ACCOUNTS FORM

ANSWER ALL THE QUESTIONS

WRITE ANSWERS 1-20 FIRST COLUMN, THEN 20-40 THE SECOND COLUMN

1. 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

2. Net profit is calculated in the

a. Trading account
b. Profit and loss account
c. Trial balance
d. Balance sheet.
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. The credit entry for net profit is on the credit side of
a. The trading account
b. The profit and loss account
c. The drawings account
d. The capital account.
5. Which of these best describes a balance sheet?
a. An account proving the books balance
b. A record of closing entries
c. A listing of balances
d. A statement of assets.
6. The descending order in which current assets should be shown in the balance sheet is
a. Stock, Debtors, Bank, Cash
b. Cash, Bank, Debtors, Stock
c. Debtors, Stock, Bank, Cash
d. Stock, Debtors, Cash, Bank.
7. Which of these best describes fixed assets?
a. Are bought to be used in the business
b. Are items which will not wear out quickly
c. Are expensive items bought for the business
d. Are of long life and are not bought specifically for resale.
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 8. Carriage inwards is charged to the trading account because
a. It is an expense connected with buying goods
b. It should not go in the balance sheet
c. It is not part of motor expenses
d. Carriage outwards goes in the profit and loss account.
9. Given figures showing: Sales £8,200; Opening stock £1,300; Closing stock £900;
Purchases£6,400; Carriage inwards £200, the cost of goods sold figure is
a. £6,800
b. £6,200
c. £7,000
d. Another figure.
10. The costs of putting goods into a saleable condition should be charged to
a. Trading account
b. Profit and loss account
c. Balance sheet
d. None of these.
11. Suppliers’ personal accounts are found in the
a. Nominal ledger
b. General ledger
c. Purchases ledger
d. Sales ledger.
12. The Sales Day Book is best described as
a. Part of the double entry system
b. Containing customers’ accounts
c. Containing real accounts
d. A list of credit sales.
13. Which of the following are personal accounts?
(i) Buildings
(ii) Wages
(iii) Debtors
(iv) Creditors
a. (i) and (iv) only
b. (ii) and (iii) only
c. (iii) and (iv) only
d. (ii) and (iv) only.
14. The software used on computers to process accounting data is
(A) Datel
(B) Pastel
(C) Prestel
(D) Windows 2007
15. Which of the following is not a hardware peripheral?
a. Mouse
b. Key board

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 c. Printer
d. Pastel
16. Bank overdraft is classified as
A. Current asset
B. Current liability
C. Non-current assets
D. Non-current liability
17. A debit balance of £100 in a cash account shows that
a. There was £100 cash in hand
b. Cash has been overspent by £100
c. £100 was the total of cash paid out
d. The total of cash received was less than £100.
18. £50 cash taken from the cash till and banked is entered
a. Debit cash column £50: Credit bank column £50
b. Debit bank column £50: Credit cash column £50
c. Debit cash column £50: Credit cash column £50
d. Debit bank column £50: Credit bank column £50.
19. A credit balance of £200 on the cash columns of the cash book would mean
a. We have spent £200 more than we have received
b. We have £200 cash in hand
c. The bookkeeper has made a mistake
d. Someone has stolen £200 cash.
20. What is the other name for subsidiary book?
a. Invoices
b. Source documents
c. Book of prime entry
d. Ledgers
21. Discounts received are
a. Deducted when we receive cash
b. Given by us when we sell goods on credit
c. Deducted by us when we pay our accounts
d. None of these.
22. Revenue is the flow of money resulting from the
a. Purchase of goods
b. Sales of goods
c. Purchases of assets
d. Transfer of goods
23. Identify a set with assets only
a. Cash at bank, wages accrued
b. Debtors, rent receivable prepaid
c. Rent receivable due, advertising prepaid
d. Stock of stationery, income paid in advance

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 24. Sales invoices are first entered in
a. The Cash Book
b. The Purchases Journal
c. The Sales Account
d. The Sales Journal.
25. The total of the Sales Journal is entered on
a. The credit side of the Sales Account in the General Ledger
b. The credit side of the General Account in the Sales Ledger
c. The debit side of the Sales Account in the General Ledger
d. The debit side of the Sales Day Book.
26. Which of the following is correct?
a. Profit does not alter capital
b. Profit reduces capital
c. Capital can only come from profit
d. Profit increases capital
27. An alternative name for a Sales Journal is
a. Sales Invoice
b. Sales Day Book
c. Daily Sales
d. Sales Ledger.
28. Entered in the Purchases Journal are
a. Payments to suppliers
b. Trade discounts
c. Purchases invoices
d. Discounts received.
29. The total of the Purchases Journal is transferred to the
a. Credit side of the Purchases Account
b. Debit side of the Purchases Day Book
c. Credit side of the Purchases Book
d. Debit side of the Purchases Account.
30. Liabilities which are repayable after one year are called
a. Current liabilities
b. Loans
c. Noncurrent liabilities
a. Trade liabilities
31. The total of the Returns Outwards Journal is transferred to
a. The credit side of the Returns Outwards Account
b. The debit side of the Returns Outwards Account
c. The credit side of the Returns Outwards Book
d. The debit side of the Purchases Returns Book.
32. Given the following, what is the amount of Capital? Assets: Premises £20,000; Stock
£8,500; Cash £100. Liabilities: Creditors £3,000; Loan from A Adams £4,000
a. £21,100

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 b. £21,600
c. £32,400
d. £21,400
33. Depreciation is
a. The amount spent to buy a fixed asset
b. The salvage value of a fixed asset
c. The part of the cost of the fixed asset consumed during its period of use by the firm
d. The amount of money spent in replacing assets.
34. A firm bought a machine for £3,200. It is to be depreciated at a rate of 25 per cent using
the Reducing Balance Method. What would be the remaining book value after 2 years?
a. £1,600
b. £2,400
c. £1,800
d. Some other figure.
35. A firm bought a machine for £16,000. It is expected to be used for 5 years then sold for
£1,000. What is the annual amount of depreciation if the straight line method is used?
a. £3,200
b. £3,100
c. £3,750
d. £3,000.
36. At the balance sheet date the balance on the Accumulated Provision for Depreciation
Account is
a. Transferred to Depreciation Account
b. Transferred to Profit and Loss Account
c. Simply deducted from the asset in the Balance Sheet
d. Transferred to the Asset Account.
37. In the trial balance the balance on the Provision for Depreciation Account is
a. Shown as a credit item
b. Not shown, as it is part of depreciation
c. Shown as a debit item
d. Sometimes shown as a credit, sometimes as a debit.
38. If an accumulated provision for depreciation account is in use then the entries for the
year’s depreciation would be
a. Credit Provision for Depreciation Account, debit Profit and Loss Account
b. Debit Asset Account, credit Profit and Loss Account
c. Credit Asset Account, debit Provision for Depreciation Account
d. Credit Profit and Loss Account, debit Provision for Depreciation Account.
39. When the final accounts are prepared, the Bad Debts Account is closed by a transfer to
the
a. Balance Sheet
b. Profit and Loss Account ‘
c. Trading Account
d. Provision for Doubtful Debts Account.

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 40. A Provision for Doubtful Debts is created
a. When debtors become bankrupt
b. When debtors cease to be in business
c. To provide for possible bad debts
d. To write off bad debts.

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