Accounting MCQs | Debits And Credits | Bookkeeping

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ACCOUNTING MOCK-P1

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A company’s trial balance failed to agree, the totals being: Debit £815,602 Credit £808,420 Which one of the following errors could fully account for the difference? A The omission from the trial balance of the balance on the insurance expense account £7,182 debit B Discount allowed £3,591 debited in error to the discount received account C No entries made in the records for cash sales totalling £7,182 D The returns outwards total of £3,591 was included in the trial balance as a debit balance Which of the following items could appear on the credit side of a Debtors ledger control account? (1) Cash received from customers (2) Bad debts written off (3) Increase in allowance for doubtful debts (4) Discounts allowed (5) Sales (6) Credits for goods returned by customers (7) Cash refunds to customers A (1), (2), (4) and (6) B (1), (2), (4) and (7) C (3), (4), (5) and (6) D (5) and (7)

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3. A business has compiled the following information for the year ended 31 October 2002: £ Opening inventory 386,200 Purchases 989,000 Closing inventory 422,700 The gross profit as a percentage of sales is always 40% Based on these figures, what is the sales revenue for the year? A £1,333,500 B £1,587,500 C £2,381,250 D The sales revenue figure cannot be calculated from this information 4. Which of the following correctly describes the imprest system of operating petty cash? A The petty cash float is replenished by regular periodic transfers of equal amount. B The petty cash float is replenished by periodic transfers of the actual expenditure in the period. C All expenses must be supported by a properly authorised voucher. D Petty cash is operated outside the business double entry accounting system.

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5. In preparing a company’s bank reconciliation statement at March 2003, the following items are causing the difference between the cash book balance and the bank statement balance: (1) Bank charges £380 (2) Error by bank £1,000 (cheque incorrectly debited to the account) (3) Lodgments not credited £4,580 (4) Outstanding cheques £1,475 (5) Direct debit £350 (6) Cheque paid in by the company and dishonored £400 Which of these items will require an entry in the cash book? A 2, 4 and 6 B 1, 5 and 6 C 3 and 4 D 3 and 5 6. Ed’s year end is 30 September. He depreciates office furniture at 15% per annum on the straight line basis. A full year’s depreciation is charged in the year an asset is purchased, and no depreciation is charged in the year it is sold. In March 2005 Ed bought office furniture for $80,000. If he sells the office furniture for $39,000 in July 2008, what will be Ed’s profit or loss on disposal? A a profit of $7,000 B a loss of $7,000 C a profit of $5,000 D a loss of $5,000 7. Which of the following statements describes current assets? A assets which are currently located on the business premises B assets which are used to conduct the organization’s current business C assets which are expected to be converted into cash in the short term D assets which are not expected to be converted into cash in the short term 8. Which of the following is the correct journal entry to record a credit note issued to a customer for goods returned? A B C D Debit Credit Debit Credit Debit Credit Debit Credit Sales returns Cash Cash Sales returns Trade receivables Sales returns Sales returns Trade receivables

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9. In the year to 31 May 2008, Lesley’s sales totaled $600,000 and her cost of sales totalled $480,000 What are the correct figures for Lesley’s mark up and margin? Mark up Margin A 25% 25% B 25% 20% C 20% 25% D 20% 20% 10. At his year end, Keith had accrued expenses totalling $4,176 and prepaid expenses totalling $3,718. How should the accrued and prepaid expenses be reported on Keith’s statement of financial position (balance sheet)? A as a current asset of $458 B as a current liability of $458 C as a current asset of $4,176 and a current liability of $3,718 D as a current asset of $3,718 and a current liability of $4,176 11. Which of the following is the correct formula to calculate cost of sales? A Purchases – Opening inventory – Closing inventory B Purchases + Opening inventory + Closing inventory C Purchases – Opening inventory + Closing inventory D Purchases + Opening inventory – Closing inventory 12. Into which income statement columns of the extended trial balance should the balances for sales returns and purchases returns be extended? Sales returns Purchases returns A debit debit B debit credit C credit debit D credit credit 13. In June 2008 Laura bought goods for $12,000. She paid $11,000 of this by cheque and agreed a 30 day credit period for the balance. She intends to buy more goods for $13,000 in July 2008. What value should be reported for Laura’s payables at 30 June 2008? A $25,000 B $14,000 C $13,000 D $1,000

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14. The bookkeeper of Peri made the following mistakes: Discount allowed $3,840 was credited to Discounts Received account. Discount received $2,960 was debited to Discounts Allowed account. Discounts were otherwise correctly recorded. Which of the following journal entries will correct the errors? Dr Cr $ $ A Discount allowed 7,680 Discount received 5,920 Suspense account 1,760 B Discount allowed 880 Discount received 880 Suspense account Discount allowed 6,800 Discount received Discount allowed 3,840 Discount received Suspense account

1,760 6,800 2,960 880

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15. Avalon gives his customers individual trade discounts from the list price and a general 5% cash discount for all invoices settled within 7 days of issue. A new customer, Nolava negotiates a 25% trade discount. His transactions during June are: June 12 Buys goods with a £5,000 list price June 15 Returns goods with a £1,000 list price as faulty June 16 Pays half of the net balance on his account How much does Nolava owe Avalon at the end of June? A £1,425 B £1,500 C £2,000 D £2,850 16. Manish buys goods on credit from Lisa but finds that some of them are faulty. What document would Manish return to Lisa with the faulty goods? A Statement B Debit note C Sales invoice D Purchase invoice

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17. Which of the following items would be likely to be paid out of petty cash? (i) Payment to window cleaner £10 (ii) Hire purchase payment for a delivery van £123 (iii) A payment for postage stamps £11·60 (iv) A payment to a supplier for goods bought on credit of £65 A All of the above B i, iii and iv C i only D i and iii 18. Louise introduces her car into her business. Which parts of the business’ accounting equation will change? A Assets and capital B Capital and profit C Liabilities and assets D Capital and liabilities 19. Which of the following should be classified as current liabilities? (1) Trade debtors (2) VAT payable (3) Trade creditors (4) Drawings A 1 and 2 B 2 and 3 C 3 and 4 D 2 and 4 20. Which item will appear as a debit balance in the ledger accounts? A Capital B Bank overdraft C Creditors D Stock 21. Which of the following balance sheet summaries is correct? Capital Assets Liabilities A £35,000 £24,000 £11,000 B £21,000 £15,000 £36,000 C £25,000 £33,000 £8,000 D £33,000 £25,000 £8,000 22. Joanne has just started-up a business. She introduced £10,000 of her own savings, equipment worth £2,500 and obtained a bank loan of £1,000. What is the correct balance on Joanne’s capital account following these transactions? A £10,000 B £13,500 C £12,500 D £11,000

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23. Which of the following is the correct posting to record a cash purchase of £300 from Amdale? A Debit Purchases £300 Credit Amdale £300 B Debit Amdale £300 Credit Purchases £300 C Debit Purchases £300 Credit Bank £300 D Debit Bank £300 Credit Purchases £300 24. Which of the following items would appear on opposite sides of a trial balance? A Stock and Drawings B Sales and Returns out C Carriage in and Carriage out D Debtors and Returns out 25. Which of the following errors would be found by extracting a trial balance? A A transaction has been completely missed in the accounts B The double entries have been made the wrong way round C Different figures have been entered for the debit and credit entries D An expense item has been posted to a fixed asset account. 26. Which one of the following is the correct posting from the purchase day book? A Dr General ledger purchase account,Cr Suppliers’ accounts in purchase ledger B Dr General ledger purchase account, Cr Cash book C Dr Suppliers’ accounts in purchase ledger, Cr General ledger purchase account D Dr Cash book, Cr General ledger purchase account 27. Jonathan sends a debit note to one of his suppliers. In which of Jonathan’s books of prime entry would this be recorded? A Sales B Purchases C Sales returns D Purchase returns 28. In which books of prime entry would the following transactions be entered? A credit sale for £387 and a cash sale of £200 less 10% discount for cash payment. A The cash book and sales day book B The petty cash book and sales day book C The purchase day book and sales day book D The journal and cash book

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29. Vic’s sales ledger balances add up to £50,000, which does not agree with his debtors control account What should the total of the balances on his sales ledger be after correcting the following errors? 1 A bank credit transfer from a credit customer of £750 was not recorded in the sales ledger 2 A contra entry of £2,000 was entered in the control account but not in the sales and purchase ledgers. A £52,750 B £50,000 C £49,250 D £47,250 30. Which of the following would normally be entered through the journal? A Credit purchase returns B Transfers between accounts C Receipts from credit customers D Expense payments

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