Accounts paper-1.doc

7/29/2019 Accounts paper-1.doc

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1. X Ltd. receives a cheque for $ 100,records it in the cashbook and banks at on the same day. A statementsent by the bank that day does not show this $ 100.How is this $ 100 shown on the bank reconciliation statement?a) as an uncredited deposit added to the bank statement balance.b) as an uncredited deposit deducted from the bank statement balance.c) as an unpresented cheque added to the bank statement balance.d) as an unpresented cheque deducted from the bank statement balance.

2. Bob returns goods bought on credit from Tariq.Which ledger account entries record this in Tariq s books?

debit creditABCD

BobBob

sales returnspurchases returns

sales returnspurchase returns

BobBob

3. Premises are purchased on 1 January 2000 using a bank loan repayable on 1 January 2010. How will thishave affected the balanced sheet on 1 January 2000?

a) increased fixed assets, decreased current liabilities.b) increased fixed assets, increased current liabilities.c) increased fixed assets, increased long-term liabilities.d) decreased fixed assets, increased long-term liabilities.

4. What is the main purpose of changing depreciation?a) to provide funds for asset replacement.b) to reduce the cost of repairing assets.c) to show the assets at their realisable values in the balance sheet.d) to spread the cost of an assets over its useful life.

5. On 1 January a machine is bought for $ 12800.Two methods of depreciating the machine are being

considered as follows:

straight line reducing balanceestimate useful life 4 yearsresidual value $ 2800

at the rate of 30 % per annum

How will the years net profit be affected if the reducing balance method is used rather than the straight-line method?a) It will be increased by $ 200. b) It will be increased by $ 200.c) It will be decreased by $ 640. d) It will be decreased by $ 1340.

6. Details of an electricity account are given.

$owing at 31 December 1998paid in 1999owing at 31 December 1999

800100001000

What amount will appear in the profit and loss account in 1999 for electricity?a) $ 9800 b) $ 10000 c) $ 10200 d) $ 11800

7. Lee maintains a bad debts account and a separate provision for doubtful debts account. He wishes to writeoff an amount due from Tan that had not been previously provided for. What entries will Lee make?

debit credit

ABCD

bad debtsTan

provision for doubtful debtsTan

Tanbad debts

Tanprovision for doubtful debts

Madhrasathul Ahmadhiyya First Term Test 2002 Grade: 10 Principles of Accounting Paper One Page 1 of5


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8. What is the purpose of control accounts?a) to calculate total accruals and payments. b) to calculate total debtors and creditors.c) to calculate total purchases and sales. d) to calculate total receipts and payments.

9. X ltd has the following balance sheet summary:

fixed assets at net book value 120000net current assets 30000

150000

financed by capital and reserves 150000

The fixed assets are valued at $ 180000 the net current assets at $ 20000.The business is required for $225000.

What is the payment for Goodwill?a) $ 25000. b) $ 45000. c) $ 75000. d) $ 105000.

10. After a traders net profit has been calculated it is discovered that the closing stock was under valued by $1000.

What is the effect of correcting the error

gross profit Net profitABCD

decrease by $ 1000.decrease by $ 1000.increase by $ 1000.increase by $ 1000.

decrease by $ 1000.unchanged.

increase by $ 1000.unchanged.

11. A business calculates its net profit at $ 25000.It is later found that two items had been omitted.i) goods taken by the owner for own use costing $ 1200.ii) electricity owing at your end, $ 800. What is the correct net profit?a) $ 23000 b) $ 23800 c) $ 25400 d) $ 27000

12. In a partnership a separate capital account and current account is kept for each partner.What are the accounting entries for interest on a loan from a partner?

debit creditABCD

profit and loss accountprofit and loss accountprofit and loss appropriation accountprofit and loss appropriation account

partners capital account.partners current accountpartners capital account.partners current account.

13. Some of the accounting records of X have been partially destroyed by fire. The remaining records show

sales for the year of $ 85240. X has a gross profit margin of 20%.What is the cost of sales for the year?a) $ 17048. b) $ 21310. c) $ 63930. d) $ 68192.

14. During the year an orchestral society bought $ 10000 of new musical instruments paying by cheque.Where will this item appear?a) Balance sheet only.b) Income and expenditure account and balance sheet.c) Income and expenditure account and receipts and payments account.d) Receipts and payments account and balance sheet.

15. A company is formed with an authorised share capital of 10 million shares of $ 0.30 per share is called up.

What is the issued share capital of the following?a) $ 3.3 million b) $ 3.5 million c) $ 5.3 million d) $ 7.0 million



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16. The table shows the gross and net profits as percentages of sales for four businesses.From this information, which business controls its overhead most efficiently?

business gross profit net profitABCD

40%37%35%30%

17%15%14%12%

17. On 31 July , X s bank statement shows a balance at bank of $ 2500, but the cash book shows a balanceat bank of $ 1750. X finds cheques totalling $ 750 have not been presented for payment which bankbalance figure appear in Xs balance sheet on 31 July?a) $ 1000 b) $ 1750 c) $ 2500 d) $ 3250

18. The months total sales of $ 2800 have been debited to the sales account. What is the effect of this on thesales account balance?a) overstated by $ 2800. b) overstated by $ 5600.c) understated by $ 2800. d) understated by $ 5600.

19. A business receives rent for letting premises. How is this rent classified?a) capital expenditure b)capital income c) revenue expenditure d) revenue income

20. An electricity accrual of $ 450 is treated as a prepayment when preparing a traders profit and lossaccount.What effect does this have on the traders net profit?a) It is overstated by $ 450. b) It is understated by $ 450.c)It is overstated by $ 900. d) It is overstated by $ 900.

21. What is the effect of making contra entries in the sales and purchases ledger control accounts?

debtors creditors profitA

BCD

increase

reduceincreasereduce

increase

reduceincreasereduce

increase

reduceno effectno effect

22. A sole trader writes off a bad debt.What will be the effect of this on the balance sheet?a) capital reduced and assets reduced. b) liabilities increased and assets reduced.c) liabilities reducced and assets increased. d) no effects on assets or liabilities.

23. A clerk has not kept double entry records. He calculates purchases using a total creditors account. Thisaccount is not correct.

Total creditors accountdebit $ credit $

31 December purchase31 December creditors c/f

360006000

1 January creditors31 December cash

400038000

42000 42000

What is the correct purchases amount?a) $ 38000. b) $ 40000. c) $ 44000. d) $ 46000.

24. The information in the table relates to X for the last financial year.

average stockgross profit

rate of stock turn over

$1500025% on cost

6:1What were the sales for the year?



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a) $ 47000. b) $ 90000. c) $ 108000. d) $ 1125000.

25. A business decides to records stocks of stationery as an asset only if they are over $ 100.Which accounting concept is being applied?a) conservatism b) dual aspect c) materiality d) money measurement.

26. Which of the following business documents is the source of information for sales made on credit?a) invoice b) copy of the invoice

c)credit note d) bank statement

27. A document from a seller notifying the purchaser that an undercharge has been made is called a/an:a) advice note b) credit note c) consignment note d) debit note

28. The debiting of the purchase of a fixed asset to the purchases account is an error ofa) commission b) omission c) compensation d) principle

29. Which of the following errors would be revealed by the trial balance?a) A sale for $ 10 to C Jones is posted to the debit of B Joness accountb) A cheque received and entered in the cashbook as $25 is entered in B Greens account as $52.c) The purchase of a new van for $25 is entered in the debit of the purchases account as $520.

d) An invoice from J smith is received but is not entered in the purchase day book orJ Smiths account.

30. Which one of the following is not a book of original entry?a) the cash book b) the ledger c) the journal d) the sales day book

31. A society has 100 members and the subscription is $5 per year. During the course of the financial year. Allhave paid the correct amount except for four members who paid $10 each because they owed for theprevious year, and two members who have paid for next year. The subscription income for this yearsIncome and expenditure account is:

a) $470 b) $480 c) $500 d) $530

32. Prime cost in a manufacturing account isa) all factory indirect costs b) all factory costsc) direct factory costs only d) direct materials ,plus direct expenses.

33. The following information is available:$

Sales 100000Purchases 80000Opening stock 10000Closing stock 15000Expenses 10000

Gross a debtor for $85, is unable to settle his account in cash and offers you a type writer instead. The

journal entry to record this in your accounts should bea) 20% and 10% b) 25% and 15 % c) 15% and 5% d) 10% and 20%

34. Smith a debtor for $85, is unable to settle his account in cash and offers you a typewriter instead. Thejournal entry to record this in your accounts should be

debit credit

A Smiths account typewriter accountB typewriter account bank accountC typewriter account Smiths accountD cash account Smiths account

35. At the end of the financial year a business has debtors of $10000 and a provision for bad debts of $480. It

is proposed to maintain provision for bad debts at 5 percent.What amount will be passed to profit and loss Account for the year?a) a debit of $500. b) a credit of $20 c) a debit of $20 d) a debit of $480



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36. The valuation of stock is carried out bya) counting the stock and valuing at selling price.b) counting the stock and valuing it at cost price.c) counting the stock and valuing it at the lower of cost price and market price.d) Balancing the stock account.

37. Which is the double entry for closing stock?

a) opening stock a/c debit, closing stock a/c credit.b) trading a/c debit, stock a/c credit .c) stock a/c debit, trading a/c credit.d) closing stock a/c debit, opening stock a/c credit.

38. Good will is paid fora) good debts b) bad debts c) good reputation d) bad reputation

39. Work in progress meansa) half- finished goods. b) partly-finished goods.c) fully- finished. d) work not yet started on materials.

40. The tuition fees received by a school is:

a) a capital expenditure to the school.b) a revenue expenditure to the school.c) a capital receipt to the school.d) a revenue to the school.


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Accounts paper-1.doc