $75,000 Q 27 The following balances have been extracted by Juliet: Capital $4,000 Sales $ 28,000 Purchases $ 26,000 Expenses $1,000 Assets $ 40,000 Liabilities $ 38,000 She prepared a trial balance, unfortunately the totals did not agree. She left the difference in a suspense account. What is the suspense account balance? A .1,000 Debit B. 3,000 Credit C. 3,000 Debit D. 1,000 Credit Q28 A Journal is a book of prime entry. A. True B. False Q29 The statement of financial position records all the assets, capital and liabilities at the year end. However, the statement of comprehensive income records all the income and expenditure for the year ended. Are the above statements correct? A. Yes B. No Q 30 At the year end the following balances are extracted from the books of Zina: $ $ Receivables 269,000 Opening allowance for receivables 21,000 Further irrecoverable debts were discovered at the year end amounting to $9,000. It has been decided to write off these balances. The closing allowance for receivables has been set at 10%. What will be the net closing balances for receivables that will be shown in the statement of financial position? A. $269,000 B. $242,100 C. $255,000 D. $234,000 Q 31 Steve, a sole trader is registered for sales tax. His sales inclusive of sales tax are $329,000 and his purchases exclusive of sales tax are $290,000. The sales tax rate is 17.5%. What is the amount of sales tax owing to or recoverable from the tax authorities? A.$1,750 recoverable B.$1,750 owing C.$14,384 owing D.$14,384 recoverable Q 32 The closing bank balance of Mario in his records is $2,850 credit. The following further information has been provided: (i) Unpresented cheques $285. (ii) Bank charges not yet recorded $56. (iii) Receipt from customer of $385 paid directly to the bank has not been recorded. (iv) The bank has recorded a standing order belonging to another customer totalling $89 in Marios bank statement. Mario has not yet entered this in his bank account. What is the adjusted closing bank account balance of Mario? A $3,179 debit B $2,717 credit C $2,521 credit D $2,432 credi

Q 33 The purchases cost of goods of a business must be recoded after deduction of both trade and
cash/settlement discounts. A True B False Q 34 A business has bought plant and machinery at cost of $28,875. The following additional cost was incurred: (i) Delivery costs $1,500. (ii) Legal costs $875. (iii) Maintenance contract for the next 3 years of $2,100 (iv) Testing and training costs before the machine could be brought into use of $3,100. What is the total capital expenditure for the plant and machinery? A $36,450 B $31,250 C $30,375 D $34,350 Q 35 A business has an old motor car which had a net book value of $5,500. It was part exchanged for a new motor car. The part exchange value given was $6,000.The amount paid for the new car was $18,000. What is the profit /loss of the old car and the total cost of the new car? Old car New car A Loss$500 Cost $24,000 B Profit $500 Cost $24,000 C Profit $500 Cost $23,500 D Loss $500 Cost $23,500 Q 36 Which of the statements below is false? A. Assets are resources controlled by a business due to a past transaction which will lead to future economic benefits B. Liabilities are obligations to transfer future economic due to past transactions C. Gains recognised in financial statements can be realised or unrealised D. Revenue is only recognised once the business receives payment from a customer Q37 Prior period adjustments are adjusted against the opening accumulated profits. A True B False

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