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On 1 January Robert Franks started his business During the year credit sales were $125,000

(43% of which remain unpaid at the year end). At the year end Robert wants to write off bad debts of $19,987 and create an allowance for receivables equivalent to 4% of the remaining value of trade receivables.

What will be the net value of trade receivables on 31 December to the nearest $?

r $53,750 ~ $32412 r $51,600 r $33,763

{2 marks)

How will the transaction be recorded?

Amir has sold a non-current asset It has been agreed that payment will be received In three months time

Dr Receivables

Dr Non-current asset accumulated depreciation Dr Non-current asset disposal

Dr Receivables

r Dr Non-current asset disposal Dr Non-current asset cost

Dr Receivables

r Dr Non-current asset disposal Dr Non-current asset disposal

Dr Non-current asset disposal

r Dr Non-current asset accumulated depreciation Dr Non-current asset disposal

Cr Non-current asset disposal Cr Non-current asset disposal Cr Non-current asset cost

Cr Non-current asset disposal

Cr Non-current asset accumulated depreciation Cr Non-current asset disposal

Cr Non-current asset disposal

Cr Non-current asset accumulated depreciation Cr Non-current asset cost

Cr Receivables

Cr Non-current asset disposal Cr Non-current asset cost

The following IS a selection of accounts from a trial balance before the preparation of the year end financial statements

(1) Bank overdraft
(2) Carriage outwards
(3) Irrecoverable debt expense
(4) Accumulated depreciation
(5) Interest on the bank overdraft Which of the above items will appear in the opening trial balance at the start of the next accounting period?

c 2 and 3 ~ 1 and4 r 2 and 5 r 1 and 5

{21ll<uks~

A business prepares ItS Income statement and reports a profit of $30,000, but then discovers that opening Inventory had been undervalued by $3,000 and closing inventory overvai.ed by $4,500.

What is the correct profit for the period?

r $28,500 r $31,500 ~ $22,500 c $37,500

(2 marks)

You are assistinq In the preparation of the extended trial balance. Some Irrecoverable debts are to be written off You are told that you will need to add a new account to make the debit posting.

Which new account should you add?

r Allowance for receivables c Receivables ledger control c Payables ledger control ~ Receivables expense

(2m<'lrks)

$27,120 $30,400 $4,800 $2,200 $1,040

The balance on Linda's receivables control account on 1 September was $62,100. The following transactions occurred in the month

Credit sales

Cash received from credit customers Contra with payables ledger

Sales returns from credit customers Bad debt write off

What is the balance on the receivables control account at 30 September?

$150780

Submit I

Your currently accepted answer:50780

{2 marks]

On 1 December 20X5 Beth took out a bank loan for $30,000 for her business. This loan IS to be repaid in three equal instalments on 30 November 20X7, 20XB and 20X9

How should this bank loan be reported in Beth's balance sheet at 31 December 20X5?

r Capital

r Current liabilities

r Non-current assets ~ Non-current liabilities

(2 marks}

Which of the following would increase the capital of a sole trader? ~ An increase in assets and a smaller increase In liabilities

r An increase in non-current assets and an equivalent increase in liabilities r A decrease in current assets and no change in liabilities

r An increase in non-current assets and an equivalent decrease in current assets

(2: marks~

Which of the following is the correct entry to record the depreciation charge for the year?

rJ Dr Depreciation expense c Dr Depreciation expense

c Dr Accumulated depreciation c Dr Accumulated depreciation

Cr Accumulated depreciation Cr Cash

Cr Non-current assets

Cr Depreciation expense

(2 marks]

In the process of reconciling the receivables ledger control account with the receivables ledger, It IS discovered that the sales day book has been under cast by $1 0000. The receivables ledger control account balance, before any required correction, IS $280500.

What is the corrected balance on the receivables ledger control account?

$1290500

Submit I

Your currently accepted answer:290500

(2mt.lrks)

A business purchased a calculator for $1 0 which had an expected life of five years. This was recorded by the business as an expense

Which accounting convention is being applied by the business when expensing the cost? ~ Materiality

c Going concern r Prudence

r Accruals

{2Illarks}

Cost Net Realisable Value
$ $
Small blue car 17,500 15,200
Medium red car 22,300 22,500
Large green car 21 800 22800
61 700 60500 A car sales business has the following motor cars In Inventory at ItS year end

What is the value of the inventory that should appear on the balance sheet at the year end?

$ 159400

Submit I

Your currently accepted answer:59400

(2mt.lrks)

When corrying out a bank reconciliation, which of the following will require a correcting entry in the cosh book?

c Unpresented cheques c Error made by the bank c Outstanding lodgements ~ Bank charges

(2 marks]

Are the following statements true or false?

If there are no errors In the financial records, the trial balance should always balance A trial balance only detects certain types of error

The trial balance must be prepared on a dally basis

If the trial balance balances, there are no errors in the financial records

True False

[!:'J r [!:'J r

r Q:'.] r [!:':]

(2 marks)

Purchases day book over-cast by $1 0000

Discounts received of $21 00 not recorded In payables ledger control account

Returns day book totalling $6700, posted as $7600 to the payables ledger control account

The balance of $1881 00 on the payables ledger control account does not agree with the surn of the balances on suppliers' accounts In the payables ledger. On investigation the following errors are discovered:

What is the revised balance on the payables ledger control account?

Submit I

Your currently accepted answer:176900

(2ml'lrks)

In error, Coburg's book keeper recorded a $10,000 purchase of a new photocopier on 1 January 20X8 as 'Stationery' Coburg's policy is to write off Office Equipment over five years on a straight-line basis with a nil residual value.

What is the effect of the error if undiscovered on the profit for the year to 31 December 20X9?

r Profits are understated by $8,000 r Profits are overstated by $8,000 r Profits are overstated by $2,000

~ Profits are understated by $2,000

The following list of Items has been prepared prior to preparation of the input Journals of a motor vehicle trader

Are the following items capital or revenue expenditure?

New motor vehicle for re-sale

New motor vehicle for delivery of parts

New motor vehicle for demonstration to potential customers New motor vehicle for use by sales person

Capital Revenue

r~ L!:'::J r r~ L!:'::J r

(2mt.lrks)

Joel's trial balance did not agree and so a suspense account was created. Subsequent checking of the underlying records revealed that a credit purchase for $880 had been posted to the wrong side of a supplier's account as $880. Supplier personal accounts are maintained as part of the general ledger

What entry is required to correct the error?

r Dr Supplier's account $1,870

r Dr Suspense account $880 6 Dr Suspense account $1 ,870 r Dr Suspense account $880

Cr Suspense account $1,870

Cr Supplier's account $880

Cr Supplier's account $1 ,870

Cr Supplier's account $880

{2m:juks}

Are rhe following valid reasons for preparing a bank reconciliarion?

To check that the bank has correctly calculated Interest To identify errors made by the bank

To identify errors in the cash book

To identify transactions omitted from the cash book

Yes No

'E] Q:J' Q:J' Q:J'

(2 marks]

The total of the list of receivables balances outstanding at the end of the year IS $16,500 However, the balance on the receivables control account was $14,500

Which of the following errors moy explain this difference?

r The sales day book has been overcast by $2,000

r A contra agreement for $1,000 had not been recorded In the lIS! of balances

~ Debts written off of $1,000 had been recorded on the wrong side of the personal account of the customer r The sales returns day book had been undercast by $2 ,000

{2 marks)

Mason and Thompson are in partnership. The partnership agreement provides that Mason will receive a salary, both partners will receive interest on capital; interest on drawings will be charged and any profit or loss will be equally divided between the two partners.

Which of the following shows the correct entries in the appropriation account?

r Dr Interest on drawings Cr Interest on capital
Dr Salary Cr Share of loss
0 Dr Salary Cr Interest on drawings
Dr Interest on capital Cr Share of loss
r Dr Interest on drawings Cr Salary
Dr Interest on capital Cr Share of loss
r Dr Salary Cr Interest on capital
Dr Share of loss Cr Interest on drawings
Submit I (2 marks}

(1) Returns outwards

(2) Carnage Inwards

(3) Accumulated depreciation of motor vehicles

The following account headings appeared In the trial balance of a sole trader:

Whioh of the above are DEDUCTED in the calculation of gross profit?

r 1 and 3 only r 1,2 and 3 ~ 1 and 2 only r 2 and 3 only

(2 marks)

Financial position as at

1 January 31 December

$ $

The following financial position relates to a business at the beginning and end of Its financial year:

Motor car at written down value Machinery at written down value Trade payables

Inventory

Trade receivables Accrued expense Cash at bank

14,000
32,000 28,000
17,000 14,000
18,000 12,000
22,000 24,000
3,000
6,000 10,000 What was the net profit for the year?

During the year, the owner of the business introduced the motor car at a valuation of $20,000 and withdrew $9,000 in cash and $4,000 In goods

$ 19000

Your currently accepted answer:9000

(2 marks)

A company suffered a fire on the last day of the financial year and all of its inventory was destroyed The following information IS available for the year.

Sales for the year

Gross profit margin on sales There was no opening Inventory Purchases for the year

$182,000 20%

What is the cost of the inventory destroyed in the fire?

$180,000

r $12,000 ~ $26,400 r $24,000 c $20,000

{2marks)

Which of the following correctly describes an accrual?

c Amounts not paid, relating to a period after the end of the financial year (' Amounts due to the business at the financial year end

~ Amounts due but not paid at the financial year end

r Amounts paid relating to a period after the end of the financial year

(2 mark'S)

Which of the following would explain an increase in gross profit?

c The seiling pnce has decreased

~ The cost of purchases has decreased c The cost of purchases has increased c Expenses have Increased

{2 marks)

Which of the following statements explains the business entity concept?

r Annual accounts must be prepared for every business entity

~ When preparing accounts, the financial affairs of the business and Its owners must be kept separate c Owners of a business cannot withdraw business assets unless the business ceases to trade

c Owners can only receive financial returns when a business reports a profit

{2 marks]

How should accruals and prepayments be reported in the financial statements?

Accruals Prepayments

Current Asset r

Current Liability

r

{2 marks)

Whioh of the following is an application of an estimation teohnique?

r Preparing final accounts on a gOing concern basis r Valuing closing Inventory on an actual cost basis ~ Depreciating fixtures and fittings at 25% per annurn r Recording adrninistration expenses at invoiced cost

(2 marks)

Which TWO of the following are correct?

r The total of sales invoices per the sales day book will be credited to the sales account and credited to the

receivables ledger control account

r:l The total of sales invoices in the month will be debited to the receivables control account and the individual [J sales will be debited to individual receivables ledger accounts

r The total of sales invoices in the month will be credited to the receivables control account and the individual sales will be credited to Individual receivables ledger accounts

r:l The total of sales Invoices per the sales day book will be credited to sales and debited to the receivables [J ledger control account

(2 marks)

200 units at $1600 150 units at $25.00 100 units at $17.00 120 units at $25.00

Tim held 80 units of an item of inventory at 1 December at cost $15.00 each.

The following movements of inventory took place in December.

7 December 12 December 18 December 23 December

Purchase Sale Purchase Sale

What is the value of Tim's closing inventory at 31 December using the first-in first-out (FIFO) method?

r $1,870 ~ $1,860 r $510 r $1,680

(2mt.lrks)

$

$

The following IS an extract from a trial balance

Balanoes per ledger

Dr Cr

Receivables ledger control Allowance for receivables Payables ledger control Purchases

Sales

346.000

13.020 350.500

480.600

624.000

You are required to Increase the allowance for receivables to the equivalent of 4% of the receivables balance.

Whioh amount should be credited to 'allowance for receivables"?

r $13.840 r $11.840 c $1000 ~ $820

(2 marks}

Bob had net assets at 1 January 20X6 of $22,500 and net assets at 31 December 20X6 of $42,200. DUring the year ended 31 December 20X6 he transferred his private car to the business at a value of $6,000 and withdrew $12,500 in living expenses

What was the profit of the business for the year ended 31 December 20X5?

r $13,200 c $38200 ~ $26,200 c $1,200

(2mt.lrks)

Colin had trade receivables of $25,400 at 1 January 20X6. At that date his allowance for receivables was $1 ,016. Trade receivables were $25,800 at 31 December 20X6. It was decided that $1,800 of the receivables at 31 December 20X6 should be written off as irrecoverable debts, and that based on past events the allowance for receivables at that date should continue at a rate of 4% of the receivables balance

What amount should appear in Colin's income statement as the total receivables expense for the year ended 31 December 20X6?

~ $1}44 r $1,856 r $2}60 r $1,800

(2 marks)

Duncan has correctly posted the credit purchase of equipment for use In his business In the payables control account but has debited the wages account.

What double entry should Duncan post to correct the error?

r- Dr Payables CrWages
r- DrWages Cr Equipment
r- Dr Equipment Cr Suspense
r Dr Equipment CrWages
Submit I {2 marks)

Chobham has the following lIS! of balances on his payables ledger:

Archie Bertie Charlie Debbie Eddie Total

$ 350 1.600 200 (50) 1.120 3.220

Whot is the correct total of the list of balances?

A purchase of $65 has been omitted from Archie's ledger account An invoice for $300 from Bertie was posted to Charlie's account. The balance on Debbie's account is incorrect as payment of $200 for wages was debited to this account.

r $3.355 ~ $3485 r $3.335 r $3.785

(2m.uks}

Which of the following statements about a non-current asset register are true, and which are false?

The non-current asset register records the balance due on any loans raised to purchase non-current assets

The non-current asset register is part of the double entry system

The non-current asset register allows the assets owned to be Identified for physical verification The non-current asset register IS part of the firm's system of Internal control

True False

r0

r C!:':J Q::J r [!:'] r

{2 marks)

Would the following balances normally be found in the debit or credit column of the trial balance?

Purchase returns Accumulated depreciation Capital

Discount allowed

Debit r r r

Credit

r

{2 marks)

A credit for $25 due to Ian for the return of goods has been posted in the receivables ledger to the account of Ray.

Whioh of the following entries will correct the mistake?

rJ Dr Ian $25 Cr Ray$25
r Dr Ian $50 Cr Ray$50
r Dr Ray$50 Cr Ian $50
r Dr Ray$25 Cr Ian $25
Submit I {2 marks)

Edna has been checking non-current assets and found that there are two more office desks In the office than are listed In the non-current asset register.

Which TWO of the following reasons could explain this difference?

I Two desks have been stolen

~ There has been a delay in recording the receipt of desks in the non-current asset register I The purchase of two desks has been recorded twice in the general ledger

~ The disposal of two desks has been recorded twice In the non-current asset register

(2 marks~

A vehicle IS sold for $5 ,500 after being used In a business for three years. The oriqinal cost of the vehicle was $20,000 and, when purchased, the vehicle was estimated to have a residual value 01$3,000 Vehicles are depreciated over four years on a straight-line basis.

What is the profit or loss on disposal of the vehicle?

c $500 loss

c $1,750 profit ~ $1,750 loss r $500 profit

(2m:juks}

A retailing firm produced the following figures for the month of March

Sales

Purchases

Inventory at 1 March Inventory at 31 March

Carriage inwards on March purchases

$41,000 $32,000 $6,500 $4,500 $1,000

Whot is the cost of soles for March?

~ $35,000 r $33,000 r $34,000 r $31,000

(2m.uks}

The closing inventory figure used In the accounts for a business has been undervalued

What effect will the correction of this error have on the profit for the year and the net assets at the year end?

rJ Profit - Increase
r Profit - Decrease
r Profit - Increase
r Profit - Decrease Net assets - Increase

Net assets - Decrease

Net assets - Decrease

Net assets - Increase

(2 marks)

Enid has prepared a payables ledger reconciliation and discovered that a credit purchase of $565 was debited to the payables control account and credited to the purchases account

What double entry should Enid record to correct this error?

rJ Dr Purchases $1,130
c Dr Purchases $565
r Dr Payables $565
r Dr Payables $1 ,130 Cr Payables $1 ,130

Cr Payables $565

Cr Purchases $565

Cr Purchases $1 ,130

(2 marks)

Item 1 Item 2

Dr Depreciation expense

Cr Accumulated depreciation' machinery

$1,000 $1,000

At the end of the financial year Karl's extended trial balance includes:

Into which columns should these items be extended?
c Item 1 Balance sheet (Dr)
Item 2 Income statement (Cr)
c Item 1 Balance sheet (Dr)
Item 2 Balance sheet (Cr)
c Item 1 Income statement (Dr)
Item 2 Income statement (Cr)
6 Item 1 Income statement (Dr)
Item 2 Balance sheet (Cr) (2m.uks}

(1) (2)

The balance on the electricity expense account of $840 had been omitted from the trial balance

The total of the sales returns day book of $520 had been correctly entered into the trade receivables ledger control account but had been posted to the sales returns account as $250

When the trial balance for a business was prepared the debit column did not equal the credit column and a suspense account was created to balance the trial balance

The following errors that fully explained the difference were discovered

What was the opening balance on the suspense account?

r Cr$1,110 r Cr$570 ~ Or$1,110 r Or$570

(2 marks)

Which of the following items would be included in a partner's current account if both a current account and capital account are maintained?

(1) Share of profits

(2) DraWings

(3) Interest on capital

r 1 and 3 only r 1 and 2 only r 2 and 3 only ~ 1,2 and 3

(2 marks)

(1) A direct debit payment for $320

(2) A dishonoured cheque from a customer for $175

(3) A bank giro credit receipt from a customer for $650

(4) Bank charges of $40

A bank reconciliation IS being prepared at 31 December 20X6. The balance on the bank account In the general ledger IS a credit balance of $1 ,350 It has been noted that a number of Items appear on the bank statement which are not In the bank ledger account:

What is the corrected balance on the bank account in the nominal ledger?

~ $1,235 Cr r $585 Cr r $1,465 Dr r $885 Cr

(2 marks}

In 0 partnership. where is the current account balance reported?

c Capital account ~ Balance sheet

r Income statement

r Appropriation account

(2 marks)

Which of the following statements about provisions and llabilltie s is true? ~ A liability is made for a known amount, a provision is for uncertain amounts c A provision is made for a known amount, a liability is for uncertain amounts r Both provrsior s and liabilities are made for known amounts

r Neither liabilities nor provrsions are made for known amounts

(2 marks)