O-Level Accounting Multiple Choice Quest PDF

1
O-LEVEL ACCOUNTING
MULTIPLE CHOICE QUESTIONS (TOPICAL& YEARLY)
(2017-18 edition)
Muhammad Nauman Malik

FCMA,MS Accounting (Gold Medalist), MBA (Finance), PIPFA, DCMAB.Com (Gold Medalist)
Keynesian Institute of Management & Sciences (KIMS)
9-F, Main Market Gulberg II, Lahore. 042-35714038

readandwrite.publications@gmail.com 0336-5314141
readandwritepublications/Shop www.readnwrite.org
2
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any
form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written
permission of the Author.
Cambridge International has not provided these questions or answers and can take no responsibility whatsoever for
their accuracy or suitability for the examinations.
Title O Level Accounting - Multiple Choice Questions (Topical& Yearly)
Author Muhammad Nauman Malik

Cell: 0321-8414262, 0300-8414262
E-mail: nauman.kims@gmail.com
Published by Read & Write Publications
Printed by Sadaat Printers Urdu Bazar Lahore
Title designed by Rashid Mehmood
Legal Advisor Mian Tariq Ahmad (Advocate Supreme Court)

Room No. 10, 11, 12 Al-Majeed Centre
1-Mozang Road, Lahore.
Tel: 042-37236145, Fax: 042-37241367
Edition: 2017
Price Rs.480/-
DISTRIBUTORS
LAHORE KARACHI
 READ & WRITE SALE POINT  BURHANI BOOK CENTRE
Shop No. 25 -28 Lower Ground Floor, Shop # 6 Hashmi Trust Building Rotson Road
Haadia Haleema Centre, Ghazni Street, New Urdu Bazar Karachi
Urdu Bazar, Lahore. Ph: 042 -35714038 Tel 021 32212640
 MARYAM ACADEMY
Tayyab Ali Building, Urdu Bazar,
Karachi.
Tel: 021 32214243 , 021 32634243
RAWALPINDI / ISLAMABAD
 BOOK VALLEY
Shop No. A P 4,China market 5 Brothers
Plaza College Road Rawalpindi.
Tel: 051 35770894, 051 35551630
Shop No. 3 4-5-6- 7, Sheh re Kitab, F-7 Markaz
Islamabad. Tel: 051-2650895, 0300 -5292272
 ASIAN BOOK STORE
Shop No. 9 Lower Ground, Asian Business Centre,
Bahria Town, Phase-7 Entrance, G.T Road,
Rawalpindi. Ph: +92-51-4917085
3
PREFACE
Cambridge University has adopted MCQs as a part of O Level Accounting Examinations since 2000. Now almost
33.3% of weightage is allocated to MCQs.
Each topic of the syllabus has been covered in a separate chapter containing MCQs from the past papers. All the
MCQs have been compiled according to the year in which they were set in the O Level Cambridge examinations.
For the better understanding of the questions detailed answers are also given at the end of each chapter.
Students will find “Student Evaluation Card” quite useful. This will enable them to compare their performances
and focus on the weaker areas.
The correct answers to the Questions are given in the answer key at the end of each chapter.
In the current edition Financial statements of sole traders has been subdivided into four topicsso that students
may focus on each sub topic independently.
Constructive criticism and suggestions to make the subsequent editions more useful would be appreciated and
thankfully acknowledged.
Muhammad Nauman Malik

Mobile No: 0300-8414262
0321-8414262
E-mail: nauman.kims@gmail.com
4
TABLE OF CONTENTS
PREFACE 3
CHAPTER 1 ACCOUNTING BASICS 6
ANSWER KEY ............................................................................................................................................. 16
DETAILED ANSWERS ................................................................................................................................. 17
CHAPTER 2 BOOKS OF ORIGINAL ENTRY 19
ANSWER KEY ............................................................................................................................................. 31
CHAPTER 3 CASH BOOK AND DISCOUNTS 37
ANSWER KEY ............................................................................................................................................. 43
CHAPTER 4 BANK RECONCILIATION STATEMENTS 48
ANSWER KEY ............................................................................................................................................. 52
CHAPTER 5 BAD DEBTS & PROVISION FOR DOUBTFUL DEBTS 56
ANSWER KEY ............................................................................................................................................. 61
CHAPTER 6 ACCOUNTING FOR NON-CURRENT ASSETS 64
ANSWER KEY ............................................................................................................................................. 72
CHAPTER 7 TRIAL BALANCE 78
ANSWER KEY ............................................................................................................................................. 80
CHAPTER 8 INCOME STATEMENTS OF SOLE TRADERS 82
ANSWER KEY ............................................................................................................................................. 87
CHAPTER 9 BALANCE SHEETS OF SOLE TRADERS 91
ANSWER KEY ........................................................................................................................................... 100
DETAILED ANSWERS ............................................................................................................................... 101
CHAPTER 10 ADJUSTMENTS IN FINANCIAL STATEMENTS 104
ANSWER KEY ........................................................................................................................................... 112
CHAPTER 11 ACCOUNTING CONCEPTS & CONVENTIONS 117
ANSWER KEY ........................................................................................................................................... 123
CHAPTER 12 CAPITAL AND REVENUE 124
ANSWER KEY ........................................................................................................................................... 129
CHAPTER 13 ERRORS NOT AFFECTING AGREEMENT OF TRIAL BALANCE 132
ANSWER KEY ........................................................................................................................................... 140
CHAPTER 14 SUSPENSE ACCOUNT 145
5
ANSWER KEY ........................................................................................................................................... 154

CHAPTER 15 CONTROL ACCOUNTS 158
ANSWER KEY ........................................................................................................................................... 167
CHAPTER 16 ACCOUNTS FROM INCOMPLETE RECORDS 172
ANSWER KEY ........................................................................................................................................... 179
CHAPTER 17 ACCOUNTS OF NON PROFIT ORGANISATIONS 184
ANSWER KEY ........................................................................................................................................... 192
CHAPTER 18 MANUFACTURING ACCOUNTS 197
ANSWER KEY ........................................................................................................................................... 202
CHAPTER 19 PARTNERSHIP 206
ANSWER KEY ........................................................................................................................................... 215
CHAPTER 20 COMPANY ACCOUNTS 220
ANSWER KEY ........................................................................................................................................... 225
CHAPTER 21 INTERPRETATION OF ACCOUNTS 228
ANSWER KEY ........................................................................................................................................... 238
CHAPTER 22 PAYROLL ACCOUNTING 246
ANSWER KEY ........................................................................................................................................... 250
MAY 2014 – PAPER 12 252
ANSWER KEY ........................................................................................................................................... 257
NOVEMBER 2014 – PAPER 12 258
ANSWER KEY ........................................................................................................................................... 262
MAY 2015 – PAPER 12 263
ANSWER KEY .......................................................................................................................................... 267
ANSWER KEY ........................................................................................................................................... 273
MAY 2016 – PAPER 12 274
ANSWER KEY ........................................................................................................................................... 279
ANSWER KEY ........................................................................................................................................... 284
Chapter 1 -6- Accounting Basics
CHAPTER 1 ACCOUNTING BASICS

1 The owner of a business takes inventory for her own use.
What are the ledger account entries to record this?
A debit drawings, credit purchases
B debit drawings, credit inventory
C debit capital, credit sales
D debit inventory, credit drawings
Specimen 2000 Q8
2 In a business’s books, the ledger account of J Brown, a customer, shows a debit balance of $450. What does
this mean?
A Brown has paid $450 to the business B Brown owes the business $450
C the business has paid Brown $450 D the business owes Brown $450
Specimen 2000 Q9/ May 06 P1 Q7/ Nov 06 P1 Q10
3 A supplier’s account in a customer’s books, has a credit balance of $8 000. What does this mean?
A the customer owes the supplier $8 000
B the customer has paid the supplier $8 000
C the supplier has paid $8 000
D the supplier owes $8 000
May 00 P1 Q7/ May 07 P1 Q10/Nov 08 P1 Q8
4 Bob returns goods bought on credit from Tariq.

Which ledger account entries record this in Tariq’s books?
Debit Credit
A Bob sales returns
B Bob purchases returns
C sales returns Bob
D purchases returns Bob
May 00 P1 Q8/ Nov 03 P1 Q1/Nov 05 P1 Q8/ May 10 P1 Q2/ Nov 13 P12 Q3
5 Which ledger entries record the purchase of a machine bought on credit?

A debit trade payables, credit machinery
B debit machinery, credit trade payables
C debit trade payables, credit purchases
D debit purchases, credit trade payables
Nov 00 P1 Q7/ Specimen 2008 Q7
6 What is the purpose of double entry bookkeeping?

A to apply the dual aspect concept
B to avoid errors
C to prepare books of prime entry accurately
D to record revenue and capital transactions correctly
May 01 P1 Q1/ May 04 P1 Q1
7 The owner of a business has taken goods for personal use but not recorded this in the books.
Which journal entries must be made at the end of the year?
Debit Credit
A drawings Purchases
B drawings sales
C purchases drawings
D sales drawings
May 01 P1 Q8/ May 05 P1 Q30 /Nov 06 P1 Q31/ May 08 P1 Q21
8 How should the cash purchase of supplies be entered in the ledger?

Account debited Account credited
A cash purchases
B cash supplier
C purchases cash
D supplier cash
Nov 01 P1 Q7/ Nov 04 P1 Q9/ Nov 16 P12 Q4
9 A sole trader takes cash and also goods for his own use from his business.
Which of these will affect his capital?
A the cash only B the goods only
C both the cash and the goods D neither the cash nor the goods
Nov 01 P1 Q30
10 A business bought a computer for the office and paid by cheque. How will the business record this
transaction?
Debit Credit
A bank account office equipment account
B office equipment account bank account
C bank account purchases account
D purchases account bank account
May 02 P1 Q1/ May 07 P1 Q1/ May 14 P12 Q3
11 Y’s account appears in the ledger of X as follows.

$ $
Jan 1 Balance b/d 100 Jan 10 Bank 100
Jan 20 Sales 400 Jan 31 Balance c/d 400
500 500
Which statement is true?
A On 1 January Y was owed $100 by X
B On 10 January Y paid $100 into the bank
C On 20 January Y supplied goods $400 to X
D On 31 January Y was a trade receivable of X for $400
May 02 P1 Q8
12 The owner of a business takes goods costing $6 000 from his shop for his own use.
What are the book keeping entries?
Debit Credit
A drawings account $6 000 purchases account $6 000
B drawings account $6 000 inventory account $6 000
C purchase account $6 000 drawings account $6 000
D inventory account $6 000 drawings account $6 000
May 02 P1 Q28/ Nov 07 P1 Q31/ Nov 13 P12 Q20/ May 14 P12 Q19
13 A trader takes goods that have a selling price of $200 from his shop for his own use. The cost price of these
goods is $150.
How is this transaction recorded in his accounting records?
Account(s) debited Account(s) credited
$ $
A drawings 200 purchases 200
B purchases 200 drawings 200
C drawings 150 purchases 150
D purchases 150 drawings 150
May 03 P1 Q30/May 13 P12 Q20
14 The owner of a business takes inventory for her own use.

What are the ledger account entries to record this?
A capital drawings
B capital sales
C drawings purchases
D drawings inventory
Nov 03 P1 Q27/ May 07 P1 Q28
15 Brown charged Jones for carriage on goods delivered to Jones’ premises.

What entries will Brown make in his ledger?
Debit Credit
A carriage inwards Jones
B carriage outwards Jones
C Jones carriage inwards
D Jones carriage outwards
May 04 P1 Q8
16 Which entry records a cheque paid to a supplier for goods bought on credit?
A bank trade payable
B bank purchases
C trade payable bank
D purchases bank
Nov 04 P1 Q1
17 What is the correct entry for office furniture bought on credit from X?
Account to be debited Account to be credited
A bank office furniture
B office furniture bank
C office furniture X
D X office furniture
May 05 P1 Q1/ Nov 10 P1 Q10
18 Which is a personal account?
(A) trade receivable B office computers
C plant and machinery D wages
May 05 P1 Q10
19 A cheque has been received from X, a trade receivable.
How is this transaction recorded in the books?
account debited Account credited
A bank X
B X bank
C sales X
D X sales
May 06 P1 Q1
20 A business buys goods on credit.
Which entries should be made?
account debited account credited
A bank purchases
B purchases bank
C purchases supplier
D supplier purchases
May 06 P1 Q8
21 Which statement is correct?

A An asset is always a credit entry.
B An expense is always a credit entry.
C An expense is always a debit entry.
D A liability is always a debit entry.
Nov 06 P1 Q1
22 Carl is a customer of Jason. The balance on Carl’s account in Jason’s books is $200 debit. Carl sends Jason a
cheque for $50.
What is the balance on Carl’s account after this transaction?
A $150 credit B $150 debit

C $250 credit D $250 debit
Nov 07 P1 Q9
23 Which will be most suitable for a computer application?
A maintaining highly confidential records
B maintaining the payroll for a large company
C recording credit sales for a small retailer
D recording inventory withdrawn by partners
Specimen 2008 Q1
24 What is the accounting equation?

A assets less liabilities equal capital
B assets plus liabilities equal capital
C capital less liabilities equals assets
D capital plus assets equals liabilities
Specimen 2008 Q2/ Nov 08 P1 Q2/ May 10 P1 Q1/May 13 P12 Q2
25 The following account appears in the ledger of Ahmed.

Sara account
2006 Debit ($) Credit ($) Balance ($)
June 01 Balance 100 dr
14 Sales 300 400 dr
16 Bank 100 300 dr
18 Sales returns 25 275 dr
A Ahmed owed Sara $100 on 1 June 2006.
B Ahmed returned goods to Sara on 18 June 2006.
C Sara owed Ahmed $275 on 18 June 2006.
D Sara sold goods to Ahmed on 14 June 2006.
Specimen 2008 Q8
26 Which is a service business?

A garage selling petrol and diesel B motor insurance agency
C second-hand car trader D shop dealing in motor parts
Specimen 2008 Q18
27 A trader prepares a ledger account using the running balance method.

Which statement is correct?
A The balance is shown after each transaction.
B The balance is shown only after a credit transaction.
C The balance is shown only after a debit transaction.
D The balance is shown only at the month end.
May 08 P1 Q10
28 What is a disadvantage of a computerised accounting system?

A Anyone with a computer can gain access to the accounting records.
B Data input can only be used for one specific purpose.
C Data output can only be understood by computer programmers.
D Operator error may result in inaccurate information.
Nov 08 P1 Q1/May 11 P1 Q4/ Nov 14 P12 Q2
29 Which is a service business?
A business installing computer systems
B business selling computers and printers
C stationery shop
D TV and video shop
Nov 08 P1 Q21/Nov 11 P1 Q20/ Nov 14 P12 Q21
30 Which best describes the assets of a business?

A cash and items that should turn into cash in the near future
B cash invested by the owner of the business
C items bought for long term use by the business
D items owing to or owned by the business
May 09 P1 Q1
31 What is true of a computerised accounting system?

A The computer will automatically correct inaccurate input.
B The data can be used for a number of different uses.
C The design of the system cannot be modified.
D The possibility of financial fraud is eliminated.
May 09 P1 Q2
32 Which businessman is operating a trading business?

A accountant B computer software developer
C hairdresser D second hand car dealer
May 09 P1 Q23
33 What is true of a computerised accounting system?

A Data input can be used for several accounting processes.
B Installation costs are low.
C It is always simple to design and modify a computer system.
D Staff do not require special training.
Nov 09 P1 Q1
34 Javed had the following assets and liabilities.

$
Equipment 10 000
motor vehicle 8 000
bank balance 2 000 credit
amount owing to suppliers 4 000
amount owing by customers 5 000
Inventory 6 000
loan to Davinder 3 000
What was Javed’s capital?
A $20 000 B $24 000
C $26 000 D $30 000
Nov 09 P1 Q2
35 Tony owns a bookshop. He sells a book to Susie who pays cash.

How will Tony record this transaction?
account to be debited account to be credited
A cash sales
B cash Susie
C sales cash
D Susie sales
Nov 09 P1 Q3
36 A trader prepares a ledger account using the running balance method.

Which statement is correct?
A The balance is shown after each transaction.
B The balance is shown only at the month end.
C There are fewer calculations than in a traditional 'T' account.
D This method is not suitable for computerised accounts.
May 10 P1 Q7
37 Which group contains only trading businesses?

A driving school, motor insurance agent, motor vehicle repairer
B driving school, motor insurance agent, petrol station
C motor parts shop, motor repairer, used car dealer
D motor parts shop, petrol station, used car dealer
May 10 P1 Q18/ May 14 P12 Q18
38 What is the benefit of using information and communications technology in book-keeping and
accounting?
A Anyone with a computer can access the information.
B It is cheap to install.
C Large quantities of information can be stored.
D Staff requires special training
May 10 P1 Q30/ Nov 13 P12 Q1
39 Which does not reduce the owner’s capital?

A business expenses paid using a personal cheque
B cash withdrawn from the business bank account for personal use
C goods taken from inventory (stock) for personal use
D personal expenses paid using business cash
Nov 10 P1 Q2
40 A customer returns goods to a supplier.

How does the supplier record this in his ledger?

A customer purchases returns
B customer sales returns
C purchases returns customer
D sales returns customer
Nov 10 P1 Q3/ May 12 P11 Q3
41 The following incomplete account appears in Singh’s sales ledger.

Bashir account
2010 Debit $ Credit $ Balance $
5 Sales 620 ?
12 Sales returns 30 ?
29 Bank 800 ?
What was the balance on Bashir’s account on 30 June?
A $590 credit B $590 debit
C $1010 credit D $1010 debit
Nov 10 P1 Q11/ Nov 13 P12 Q24
42 The following account appears in the ledger of Chan.

Fu account
2010 $ 2010 $
Aug 28 Bank 100 Aug 01 Balance b/d 100
31 Balance c/d 250 12 Purchases 250
350 350

A Chan is owed $100 by Fu on 1 August.
B Chan paid Fu $100 by cheque on 28 August.
C Fu is a debtor of Chan for $250 on 31 August.
D Fu purchased goods, $250, from Chan on 12 August.
Nov 10 P1 Q12/Nov 15 P12 Q9
43 Businesses make use of both book-keeping and accounting procedures. What is the purpose of book-
keeping?
A to interpret the double entry records
B to prepare financial statements at regular intervals
C to record all the financial transactions of the business
D to summarise the financial position of the business
May 11 P1 Q2/ Nov 14 P12 Q1
44 Which would be recorded by a credit entry in an account?

A a decrease in capital B a decrease in liabilities
C an increase in assets D an increase in capital
May 11 P1 Q3/Nov 15 P12 Q3
45 Which is the accounting equation?

A assets − current liabilities = owner’s equity (capital)
B assets − liabilities = owner’s equity (capital)
C current assets − current liabilities = owner’s equity (capital)
D non-current assets − liabilities = owner’s equity (capital)
May 11 P1 Q5
46 Jane, a trader, withdrew $50 from the business bank account for office use. How is this recorded in Jane's
books?
A bank cash
B bank drawings
C cash bank
D drawings bank
May 11 P1 Q9
47 Which is not a service business?

A hairdresser B manufacturer
C private tutor D window cleaner
May 11 P1 Q20
48 Melanie provided the following information at the end of her financial year.
$
non-current assets at cost 14 000
amount owing by customers 1 250
amount owing to suppliers 850
inventory 1 875
bank overdraft 365
What was Melanie's capital?

A $12 160 B $15 110 C $15 910 D $16 640
Nov 11 P1 Q1/Nov 16 P12 Q3
49 How does the information provided by computerised accounting differ from that provided by a manual
system?
A The balance sheet does not include non-current asset accounts.
B The general ledger does not include non-current asset accounts.
C The income statement always shows a profit.
D The trial balance always balances.
Nov 11 P1 Q2/ May 14 P12 Q1
50 Which statements about book-keeping and accounting are correct?
1 Accounting is performed periodically rather than daily.
2 Accounting relies on having accurate book-keeping records.
3 Book-keeping involves the preparation of financial statements.
4 Book-keeping is based on the double entry system of recording.
A 1, 2 and 4 B 1 and 3
C 2, 3 and 4 D 2 and 4
May 12 P11 Q1
51 Padma started a business on 1 April 2011 with $30 000 of her own money. On 31 March 2012 her
assets and liabilities were:
$
machinery at net book value 38 000
other assets 15 000
long-term loan from bank 16 500
What was Padma’s capital on 31 March 2012?
A $30 000 B $36 500 C $46 500 D $53 000

May 12 P11 Q2
52 A company began trading on 1 January 2012. During that month, the following transactions took place.
received capital from shareholders, $10 000
received goods for resale, $4 000
despatched goods to customer, $5 000
paid $3 000 for goods received
What was the total in the bank account on 31 January 2012?
A $7 000 B $8 000 C $11 000 D $12 000

May 12 P11 Q8
53 Which is an intangible asset?

A goodwill B inventory
C machinery D trade receivables
May 12 P11 Q21/ Nov 14 P12 Q19
54 Which is not a service business?

A accountant
B insurance company
C motor trader
D travel agent
May 12 P11 Q22
55 Which task would not be carried out by an accountant?

A comparing one year’s results with those of previous years
B interpreting the accounting records
C preparing financial statements
D recording the financial transactions
May 12 P12 Q1
56 Jane made a payment to a supplier for goods bought on credit. Jane does not have a bank
overdraft.
What is the effect on the accounting equation?
A decrease capital and decrease assets
B decrease liabilities and decrease assets
C increase assets and decrease liabilities
D increase liabilities and decrease capital
May 12 P12 Q2
57 On 1 January Tan,a soletrader, lent Chan$4 000. On 1 November Chanrepaidpart of the loan leaving an
amount outstanding of $1 000.
Which entry was made in the accounts of Tan on 1 November?
account to be debited $ account to be credited $
A Bank 1 000 Chanloan 1 000
B Bank 3 000 Chanloan 3 000
C Chanloan 1 000 Bank 1 000
D Chanloan 3 000 Bank 3 000
Nov 12 P12 Q3
58 Melissamade payments to the following suppliers.
Which suppliers is a service business?
name of business reason for payment
A M1 Insurance Company costof motor insurance
B Music & Move Company purchase of car radio
C PJ Garages Ltd costof motor vehicle
D The Petrol Station purchase of petrol
May 13 P12 Q19
59 How is owner’s equity calculated?

A money invested in the business by the owner, plus the net current assets
B money invested in the business by the owner, plus the non-current liabilities
C total of non-current assets and working capital, less the non-current liabilities
D total of non-current assets, long term liabilities and net current assets
Nov 13 P12 Q2
60 The following account appeared in a trader’s ledger.
equipment account
debit credit balance
2013 Details
$ $ $
July 31 Balance 4 000 Dr
August 2 Bank 7 500
What was the balance on the account on 2 August?
A $3 500 credit B $3 500 debit
C $11 500 credit D $11 500 debit
Nov 13 P12 Q7
61 A trader purchased a motor vehicle for his business using a cheque from his personal bank account. How is
this recorded in the books of the business?
A bank motor vehicles
B capital motor vehicles
C motor vehicles Bank
D motor vehicles capital
Nov 14 P12 Q3
62 What is prepared by a book-keeper?

A appropriation account
B cash book
C income statement
D statement of financial position
Nov 15 P12 Q1
63 Which task would not be carried out by a book-keeper?

A posting cash receipts
B preparing financial statements
C recording entries in the purchases ledger
D writing up the sales returns journal
May 16 P12 Q1
64 Which statement is not true about reasons for using international accounting standards?
A helps when making comparisons between companies
B improves the reliability of accounting information
C narrows the areas of difference between companies
D makes the preparation of financial statements less time consuming
May 16 P12 Q30
65 A company employs a book-keeper and an accountant.

Which task would the accountant perform?
A extracting balances from the ledger accounts to produce a trial balance
B making entries in the journal to adjust a provision for doubtful debts
C preparing a monthly report that analyses the profit ability of the company
D recording sales and purchase invoices in the books of prime (original) entry
Nov 16 P12 Q1
66 Which is a trading business?

A food store B hairdresser
C investment adviser D motor vehicle repairer
Nov 16 P12 Q20
STUDENT NOTES
______________
STUDENT EVALUATION CARD

Attempt Total no. of Multiple Total number of Serial number of each individual incorrect Multiple
No. Choice Questions incorrect Multiple Choice Question
attempted Choice Questions
1
2
3
4
5
ANSWER KEY
1 A 18 A 35 A 52 A
2 B 19 A 36 A 53 A
3 A 20 C 37 D 54 C
4 C 21 C 38 C 55 D
5 B 22 B 39 A 56 B
6 A 23 B 40 D 57 B
7 A 24 A 41 B 58 A
8 C 25 C 42 B 59 C
9 C 26 B 43 C 60 D
10 B 27 A 44 D 61 D
11 D 28 D 45 B 62 B
12 A 29 A 46 C 63 B
13 C 30 D 47 B 64 D
14 C 31 B 48 C 65 C
15 D 32 D 49 D 66 A
16 C 33 A 50 A
17 C 34 C 51 B
DETAILED ANSWERS
2 Question shows position (balance) of an account at a particular date. “A” and “C” options are examples of
accounting transactions and do not represent balances, whereas “D” option represents a liability on part of
the business. Moreover debit balance indicates an asset (receivable) so “B” option is correct.
3 “D” option shows that amount is payable by the supplier to the customer whereas opposite is true. “B” and
“C” options are the examples of accounting transactions (not balances).
4 Although for Bob this return is Purchases return but for Tariq this is Sales return so when Bob will return the
goods, then sales income of Tariq will decrease (debited) with decrease in amount receivable from Bob
(credited).
11 Balance on 1 January represents amount receivable by X as part of X whereas opposite was given in option
“A”. Transaction on 10 January (“B” option) shows cheque received by X from Y. Transaction on 20 January
(“C” option) shows that X supplied goods to Y. “D” option is correct as debit side is more than the credit side
so represents an asset (receivable) by X.
13 Drawings of goods are always recorded at cost price and that is $150.
15 As amount of carriage outwards is charged to Jones, so his account will be debited as the amount receivable
from him has increased whereas carriage outwards expense will decrease and will be credited.
16 “C” option is correct as payment is made to a trade payable (supplier). “A” option represents receipt from a
trade payable whereas “D” option is the entry to record cash purchases.
18 Personal accounts simply mean accounts of persons i.e. “A” option is correct.
22 Carl’s account
$ $
Balance b/f 200 Bank 50
___ Balance c/d (Dr) 150
200 200
26 “B” option is correct whereas businesses in other three options are trading organisations.
29 “A” option is correct as business installing computer systems is not selling anything rather it is giving services
to others whereas businesses in other three options are trading organisations.
30 “D” option is correct. “A” option describes definition of current assets only whereas “C” option tells
definition of non-current assets only. “B” option, on the other hand gives definition of owner’s capital.
32 “D” option is correct. Items in other three options are examples of trading businesses.
34 Assets $ $
Equipment 10 000
Motor vehicle 8 000
Amount owing by customers 5 000
Inventory 6 000
Loan to Davinder 3 000 32 000
Liabilities
Bank balance 2 000
Amount owing to suppliers 4 000 (6 000)
Javed’s capital 26 000
37 “D” option is correct as driving school, motor insurance agent and motor vehicle repairer are all service
businesses.
38 “C” option is correct. “D” option shown disadvantage of using computer. Different security measures don’t
allow everyone to access the information so “A” option is incorrect. As computers are expensive so “B”
option is not correct.
39 “A” option is correct whereas items in “B”, “C” and “D” options show withdrawals by partners and will
reduce their capitals.
41 Bashir account
2010 Debit $ Credit $ Balance $
5 Sales 620 1 420 dr
12 Sales returns 30 1 390 dr
29 Bank 800 590 dr
43 “C” option is correct whereas items in other three options are purposes of Accounting.
44 “D” option is correct whereas items in other three options are recorded by a debit entry.
46 “C” option is correct as the amount is withdrawn from bank so involves credit entry in bank account. In
addition as amount is withdrawn for office (business) use so should not be recorded as Drawings.
48 $
Assets ($14 000 + $1 250 + $1 875) 17 125
Less Liabilities ($850 + $365) (1 215)
Capital 15 910
51 Assets at 31 March 2012 $ $
Machinery at net book value 38 000
Other assets 15 000 53 000
Liabilities at 31 March 2012
Long-term loan from bank (16 500)
Capital at 31 March 2012 36 500
52 Bank account
$ $
Capital 10 000 Purchases 3 000
____ Balance c/d 7 000
10 000 10 000
54 “C” option is correct as accountant, insurance company and travel agent are all service businesses.
56 Effects of this transaction are:
Trade payable (liabilities)
Bank  (assets)
57 As asset of loan has been decreased by $3 000 (from $4 000 to $1 000) so bank would have been increased
(debited) and Asset of Chan’s loan would have been decreased (credited) by $3 000.
59 Owner’s equity is equal to non-current assets + working capital –non-current liabilities (option C).
60 The account has an opening debit balance and there is a debit entry on 2 August, so the balance after this
transaction must be a debit of $11 500.
62 “B” option is correct whereas statements in “A”, “C” and “D” options are prepared by accountants.
63 A book-keeper would not prepare financial statements as this is the responsibility of accountants.
64 The statements made in options ‘A’, ‘B’ and ‘C’ are correct. Statement ‘D’ is not true as the application of
international accounting standards has no effect on the time taken to prepare financial statements.

O-Level Accounting Multiple Choice Quest PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

O-Level Accounting Multiple Choice Quest PDF

Uploaded by

Copyright:

Available Formats

1

Muhammad Nauman Malik

9-F, Main Market Gulberg II, Lahore. 042-35714038

Title O Level Accounting - Multiple Choice Questions (Topical& Yearly)

Author Muhammad Nauman Malik

Published by Read & Write Publications

Printed by Sadaat Printers Urdu Bazar Lahore

Title designed by Rashid Mehmood

Legal Advisor Mian Tariq Ahmad (Advocate Supreme Court)

Muhammad Nauman Malik

ANSWER KEY ........................................................................................................................................... 154

CHAPTER 1 ACCOUNTING BASICS

4 Bob returns goods bought on credit from Tariq.

5 Which ledger entries record the purchase of a machine bought on credit?

6 What is the purpose of double entry bookkeeping?

8 How should the cash purchase of supplies be entered in the ledger?

11 Y’s account appears in the ledger of X as follows.

14 The owner of a business takes inventory for her own use.

15 Brown charged Jones for carriage on goods delivered to Jones’ premises.

21 Which statement is correct?

A $150 credit B $150 debit

24 What is the accounting equation?

25 The following account appears in the ledger of Ahmed.

26 Which is a service business?

27 A trader prepares a ledger account using the running balance method.

28 What is a disadvantage of a computerised accounting system?

30 Which best describes the assets of a business?

31 What is true of a computerised accounting system?

32 Which businessman is operating a trading business?

33 What is true of a computerised accounting system?

34 Javed had the following assets and liabilities.

35 Tony owns a bookshop. He sells a book to Susie who pays cash.

36 A trader prepares a ledger account using the running balance method.

37 Which group contains only trading businesses?

39 Which does not reduce the owner’s capital?

40 A customer returns goods to a supplier.

account to be debited account to be credited

41 The following incomplete account appears in Singh’s sales ledger.

42 The following account appears in the ledger of Chan.

Which statement is true?

44 Which would be recorded by a credit entry in an account?

45 Which is the accounting equation?

47 Which is not a service business?

What was Melanie's capital?

A $30 000 B $36 500 C $46 500 D $53 000

A $7 000 B $8 000 C $11 000 D $12 000

53 Which is an intangible asset?

54 Which is not a service business?

55 Which task would not be carried out by an accountant?

59 How is owner’s equity calculated?

60 The following account appeared in a trader’s ledger.

62 What is prepared by a book-keeper?

63 Which task would not be carried out by a book-keeper?

65 A company employs a book-keeper and an accountant.

66 Which is a trading business?

STUDENT EVALUATION CARD

You might also like