UWA Business School

MID-SEMESTER MOCK EXAM

1st Semester 2019

ACCT1101 FINANCIAL ACCOUNTING

SURNAME: STUDENT NO:

GIVEN NAMES: SIGNATURE:

This Paper Contains: 20 pages including title page.

Section A: 40 multiple choice questions 40 marks

Section B: 10 Multiple choice questions 10 marks
Section C: 5 Multiple choice questions 5 marks
Section D: 20 multiple choice questions 20 marks
TOTAL MARKS: 75 marks
This is a closed book exam.
Authorised materials - An approved calculator.
Multiple choice questions are to be answered in the answer sheet provided.
Exam papers are to be collected with the examination answer booklets.

PLEASE NOTE

Examination Candidates may only bring authorised materials into the examination
room. If a supervisor finds, during the examination, that you have unauthorised
material, in whatever form, in the vicinity of your desk or on your person,
whether in the examination room or the toilets or en route to/from the toilets,
the matter will be reported to the head of school and disciplinary action will
normally be taken against you. This action may result in your being deprived
of any credit for this examination or even, in some cases, for the whole unit.
This will apply regardless of whether the material has been used at the time
it is found.
Therefore, any candidate who has brought any unauthorised material whatsoever
into the examination room should declare it to the supervisor immediately.
Candidates who are uncertain whether any material is authorised should ask the
supervisor for clarification.

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SECTION A: MULTIPLE CHOICE QUESTIONS (40 Marks)
ANSWER ALL QUESTIONS - EACH QUESTION IS WORTH ONE (1) MARK.

This Section consists of forty (40) multiple-choice questions. Indicate the answer you deem to
be the best response to each multiple-choice question posed.

A1. Select the correct order in which the steps in the decision making process occur.
1. Choose a course of action
2. Establish goals
3. Gather available information
4. Evaluate the consequences of the various alternatives
(a) 1, 2, 3, 4
(b) 2, 4, 3, 1
(c) 2, 3, 4, 1
(d) 4, 3, 2, 1
(e) 3, 1, 2, 4

A2. How many of the following are differences between management and financial
accounting?
 Types of reports produced
 Frequency of reports
 The format of reports
 The users of reports
(a) None
(b) One
(c) Two
(d) Three
(e) Four

A3. General-purpose reports provide information mainly for the use of which of the
following parties?
Internal decision makers External decision makers
(a) Yes Yes
(b) Yes No
(c) No Yes
(d) No No
(e) Unable to be determined from the information provided

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A4. Of the major steps in the accounting process, which is most concerned with the
classification and summarisation of financial data?
(a) Identification
(b) Measurement
(c) Recording
(d) Communication
(e) Translation

A5. Assume you are examining a financial statement headed ‘As at the 30th June 2015.
The heading indicates the statement that is being looked at is the:
(a) Balance Sheet
(b) Income Statement
(c) Profit and Loss Statement
(d) Statement of Changes in Equity
(e) Cash Flow Statement

A6. Which of the following expressions of the accounting equation is correct?

(a) Assets + Liabilities = Equity

(b) Liabilities = Assets + Equity
(c) Assets = Liabilities + Equity
(d) Assets = Equity – Liabilities
(e) Equity = Liabilities – Assets

A7. Silverware Company Ltd reports the following balance sheet information for 2014:
1 January 2014 31 December 2014
Assets $600 000 $700 000
Liabilities $120 000 $140 000

Assuming the capital contribution made by the owners during 2014 was $30 000 and
Drawings were $120 000, the Net Profit for 2014 must have been as follows:
(a) $120 000
(b) $140 000
(c) $160 000
(d) $170 000
(e) $180 000

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A8. In order to prepare financial information for interested parties, Chambers Co Ltd divides
the economic activity of the firm into three-month segments and prepares financial
statements at the end of each segment. Which accounting assumption is Chambers Co
Ltd applying?
(a) Economic substance
(b) Materiality
(c) Accounting entity
(d) Going concern
(e) Accounting period

A9. PD Elliott is an osteopath who is operating as a sole proprietor. In January, 2014 he

purchased for $540 some new furniture for his waiting room. The purchase is made on
credit. (Assume there is no GST on the transaction.) The effect of this transaction on the
accounting equation is an:
(a) Increase in the asset furniture $540, increase in the liability accounts payable $540
(b) Increase in the asset furniture $540, decrease in the asset accounts receivable $540
(c) Increase in the asset furniture $540, increase in equity $540
(d) Increase in the asset furniture $540, increase in the asset accounts receivable $540
(e) Increase in a liability $540, decrease in equity $540

A10. A chart of accounts is:

(a) A planning device used by management to anticipate information flows through the
accounting system
(b) A list of accounts receivable
(c) A chart showing the organisational structure of the firm
(d) A plan of the ledger listing account titles and their related numbers
(e) A list of the names and account numbers of all the firms we owe money to

A11. A credit entry is made to:

(a) Decrease an asset, increase a liability, and decrease equity
(b) Increase an asset, decrease a liability, and decrease equity
(c) Decrease an asset, decrease a liability, and increase equity
(d) Increase an asset, decrease a liability, and decrease income
(e) Decrease an expense, increase income, and increase equity

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A12. If a sole proprietor who owns an electrical store takes home a DVD player from the
showroom for his own personal use, this would be considered to be:
(a) An expense because an asset has been given away
(b) An increase in equity and a decrease in assets because the proprietor now owns the
DVD player
(c) A decrease in assets and a decrease in equity because by taking the DVD player the
owner has made a drawing from the business
(d) An increase in assets and an increase in equity
(e) There would be no effect because the proprietor owns all the stock of the business

A13. Equipment is purchased on credit for $16 000 (plus 10% GST). The general journal entry
to record this transaction is:
Debit Credit

(a) Equipment $16 000

Accounts Payable $16 000
(b) Equipment $14 545
GST Outlays $1 455
Accounts Payable $16 000
(c) Equity $16 000
GST Outlays $1 600
Accounts Payable $17 600
(d) Equipment $17 600
GST Outlays $1 600
Accounts Payable $16 000
(e) Equipment $16 000
GST Outlays $1 600
Accounts Payable $17 600

A14. During 2014 the Coin Factory paid out $656 000 in wages from its bank account. At year-
end 2014 wages owing but unpaid were $38 400. The business uses accrual accounting.
How much would be reported as wages expense for 2014 in the income statement of the
Coin Factory?
(a) $617 600
(b) $656 000
(c) $694 400
(d) $ 38 400
(e) None of the above

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A15. The Prepaid insurance account of Coco Black Club shows a balance of $900 (assume no
GST applies) representing a payment on 1 July 2013 of a three-year insurance premium.
The correct adjusting entry for Coco Black Club on 31 December 2013, at the end of the
annual accounting period, is:
(a) Insurance Expense 150
Prepaid Insurance 150
(b) Insurance Expense 300
Prepaid Insurance 300
(c) Prepaid Insurance 150
Insurance Expense 150
(d) Insurance Expense 900
Prepaid Insurance 900
(e) None of the above

A16. Clear White Company purchased a machine for $75 000 on 1 January 2013 with an
estimated life of 5 years and a residual value of zero. The straight-line method of
depreciation is used. What is the carrying value of the machine on the 31 December 2014
in the balance sheet of Clear White Company? (Assume no GST applies)
(a) $75 000
(b) $60 000
(c) $45 000
(d) $30 000
(e) $15 000

A17. If a company has earned income which has not been received in cash at the end of the
accounting period, an adjustment should be made which will:
(a) Debit an asset account and Credit an income account
(b) Debit an expense account and Credit an income account
(c) Debit an income account and Credit an asset account
(d) Debit an asset account and Credit an expense account
(e) Debit an income account and Credit an equity account

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A18. In which order do the following steps in the accounting cycle occur?
1. Prepare financial statements
2. Prepare reversing entries
3. Prepare adjusting entries
4. Prepare closing entries
5. Prepare an adjusted trial balance
(a) 1, 5, 3, 4, 2
(b) 2, 3, 4, 1, 5
(c) 4, 5, 3, 2, 1
(d) 5, 3, 1, 2, 4
(e) None of the above

A19. Income and expense accounts can be referred to as:

(a) Permanent accounts
(b) Real accounts
(c) Temporary accounts
(d) Deferred accounts
(e) Contra accounts

A20. The balance in the Profit and Loss Summary account before it is closed off represents:
(a) Total income
(b) Total expense
(c) Net profit (or net loss)
(d) Net profit (or net loss) less cash drawings
(e) Net profit (or net loss) plus cash drawings

A21. Which of the following statements relating to the Profit and Loss Summary Account is
incorrect?
(a) The Profit and Loss Summary Account is a temporary account
(b) The balance in each income and expense account is transferred to the Profit and
Loss Summary Account
(c) The balance in the Profit and Loss Summary Account is transferred to the
owner’s Capital account
(d) The Profit and Loss Summary Account is established to summarise the balances
in the income and expense accounts
(e) None of the above statements are incorrect

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A22. Which of these statements relating to inventory is correct?
(a) It can be referred to as stock or stock in trade
(b) It is classified as a current asset in the balance sheet
(c) It makes up a significant portion of a retailer’s assets
(d) It is a very active asset, continually being acquired, sold and replaced
(e) All of the statements are correct

A23. The primary purpose of settlement discounts is to:

(a) Convince the customer to buy the goods on credit
(b) Facilitate the quoting of prices to different customer groups
(c) Reduce the invoice price of the goods
(d) Encourage the customer to settle their account early
(e) Increase sales volume

A24. The entry to record the return of goods to a supplier under the perpetual inventory system
is:
(a) Debit Inventory; Credit Purchases Returns, Credit GST outlays
(b) Debit Accounts Payable; Credit Purchases, Credit GST outlays
(c) Debit Inventory; Debit GST outlays, Credit Accounts Payable
(d) Debit Cost of Goods Sold; Credit Purchases
(e) Debit Accounts Payable; Credit Inventory, Credit GST outlays

A25. Simone’s Boutique Traders sold goods to Ms. Girlfinkle for $3300 (including 10% GST.)
A few days later, Ms. Girlfinkle paid her account within the discount period and received
a settlement discount of 2%. The entry required in Simone’s books to record the payment
from Ms. Girlfinkle is:
(a) Debit bank $3234, Debit discount allowed $60, Debit GST collections $6; Credit
accounts receivable $3300
(b) Debit bank $3234, Debit discount allowed $66; Credit accounts receivable
$3300
(c) Debit bank $3240, Debit discount allowed $60; Credit accounts receivable
$3,300
(d) Debit bank $3234, Debit discount allowed $66, Debit GST collections $6; Credit
accounts receivable $3306
(e) None of the above

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A26. Assuming the use of the perpetual inventory method, which of the following entries
would be a closing entry at the end of the accounting period?
(a) Debit Inventory; Credit Profit and Loss Summary
(b) Debit Profit and Loss Summary; Credit Inventory
(c) Debit Profit and Loss Summary; Credit Purchases
(d) Debit Profit and Loss Summary; Credit Cost of Goods Sold
(e) Debit Cost of Goods Sold; Credit Purchases

A27. Which statement about control accounts is not correct?

(a) They provide summarised data
(b) They follow the normal rules of debit and credit
(c) They appear in the subsidiary ledger
(d) They appear in the trial balance
(e) None of the above, that is, all statements are correct

A28. Details of amounts owed to individual suppliers are found in the:

(a) Accounts payable subsidiary ledger
(b) Accounts payable control account
(c) Accounts receivable control account
(d) General ledger
(e) Accounts receivable subsidiary ledger

A29. Columns for GST Collections could be found in which two special journals?
(a) Cash Receipts and Cash Payments
(b) Cash Receipts and Sales
(c) Sales and Purchases
(d) Cash Receipts and Purchases
(e) Purchases and Cash Payments

A30. A credit of $580,000, was posted to the Accounts Payable Control account on the last day
of the month. From which special journal would this posting most likely have come?
(a) Cash Receipts
(b) Cash Payments
(c) Purchases
(d) Sales
(e) General Journal

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A31. How many of the following are advantages offered by the use of computers in
accounting?
• Faster response time
• Error reduction
• A greater range of reports
• Lower capital outlays
• Easier data storage

(a) One
(b) Two
(c) Three
(d) Four
(e) Five

A32. Under the Perpetual inventory system what is the entry for the credit purchase of 10
electric guitars at $250 per guitar (plus 10% GST.)

(a) Debit Inventory $2750;Credit Accounts Payable $2500 Credit GST Outlays $250
(b) Debit Inventory $2500, Debit GST Outlays $250;Credit Accounts Payable $2750
(c) Debit Inventory $2750; Credit Accounts Payable $2750
(d) Debit Accounts Payable $2750;Credit Inventory $2500,Credit GST Outlays $250
(e) Debit Purchases $2750; Credit Accounts Payable $2750

A33. The major purpose of a post-closing trial balance is to:

(a) Prepare the financial statements

(b) Determine if any adjusting entries have been omitted
(c) Test for equality of debits and credits in the general ledger to ensure the opening
position is correct for the next period
(d) Make sure that all post-closing account balances are equal to the pre-closing
account balances
(e) All of the above

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A34. The balance on the 30th June, 2013 of the Salaries Expense account is $1200. Which of the
following is the correct closing general journal entry that will be made in the accounts of
the company?
Debit Credit
$ $
(a) Cash 1 200
Salaries Expense 1 200

(b) Salaries Expense 1 200

Profit and Loss Summary 1 200

(c) Salaries Expense 1 200

Cash 1 200

(d) Profit and Loss Summary 1 200

Salaries Expense 1 200

(e) Capital 1 200

Salaries Expense 1 200

A35. On 20 June, 2014 VIP Ltd repaired AAA Ltd’s computer and charged a total of $660
cash (including 10% GST). The general journal entry to record the transaction is:
Debit Credit
$ $
(a) Cash at Bank 660
GST Collections 60
Income from repairs 600

(b) Cash at Bank 600

GST Collections 60
Income from repairs 660

(c) Cash at Bank 660

GST Outlays 60
Income from repairs 600

(d) Cash at Bank 660

Income from repairs 660

(e) Income from repairs 660

Cash at Bank 660

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A36. Which of the following statements relating to reversing entries is correct?

(a) They reverse the effect of credit transactions

(b) They reverse the effects of closing entries
(c) They reverse the effects of errors
(d) They reverse the effects of certain adjusting entries
(e) They reverse only prepaid expenses and unearned income entries

A37. Which of the following is a fundamental qualitative characteristic of accounting

information?

(a) Relevance
(b) Verifiability
(c) Comparability
(d) Timeliness
(e) Consistency

A38. Which of these should be classified as an administrative expense in the income statement
of a retailer?

(a) Depreciation on the Sales Manager's motor vehicle

(b) Depreciation on office furniture and equipment
(c) Discount allowed
(d) Interest on Bank Overdraft
(e) Freight Outward costs

A39. Sales Returns and Allowances is what type of account?

(a) Income
(b) Contra to sales revenue
(c) Liability
(d) Contra to an asset
(e) Expense

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A40. On July 2014, the Indigo Ltd rented out part of its property and collected $9000 in advance
for a nine-month period. The receipt was credited to a liability account. At 31 December 2014,
Indigo Ltd's year-end, which of the following adjusting journal entries should be made?

(a) DR Cash $6000; CR Rent Income $6000

(b) DR Rent Income $3000; CR Unearned Rent Income $3000
(c) DR Unearned Rent Income $6000; CR Rent Income $6000
(d) DR Rent Receivable $6000; CR Rent Income $6000
(e) DR Unearned Rent Income $3000; CR Rent Income $3000

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SECTION B: Comprised Of 10 Multiple Choice Questions worth 1 mark each.

The 10 multiple choice questions in this Section in your Mid-Semester Exam will be based on
an entity’s Unadjusted Trial Balance figures upon which both Adjusting Journal entries &
Closing Journal entries have to be recorded in the accounts of the business.

The standard of difficulty of these questions will be similar to that found in various Questions
that involve an Unadjusted Trial Balance such as those covered in Lecture Week 5 Example
in the Lecture Notes which can be found on LMS & Lecture Week 6 Example in the Lecture
Notes which can also be found on LMS; and Tutorial Questions – Exercise 4.2, Problem 4.16
& Problem 4.21 and Practical Lecture - Problem 4.19 & Problem 4.29 from the textbook
“Financial Accounting” (2018) by Hoggett, Medlin, Chalmers, Beattie, Hellmann and Maxfield,
(10th Edition).

SECTION C: Comprised Of 5 Multiple Choice Questions worth 1 mark each.

The 5 multiple choice questions in this Section in your Mid-Semester Exam will
be based on information similar to the following Question, pertaining to the
recording of transactions of a retailer.

The following information relates to Colorado Ltd.

Colorado Ltd sells handheld video games for $50 each (plus 10% GST). It buys the games for
$30 each (plus 10% GST). On 1 September 2009, 40 games are in inventory. Colorado Ltd
completed the following transactions during the month of September:

Sept. 1 Sold 10 games for cash.

2 Paid the supplier for 20 games purchased on 6 August. Terms: 2/10, n/30.
4 Purchased 25 games on account. Terms: 2/10, n/30.
5 A customer returned 4 of the games sold on 1 September and received a
cash refund. The games were not defective in any way.
8 Paid $30 in freight charges on 4 September purchase.
10 Returned 5 of the games purchased on 4 September for credit.
12 Sold 20 games on account. Credit terms: 2/10, n/30.
14 Paid the supplier the amount due on the 4 September purchase.
23 A customer returned 5 games sold on 12 September and included a
cheque for the amount due on the other 15 games. The games were not
defective and were returned to inventory.
24 Purchased 30 games on credit. Terms: 2/10, n/30.
29 Paid the supplier for the 24 September purchase.

A physical inventory count taken on 30 September by Colorado Ltd found that a total of 61
games were still on hand.
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Required :

A. Prepare general journal entries to record the transactions assuming that a

Perpetual Inventory system is used by Colorado Ltd. The business is
registered for GST purposes.

B. Assuming that Colorado Ltd completes the closing process at the end of each
period, prepare journal entries to close the accounts on 30 September, 2009.

* Tutorial Questions – Exercise 6.2, Exercise 6.3 & Problem 6.15 and Practical
Lecture - Problem 6.16 from the textbook “Financial Accounting” (2018) by
Hoggett, Medlin, Chalmers, Beattie, Hellmann and Maxfield (10th Edition) may
also be attempted in preparation for Section C. This involves recording
transactions for a retailing business using either the Perpetual or Periodic
Inventory systems.

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SECTION D: COMPRISED OF MULTIPLE CHOICE QUESTIONS @ 1 MARK EACH

The adjusted Trial Balance of the Intelligent Computers One-Stop Shop as at 30 June,
2016 is as follows. The owner of the business is Mr. I. Smart

Adjusted Trial Balance

Account Title Debit Credit
Cash at Bank 88 100
Accounts Receivable 44 000
Opening Inventory – 01/07/2015 56 000
Prepaid Rent 25 000
GST Outlays 16 000
Buildings Showroom 780 000
Accumulated Depreciation – Buildings Showroom 38 500
Accounts Payable 108 000
GST Collections 28 000
Mortgage Payable – 31/12/2022 600 000
I. Smart – Capital 515 500
I. Smart – Drawings 100 000
Sales 2 975000
Sales Returns & Allowances 112 000
Unearned Revenue 9 000
Purchases 2 817000
Purchases Returns & Allowances 612 500
Freight Inwards 147 000
Salesmen Salaries Expense 150 000
Office Rent Expense 130 000
Utilities Expense 113 240
Bad Debts 6 000
Freight Outwards 16 020
Interest Expense 23 015
Depreciation Expense – Buildings Showroom 33 000
Marketing Costs 24 000
Salesmen Salaries Payable 15 000
Commission Income 44 375
Insurance Expense 65 000
Trademarks & Brand Names 200 000
$ 4 945 875 $ 4 945 875

Additional Information
– Closing Inventory on 30/06/2016 was $128 920
– The firm uses a Periodic Inventory System

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Q1. What is the Gross Sales Revenue?

Q2. What is the Net Sales Revenue?

Q3. What are the Net cost of Purchases?

Q4. How much are the Cost of Goods Sold?

Q5. What is the Other Income equal to?

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Q6. What is the Gross Profit?

Q7. How much are the Selling Expenses?

Q8. How much are the Administrative Expenses?

Q9. How much are the Financial Expenses?

Q10. What are the Total Expenses?

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Q11. What is the Net Profit (or Net Loss) for the period?

Q12. What are the Current Assets equal to?

Q13. How much are the Intangible Assets?

Q14. What are the Non-Current Assets equal to?

Q15. What are the Total Assets equal to?

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Q16. How much is the GST payable?

Q17. How much are the Current Liabilities?

Q18. How much are the Non-Current Liabilities?

Q19. How much are the Total Liabilities?

Q20. What is the Equity of the business equal to?

END OF EXAMINATION

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