Financial Accounting Assignment I Section A 30 multiple choice questions of 2 marks each Section B 2 Structured Problems of 20 marks each All

ll questions are compulsory and must be attempted Section A

1) Which is first on Statement of financial position? a) Current Assets b) Current liabilities c) Non Current Assets d) Intangible assets 2) Working capital is a) Gains minus losses b) Current liabilities minus current assets c) Current Assets minus current liabilities d) Asset minus liabilities 3) The accounting equation is expressed as a) Asset = liabilities capital b) Asset = liabilities + capital c) Liabilities = capital + assets d) Capital = assets + liabilities 4) The cost of goods and services consumed in operating an enterprise are a) Assets b) revenues or income b) Expenses d) liabilities 5) To record cash received on account a) Dr cash Cr Accounts receivable b) Dr cash Cr Accounts Payable c) Dr sales Cr Accounts receivable d) Dr sales Cr Accounts Payable 6) Inventory of goods on hand held by firm for future sale is called a) cost of goods sold b)purchases c) sales d)closing Inventory 7) Drawings are deducted from a) Accounts Payable c) Profits b) Capital d) Non current assets

8) A trial balance indicates a) Complete proof of accuracy of ledger b) Net profit or loss c) Postings to ledgers are accurate d) Debit and credit are equal

9) Which of the following should not be called sales a) Office furniture sold b) Goods sold on credit c) Goods sold for cash d) Sale of item previously included in purchase 10) Which of the following is correct? a) Profit does not alter capital b) Profit reduces capital c) Capital can only come from profits d) Profit increases capital 11) Which of the following is correct? a) Asset increases liability decreases b) Asset decreases liability increases c) Asset increases liability increases d) Liability increases capital increases 12) Profit is a) Asset liabilities c) Revenue Expenses b) Capital Drawings d) Expenses Revenue

13) New capital is a) New assets new liabilities b) Old capital + profit + additional capital if any drawings c) Old capital + loss d) Old capital + drawings profit additional capital 14) Which of the following is expense A/C a) Rent receivable A/C c) Discount received A/C 15) Which of the following is revenue A/C a) Rent A/C c) Commission A/C b) Insurance A/C d) Commission received A/C b) Bank interest A/C d) Royalties receivable A/C

16) Double entry book keeping means a) Every transaction affect one item in Statement of financial position b) Each debit has an equal and opposite credit c) Each transaction is entered only one side d) Total debit is not equal to total credit 17) Which of the following best describes trial balance a) Shows financial position of business b) It is a special A/C c) Shows all entries in the book

d) It is a list of balances on the book 18) Rent of $200 paid in cash a) Debit cash A/C Cr Rent A/C c) Dr cash A/C Cr bank A/C 19) Van bought for cash. The correct entry is a) Dr purchases Cr cash c) Dr van A/C Cr cash A/C 20) Sold van for cash. The correct entry is a) Dr cash A/C Cr sales A/C c) Dr cash A/C Cr van A/C b) Dr Rent A/C d) Dr Bank A/C Cr cash A/C Cr cash A/C

b) Cash A/C Cr van A/C d) Dr cash A/C Cr purchases A/C b) Dr sales A/C Cr van A/C d) Dr van A/C Cr sales A/C

21).Traders net profit for the year may be computed by using the foll. Formula: A-op. cap+drawings-cap int-cl. capital B-Cl. capital +drawing cap int. op.cap C-op. cap + drawing S + Cap. Int. Cl. Cap D-Cl. Cap- Drawing + Cap.int. Op. cap. 22).Which one of the foll. Occurrences could not account for a credit balance on trade Accounts receivable a/c. A-A sales invoice has been paid twice. B-Sales Invoice has been posted to another customers account in error C-Returns outward have not been taken in to account. D-A cheque from customer was made out in wrong a/c 23). The capital of sole trader would change as a result of A-A creditor being paid his account by cheque B-Raw material being purchased on credit C-Non current assets purchased on credit D-Wages being paid in cash 24). Capital income A- Included in Statement of financial position B- Included in debit side of Income Statement C- Included in credit side of Income Statement D-Included in trading Account 25). Classify Capital or Revenue A-Purchase of new delivery van C-Purchase of new exhaust for van 26). Classify capital or revenue A- The cost of new warehouse C-A telephone bill B-Redecorating sales Managers office D-Running and Maintenance exp of van B-Cost of servicing a delivery van D-wages for new employees

27). Classify capital or revenue A- A purchase of computer hardware B-Purchase of accounting software C-Training accounting staff for new system D-Purchase of computer stationery 28). Which of the following is classified as current assets A-Inventory in hand B-Accounts receivable C-Motor Vehicle D-Cash at Bank 29) Gross Profit is a) Excess of sales over cost of goods sold b) Sales less purchases c) Cost of goods sold + opening Inventory d) Net profit les expenses of the period 30) Which of these best describes a Statement of financial position a) An account providing book balance c) A listing of balances b) A record of closing entries d) A statement of Assets

Section B
1) 2) 3) 4) 5) 6) 7) 8) 9) 31) Summarise the effect of each transaction on accounting equation Payment of $200 to a creditor Payment of $1000 by cheque for office furniture A sale on credit of $350 (goods sold originally cost $250) Receipt of 140 from debtor Taking out bank loan of $100 Drawing by owner of $100 Payment of $40 casual wages Purchase of computer for office on credit for 1500 Sale for cash $800 (goods sold originally costs $600) 32). Prepare ledger A/Cs and trial balance for 10 days ended below. (2012 January) 1) Kermits starts business and introduces $2000 cash 2) He buys a motor van for $1000 and some shop fittings for $800 3) He buys some Inventory from Fozzie costing $500 on credit 4) He sells one half of goods to scooter for $650 cash 5) He pays $500 to Fozzie 6) He draws $50 cash from business for personal use 7) He buys goods costing $1000 on credit terms from Fozzie 8) He sells goods which cost him $900 to Miss. Pat on credit for $1200 9) He receives $500 from Miss Pat 10) He pays wages of $100 to Rolf his employee