You are on page 1of 14

CAT T3 Maintaining Financial Records Mock Examination (CBE)

1. A tract of land purchased for $500,000 was recorded at its cost price, even though it was valued at a higher price. What accounting concept is adhered to in this case? A. B. C. D. Historical Cost Prudence Materiality Accruals/Matching Principle ( 2. In times of rising prices, the historical cost concept has the effect of : A. B. C. D. Understating profits and overstating asset values Overstating profits and understating asset values Understating profits and understating asset values Overstating profits and overstating asset values ( 3. Which three of the following is a capital expenditure? i. ii. iii. iv. v. vi. Cost of replacing worn out tiles on the office floor Cost of buying computers for use in the office Cost of goods distributed as samples for an advertising campaign Business making a donation of $2,000 towards building of a rehabilation cetnre for drug addicts Stamp duties paid to the government for the purchase of property Building an extension to the existing business premises ( )( )( ) ) )

4. The Bank Account balance in the Cash Book has $150 debit balance. The following transactions were then entered in the Bank Account: Receipts from sales Dividends banked Cheques paid to supplier $4,210 $ 180 $3,270 ___________

What is the new bank balance in the Cash Book?

T3MaintainingFinancialRecordsMockTest

Page1

5. Wendy found the following discrepancies between his Cash Book and his Bank Statement : A standing order for payment of an insurance premium of $530 An unpresented cheque $2,110 An uncredited deposit $6,460 A dishonoured cheque $1,250

Wendys Cash Book has a balance of $16,000. What are the updated Cash Book Balance(after the above adjustments) and the Bank Statement Balance before adjusting the above discrepancies? _____________ / ____________ 6. Geraldine has the following information: Trade Payables, 1 Sept 2008 Trade Payables, 31 Aug 2009 Total payments during the year (including cash purchases of $4,500) $24,600 $18,900 $27,350

What is the amount of credit purchases during the year amounted to? __________

7. Lily Tan, a partner is entitled to an annual salary of $12,000. By the year end, 31 December 2009, he has been paid $8,000 for salary. What amounts for salary would be entered in the Profit and Loss Appropriation Account and credited to Lily Tans Current Account on 31 December 2002? __________/_________

8. 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? A. B. C. D. Debit Income Statement Debit Income Statement Debit Appropriation account Debit Appropriation account Credit Partners capital account Credit Partners current account Credit Partners capital account Credit Partners capital account ( )

T3MaintainingFinancialRecordsMockTest

Page2

9. Jerry and Tom formed a partnership on 1 January 2009. The following information is available for partner Tom for the year ended 31 December 2009. Salary $3,000, Drawings $5,000, Interest on Drawings, $500, Interest on Capital $1,000, Capital $100,000 and Share of Profits $9,000 What will be the balance in Toms Current Account on 1 January 2010? _____________ 10. All of the following are true about assets accounts, except: A. B. C. D. Debit the account for increase in asset Credit the account when asset is sold Asset balances are listed in the Income Statement Asset accounts have debit balances ( )

11. Carriage Inwards $50 is wrongly recorded in the Insurance Account. This error results in two of the following effects : i. ii. iii. iv. Net Profit is overstated by $50 Gross Profit is overstated by $50 Gross Profit remains unchanged Net Profit remains unchanged ( )( )

12. The debit side of a Trial Balance was less than the credit side by $100. This could be attributed to which of the following errors: A. Interest paid $100 was posted to the Interest Received Account B. Interest paid $50 was posted to the Interest Received Account C. Interest paid $50 was entered in the Cash Account but omitted from the expense account D. Interest received $50 was entered in the revenue account but omitted from the Cash Book ( )

T3MaintainingFinancialRecordsMockTest

Page3

13. Cartier is deciding the method to use for valuation of his inventory. Which one of the following statements is correct? A. First-in-first-out will report a lower profit and a lower closing inventory value than weighted average B. Profit and closing inventory value for the year will be the same whichever method Cartier uses C. Weighted average will report a lower profit and a lower closing inventory value than first-in-first-out method D. First-in-first-out will report a higher profit and a lower closing inventory value than weighted average ( 14. Jennifer uses the weighted average cost method of valuing inventories. During December 2009, the following details were recorded : Opening balance 6 December 2009 10 December 2009 18 December 2009 29 December 2009 20 units valued at $4 each purchase of 10 units at $5 each issue of 10 units purchase of 10 units at $6 each issue of 20 units )

The value of the balance of inventories as at 31 December was : _______________

15. If sales are $74,000 and the gross profit on sales is 25%, what is the cost of goods sold? ______________ 16. At 31December 2009, Edelines trial balance has the following balances : Trade Receivables Accruals Bank Overdraft Receivable Allowances Prepayments Cash Inventory $5,000 $ 60 $1,200 $ 110 $ 70 $2,000 $ 300

Receivable Allowance is to be adjusted to 2% of Trade Receivables on 31 December 2009. What is the current asset value in Edelines statement of financial position as at 31 December 2009? ______________
T3MaintainingFinancialRecordsMockTest Page4

17. John, a sole trader on checking his ledger entries, found the following errors : i. ii. iii. iv. v. Sales Day Book and Purchase Day Book were overcast by S$500 $100 cash received from a customer, Julie was recorded in the Cash Book only Commission Received S$590 was wrongly debited to the Commission Account and credited to the Cash Account $30 paid for Advertising charges had been recorded correctly in the Cash Book but was posted to Advertising Account as $300 Receivables Control balance was undercast by $9.

Which of the three errors above would cause a difference between the total of the debit balances and the total of the credit balances when the trial balance is prepared? ( )( )( )

18. Which of the following is not an advantage of accounting standards? A. The standards have in the past being subject to lobbying or government pressure B. The accounting treatment recommended by the standards is not relevant to all businesses C. The standards require companies to disclose more accounting information than they would otherwise have done if standards did not exist D. The standards have created areas of confusion especially when they have not eliminated choice of treatment ( )

19. The net book value of a machine in the Financial Statement of ZQ Company as at 31 December 2009 was S$2,400. It had been bought on 1 January 2002 and had been depreciated at 10% per annum on cost. What was its original cost? A. B. C. D. $13,200 $ 9,600 $10,800 $12,000 ( )

T3MaintainingFinancialRecordsMockTest

Page5

20. Mozart bought a Motor Vehicle for $100,000 on 1 July 2008 on credit from Beethovan. Depreciation of 20% per annum using reducing balance method was allowed on this motor vehicle at every year end 31 December. An Accumulated Depreciation was set up to record the accumulated depreciation. On 1 June 2010, the motor vehicle was sold off for $69,000. Mozart keeps a policy of full depreciation is charged on the year of purchase and no depreciation is charged on the year of sales What is the gain or loss on disposal ? __________________

21. A business has a machine which is depreciated using the reducing balance method. Which statement is true? A. B. C. D. Depreciation charge in each year is equal Depreciation charge in year 1 is less than the charge in year 2 Depreciation charge in year 2 is less than the charge in year 1 Depreciation percentage charge is changed each year ( )

22. Matt has a balance of $150,000 in its Capital account on 1 January 2009. During the year, he took $3,000 for his personal use. He also sold his private car and banked the sale of $30,000 into the business bank account. He also made a net profit of $14,000 during the year. What is the balance on his capital account on 31December 2009. _____________

23. Watson has a private car repair bill that has been treated as a business expense. What entry is required to correct this error? Debit Capital Drawings Motor Expenses Motor Car Credit Motor Car Motor Expenses Motor Car Capital

A. B. C. D.

24. Which three of the following would appear in a Receivables control account? i. ii. iii. iv. v. vi. Trade discounts given Allowances for Receivables Receivables Expenses Discounts Allowed Returns Outwards Returns Inwards (
T3MaintainingFinancialRecordsMockTest

)(

)(

)
Page6

25. Picasso does not keep a full set of books. On 1 January 2009, his opening inventory is $5,000. He purchases $58,000 goods for the year 2009. On 31 December 2009, his closing inventory is $7,000. Picasso applies a mark up of 20% to obtain the selling price of goods. What are Picassos total sales for the year? A. B. C. D. $67,200 $72,000 $70,000 $72,500 ( 26. Pauline does not keep a complete set of accounts. She wishes to know the purchases figure for the year. She provides you with the following information: Payables 1 January 2009 Payables 31 December 2009 $35,000 $53,200 )

She also shows you these documents received from her supplier during the year: Receipts for a total amount of $12,400 Credit notes for a total amount of $900 What are her purchases for 2009? $29,200 $31,500 $66,500 $74,900 ( 27. The assets and liabilities of a firm are shown below: Year 2008 $68,000 $36,000 Year 2009 $88,000 $43,000 )

A. B. C. D.

Assets Liabilities

If drawings is $5,000 for 2009, what is the profit of the firm at the end of year 2009? A. B. C. D. $13,000 $ 8,000 $18,000 $23,000 ( )

T3MaintainingFinancialRecordsMockTest

Page7

28. Consider the following statements : i. ii. iii. Assets are decreased by debits Goods purchased on credit are debited to Payables A cash sale is recorded as a debit entry in the Cash Book and a credit entry in the Sales account

Are these statements true or false? Statement (i) Statement (ii) A. False False B. False True C. False False D. True False

Statement (iii) False False True True ( )

29. Gross Loss is incurred when A. B. C. D. Sales exceed cost of sales Net sales are less than cost of goods sold Net purchases are more than net sales There is an excess of net sales over cost of goods sold ( 30. Inventory 1.1.2009 Inventory 31.12.2009 Purchases Carriage Inwards Carriage outwards Freight Charges Sales Sales Returns Purchases Returns $9,400 $5,670 $10,860 $400 $500 $90 $26,760 $110 $88 ____________ )

What is the gross profit earned for the year 2009?

31.Which of the following statements in NOT true of the Income Statement? A. B. C. D. Insurance on purchases increases the Cost of Sales Excess of Cost of Sales over Net Sales is Gross Loss Gross Loss will definitely lead to Net Loss Expenses are deducted from Gross Profit to obtain Net Profit/Net Loss ( )

T3MaintainingFinancialRecordsMockTest

Page8

32. Van Gogh is preparing a reconciliation of the balances on the Receivables Ledger Control account in the general ledger to the total of the list of balances on the accounts in the Receivables Ledger. He discovered the following : i. ii. iii. A credit balance in a customers account was listed as a debit balance A credit note for $100 was misplaced Purchases Day Book total of S156,000 was posted as S$156,900 in the Receivable Ledger Control Account

Which of the errors above will require an adjustment to the list of balances? A. B. C. D. Neither any one of them All of them (i) and (ii) (i) only ( 33. Abraham made an error in recording. A customers payment of $200 was incorrectly debited to the Receivable Control. Abrahams Receivables ledger Balances totaled S$11,700 but his Receivable Control account showed a balance of $12,100. What is the correct total in Abrahams Receivables ledger balances? A. B. C. D. $11,700 $11,300 $11,500 $11,100 ( 34. Which of the following would require an adjustment to be made to both the receivables ledger control account and the list of balances in the receivables ledger book? i. ii. iii. The sales day book being undercast by $13,000 $56,000 received from customers were being posted to the receivables ledger control account as $58,000. Cash Book was posted correctly Invoice No 6784, amount $5,309 was omitted from recording in anywhere in the books A. B. C. D. (ii) Only (ii) And (iii) (iii) Only All of the above ( ) ) )

T3MaintainingFinancialRecordsMockTest

Page9

35. A cheque $309 received by Malcolm for commission earned was correctly debited in the cash book, but no credit entry was made. The total of the trial balance did not agree and a suspense account was opened to record the difference. What journal entry is required to eliminate the balance on the suspense account? A. Debit Credit B. Debit Credit C. Debit Credit D. Debit Credit Commission Earned Suspense Suspense Commission Earned Suspense Commission Commission Suspense $309 $309 $309 $309 $309 $309 $309 $309 ( )

36. Emeralds draft accounts report a profit of $20,777. However, a prepayment of $598 was treated as an accrual and an accrual of $588 was incorrectly recorded as $888. What is the correct profit? ____________

37. Lolita is completing her extended trial balance, which includes balances for depreciation expense and accumulated depreciation. Into which columns should these balances be extended? Depreciation Expense A. Debit Income Statement B. Credit Statement of Financial Position Position C. Debit Income Statement Position D. Debit Statement of Financial Position Accumulated Depreciation Credit Income Statement Debit Statement of Financial Credit Statement of Financial Credit Income Statement ( )

T3MaintainingFinancialRecordsMockTest

Page10

38. When Marks extended trial balance was extended and totaled, the totals were Income Statement Debit Credit $101,890 $90,876 A. B. C. D. $11,014 loss $11,014 profit $119,141 loss $119,141 profit ( 39. Kenix is a furniture seller. His inventory includes an antique clock which sells $80,000. Kenix expects to incur $11,000 to refurbish the clock before he could sell it for S$$93,000. At what value should this antique clock be included in Kenixs inventory? A. B. C. D. $93,000 $91,000 $82,000 $80,000 ( 40. At 1 January 2009, Jessie owes rent of $657 to her landlord. During the year to 31 December 2009, he paid a total of $9876 to her landlord. On 31 December 2009, she still owes the landlord $568. What is the charge for rent in his income statement for the year to 31 December 2009 A. B. C. D. $11,101 $9,965 $9,787 $8,651 ( 41. Venial sold some of his goods which he bought for $8765, for $12,000 in cash. How are his assets and capital affected by the sale? Assets Increased by $3,235 Decreased by $3,235 Increased by $3,235 Decreased by $3,235 Capital Increased by $3,235 Decreased by $3,325 Decreased by $3,235 Increased by $3,235 (
T3MaintainingFinancialRecordsMockTest

Statement of financial position Debit Credit S$210,017 $221,031

A. B. C. D.

)
Page11

42. At 1 December 2009, Williams receivables allowance was $800. At 31December 2009, balance in his receivables control account is $60,200. Based on his past experience, she would like to provide an allowance equivalent to 2% of the outstanding balances. What should be reported in Williams income statement for the year to 31December 2009? A. B. C. D. A credit of $404 A debit of $404 A credit of $1204 A debit of $1204 ( 43. One of the purposes of accounting is to provide financial information to various interested parties. Which of the three groups of people are mostly likely interested in the final accounts of a partnership business? i. ii. iii. iv. v. The general public The bank who provides the bank loan The stockbrokers The partners of the business The tax authorities ( )( )( ) )

44. Rose s total payment for Electricity bill for the year 2009 was $3,400. However, the bill for 16 December to 15 January which totaled $160 only came at the end of January 2010. It was further agreed that a quarter (1/4) of the expenses would be charged to the owner for his private use and three quarters (3/4) to the business. How much was charged to the business Income Statement for the year ended 31 December 2009? A. B. C. D. $2,610 $2,670 $2,490 $2,430 ( )

T3MaintainingFinancialRecordsMockTest

Page12

45. The main function of the non-current asset register is to provide a system of internal control for the non-current asset of the business. It facilitate such control by : i. ii. iii. A. B. C. D. Enabling physical verification/existence of non-current assets Enabling calculation of total loan taken for purchasing the non-current assets Enabling reconciliation to be made to the manual ledger (i) and (iii) (i) only (i) and (ii) All of the above ( 46. The landlord sent a debit note to Ginny on account of rent owing. How is this shown in Ginnys Balance Sheet? A. B. C. D. Non current payables Current payables Current assets Non Current Assets ( ) )

47. Which formula will give net sales? A. B. C. D. Sales Sales returns Sales Discount allowed sales returns Sales Credit notes received Sales + Credit notes issued ( 48. To what does the term mark up refer ? A. B. C. D. Gross profit expressed as a percentage of cost price Gross profit expressed as a percentage of selling price Net profit expressed as a percentage of cost price Net profit expressed as a percentage of selling price ( ) )

T3MaintainingFinancialRecordsMockTest

Page13

49. Mary purchased a factory building for her business recently. She paid S$1,200,000 for the building, $10,000 for the legal fees, $1,200 for stamp duties and $1,000 for monthly maintenance to the building management. What is the value of Marys capital expenditure A. B. C. D. $1,200,000 $1,210,000 $1,212,200 $1,211,200 ( 50. A dishonoured cheque is recorded by which of the following entries? A. B. C. D. Debit bank account and credit receivables account Debit receivables account and credit bank account Debit dishonoured cheque account and credit bank account Debit payable account and credit bank account ( ) )

T3MaintainingFinancialRecordsMockTest

Page14