ACCOUNTS PAPER ONE

FORM TWO
TIME: 1 ½ HRS
ANSWER ALL QUESTIONS

1. Which of the following business transactions is an example of purchases?

a. Bought an office desk on credit from Zimbabwe Furnishers for $875
b. Bought stationary for resale from Tonderai Booksellers for $550
c. Sold an old van on credit to R. Dondo for $720
d. Sold goods on credit to K. Tavengwe for $720
2. Which of the following is true about rent receivable?
a. It is a liability to the business
b. Is an expense of a business?
c. It is nominal account with a credit balance
d. It is a nominal account with a debit balance
3. Which of the following does not appear in the income statement?
a. Commission received
b. Interest earned
c. Rent received
d. Trade receivables
4. What is the effect of the following transactions in the financial statements?
Owner took goods worth $550 for own use
Increase decrease
a. Purchases by $550 drawings by $550
b. Drawings by $550 sales by $550
c. Drawings by $550 purchases by $550
d. Sales by $550 drawings by $550

5. Working capital is obtained by

a. Adding current assets to current liabilities

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 b. Adding current liabilities to fixed assets
c. Subtracting current liabilities from current assets
d. Subtracting current liabilities from fixed assets
6. Which of the following is both a book of original entry and also part of the
ledger?
a. Purchases book
b. Cash book
c. Journal
d. Sales day book
7. Cost of transporting purchases by ship is known as
a. Carriage inwards
b. Dock charges
c. Freight charges
d. Railage inwards
8. A statement recorded to bring the cash book bank balance to agree with
the bank balance in the bank statement is known as
a. Bank reconciliation statement
b. Statement of receipts and payments
c. Statement of affairs
d. Statement of financial position
9. Repairs to buildings entered in error as buildings, this is an error of
a. Compensation
b. Commission
c. Original entry
d. Principle
10.Working capital is
a. The amount of capital used to start a business
b. Capital, less drawings and loans
c. The difference between current assets and current liabilities
d. The difference between non-current assets and current assets

11.Which of the following is the most appropriate title?

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 a. Bank reconciliation statement as at the end of month
b. Bank reconciliation statement for the month ended 31 Dec 2010
c. Bank reconciliation statement for the year ended 31 Dec 2010
d. Bank reconciliation statement as on 31 December 2010
12.If the two totals of the trial balance do not agree, the difference must be
entered in
a. Capital account
b. Income statement
c. Nominal account
d. Suspense account
13. A credit balance of $800 on the bank column of the cash book would mean
a. The business has cash at bank $800
b. The business has an overdraft at bank
c. The bookkeeper has made a mistake
d. The bookkeeper has stolen $800 cash
14.Which transaction is recorded in the purchases ledger?
a. Cheque paid to a creditor
b. Cash purchases
c. Cheque received from a debtor
d. Purchase of fixed assets
15.When preparing final accounts, what affects gross profit?
a. Discount allowed
b. Carriage inwards
c. Discounts received
d. Goods taken by owner for personal use
16.Which of the following will cause a difference on a trial balance?
a. An invoice omitted from the sales journal
b. An invoice of $415 entered in the sales journal
c. An invoice for $600 entered in the sales journal as $451 in the month’s
total
d. A credit note entered in the sales journal

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 17.Computers are important in bookkeeping because
a. Are less difficult to use
b. Can use anti-virus
c. Store huge volumes of information
d. Use less sophisticated software
18.Which of the following is a nominal account?
a. Capital
b. Furniture
c. Stationary
d. Stock
19.A debit balance in a bank account represents
a. Accruals
b. Bank overdrafts
c. Cash at bank
d. Prepayments
20.The journal entry for correcting a sales journal which was over added is
a. Debit debtors, credit suspense
b. Debit sales, credit suspense
c. Debit suspense, credit debtors
d. Debit suspense, credit sales
21.The difference between current assets and current liabilities is
a. Capital
b. Working capital
c. Liability
d. Net profit
22.Which would be most suitable for a computer application
a. Monitoring highly confidential records
b. Maintaining the payroll for a large company
c. Recording credit sales for a small retailer
d. Recording stock withdrawn by the business owner

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 23.The bank column of your cash book shows a credit balance. This would
appear in the balance sheet as
a. Current assets
b. Long term liability
c. Current liability
d. Fixed assets
24.Financial accounting is concerned with
a. Measuring the financial performance of an enterprise
b. Presenting the true and fair view of the financial position of the business
c. Showing whether or not an enterprise can meet its financial obligations
d. All of the above
25.Choose the correct answer from the following options
Drawings account is
a. Really an expense account
b. Really an asset account
c. Really a part of the capital account
d. A liability
26. Which of the following would prevent a trial balance from balancing?
a. a credit notes from a supplier entered in the sales journal
b. B a discount allowed posted to the Discounts Received account
c. C an invoice entered twice in the sales journal
d. D a refund to a customer wrongly posted to Discounts Allowed account
27.Which sets of accounts contains nominal accounts
a. Capital, creditors, debtors
b. Cash, drawings, wages
c. Discount received, motor expenses, stationery
d. Furniture, motor vehicles, stock
28.What is the source of entries in an updated cash book?
a. Bank statement
b. Check stub
c. Reconciliation statement
d. Statement of account

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 29.A correct amount entered in the wrong person’s account. this is an error of
a. Commission
b. Original entry
c. Principle
d. Transposition
30.Which of the following are source documents for a cash book?
a. Bank statement, cheque, deposit slip
b. Credit note, invoice, voucher
c. Credit note, receipt, voucher
d. Debit note, receipt, sales invoice
31.A disadvantage of a computer in processing data is that
a. It is more difficult to discover fraud
b. Operating costs are cut as fewer employees are needed
c. There are less chances of arithmetical errors
d. Up to date information is made available faster
32.The document sent by the supplier to a buyer to request for payment at the
end of the month is called a
a. Bank statement
b. Credit note
c. Purchases invoice
d. Statement of account
33.Which of the following setoff items appears on the debit side of the trial
balance?
a. Carriage inwards and carriage outwards
b. Commission paid and commission received
c. Discount allowed and discount received
d. Returns inwards and returns outwards
34.Which of the following errors would be revealed by a trial balance?
a. Credit sales of $300 recorded in the books of original entry as $30
b. Expenses being debited to the sales account
c. Insurance paid $75 not recorded in the books
d. Salaries paid $650 recorded in the salaries account only

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 35.How is a credit balance on a bank account shown in the balance sheet?
a. Current asset
b. Current liability
c. Fixed asset
d. Long term liability
36.A trial balance is prepared in order to
a. Balance off ledger accounts
b. Correct errors in the ledger
c. Draw up a suspense account
d. Prove the arithmetic accuracy of ledger accounts
37.Which is an example of real accounts
a. Electricity account
b. Furniture account
c. Rent account
d. Stationery account
38.One of the reasons for using the general journal is to
a. Correct errors made in the books of accounts
b. Record cash transactions
c. Record goods bought on credit
d. Reduce the number of entries made in the ledger
39.Which component of a computer manipulates accounting information
a. The central processing unit
b. The input device
c. The output device
d. The visual display unit
40.An example of a personal account is
a. Capital account
b. Machinery account
c. Purchases account
d. Stationery account

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