4) yD ED 49) © Who benefits from a company’s limited liability? A B c D ‘The work in progress of a manufacturing business increased during the year. Which effect does this have? on cost of production on gross profit A | decrease increase B | decrease no effect [| C | increase decrease D | increase no effect its credit customers its credit suppliers Its debenture holders its shareholders Mcq CExam, &) What is meant by mark-up? A B c D gross profit measured as a percentage of cost of sales gross profit measured as a percentage of revenue profit for the year measured as a percentage of expenses Profit for the year measured as a percentage of revenue Why would a bank manager look at a trader's financial statements? A B c to calculate how fast trade payables were being paid to check if the trader would be able to repay a loan to find out if customers will receive continuous supplies to know if inventory levels are too high a] fl f) t5) What is the purpose of accounting? A tocheck the arithmetical accuracy of the double entry to control inventory levels B C _toensure that all transactions are recorded D to prepare financial statements {] 6) Alice had owed Brian $120 for a long time. Brian decided to write off the balance on Alice's account but in error entered $210 in the bad debts account. Which entries correct this error? debit entry credit entry Alice $90 baddebts $90 bad debts $90 Alice $90 baddebts $90 suspense $90 0 Ooo > suspense $90 baddebts $90 ro] ay A trader's cash book had a debit balance of $50. When the bank statement arrived he saw that a customer's cheque for $80 had been dishonoured, and that the bank had charged him $10 in bank charges. What was the balance on the cash book when it had been updated? A $20 credit ‘$40 credit B C $120 debit D $140 debit a)%) 9% fo) © ‘Where are bad debis recorded in the Control accounts? A on the credit side of the purchases ledger control account B on the credit side ofthe sales ledger control account © on the debit side of the purchases ledger control account D onthe debit side of the sales ledger control account Which statements are true about capital employed? 1 Itequals non-current assets plus net current assets. 2 Itequals owner's capital less non-current liabilities, 3 It represents total funds invested in the business. tonly Jand3 2and3 oOo om Db 3 only Apartnership had a profit for the year of $60000. Interest on capital was Jamila $4000 Kate $2000 Drawings were Jamila $1800 Kate $10000 Profits were shared equally. a 1) What was the total amount credited to Jamila’s current account at the end of the year? $13000 $27000 $29000 co 0 wo > $31000 ty [Turn overu) 42) 13) © ‘company provided the following information, s Profit for the year 85000 dividend paid 15000 transfer to general reserve 10000 proceeds of share issue 30000 By how much did total equity (shareholders’ funds) increase during the year? A $60000 C $90000 Bl B ¢ $100000 D $105000 m1 Why did the trade receivables collection period of a trader decrease from 32 days to 21 days? A He increased the rate of cash discount. B He increased the rate of trade discount. C His credit sales decreased. D His credit sales increased. (1 Atrader provided the following information. $ Cash sales for the year 6000 Credit sales for the year 84000 Trade receivables at the year end 7400 Bad debts to be written off at the year end 1300 What was the trade receivables collection period? A 25days B 27 days C 31 days D 33days tH44) Ie) Amber sells goods on credit to Bashir. Which statement is correct about a credit note? A Itis sent by Amber when Bashir buys goods. B itis sent by Amber when Bashir retums goods. C tis sent by Bashir when he buys goods. D itis sent by Bashir when he returns goods. CJ LJ Oy Antony decided to write off $300 owed by Mariam. He debited Mariam’s account and credited the provision for doubtful debts account, both with $300. Which entries are needed to correct the error? Debit entry Credit entry A | Bad debts 3300 | Mariam $300 Cl 2 | provision for doubtful debts $200 | Maram iil | Provision for doubtful debts $300 | Baddebts $300 r D | Provision fordoubtful debts $600 | Baddebts $300 Mariam $300 L_| 1) Jack's bank statement showed a credit balance of $600 on 30 June. It contained bank charges, $20, which did not appear in the cash book. Cheques, $150, issued by Jack did not appear on the bank statement. Which value for bank appeared in Jack's statement of financial position on 30 June? A $450 current asset B $580 current asset © $620 current liability D $750 current liability (1)1t) 13) 4)° © Assales ledger control ‘Account showed the following entries, ‘opening balance to closing balance 180 sales 2000 receipts 1750 What is the missing entry? A discount allowed $170 discount allowed $330 B © discount received $170 D discount received $330 (1) During 2015 John made a payment of $1200 for insurance for the 12 months to 30 September 2016. ‘Which amount appeared in John’s statement of financial position at 30 June 20167 A $300 current asset ‘$300 current liability B © $900 current asset D {$900 current liability Aretailer has an item of inventory which cost $60 and which is on sale at $50. How does the retailer value this item in his statement of financial position? A at cost price, to allow for losses as early as possible at cost price, to avoid recognising profit before itis earned at selling price, to allow for losses as early as possible B c D at selling price, to avoid recognising profit before it is earned i) a) [Turn over‘p) 2t) 22) @ Astatement of financial Position iabilii Showe and non-current liabilities, 'ed non-current assets, current assets, current liabiities What equals owner's Capital? A current assets — Current liabilities B non-current assets C total assets — current liabilities D total assets — total liabilities Which statement is true about dividends paid on ordinary shares? A They appear in the appropriation account and are paid to partners. B_ They appear in the income statement and are paid to partners. © They appear in the statement of changes in equity and are paid to members of a company. D They appear in the statement of financial position and are paid to members of a company. Cl 1) 1) ‘A club has 200 members paying an annual subscription of $50. It provided the following information. $ subscriptions received 9800 new equipment purchased 1120 depreciation of equipment 850 8280 other running costs What was the surplus for the year? A $400 B $600 c $670 D $870 (1)24) 2s) How is profit for the year calculated? A closing capital + ‘drawings — ae capital B closing capital — crawirigs — pening capital © opening capital + drawings — closing capital D pening capital ~ drawings — closing capital 1) Vikram received $100 from Sasha, a credit customer. He credited bank and debited the account of Sally. Which entries correct this error? account debited $ account credited $ A | bank 100 | Sally 100 bank 200 | Sally 100 Sasha 100 Sasha 100 | Sally 100 suspense 200 | Sally 100 Sasha 100 ‘A bank statement balance and a cash book balance do not agree. Which items arise from timing differences? 1 bank charges 2 bank errors 3 uncredited deposits 4 unpresented cheques 1 and 2 only 1,2,3and4 2,3 and 4 only 090 @ > Sand 4 only (1) 1)@® F.) Which item appears on the debit side of a sales ledger contro! account? A discount received dishonoured cheque from customer B C provision for doubtful debts D sales returns t1] 2%) —_ The purchase of a motor vehicle for business use has been treated as revenue expenditure. Which item in the statement of financial position was understated? A. capital current assets 000 (1) B current liabilities D non-current liabilities 28) Omar's financial year ended on 30 September 2015, He had paid $2000 on 31 March 2015 for ten identical advertisements to run monthly from April 2015 to January 2016. How did this appear in his financial statements? income statement | statement of financial position A. | $800 expense $1200 current asset B__ | $800 expense $1200 current liability c | $1200 expense _| $800 current asset D | $1200 expense —_| $800 current liability il [urn over30) 31) Atrader provided the following information, at31 March | at 31 Ma 2015 2016 trade receivables $40000 $46 ‘000 tate of provision for doubtful debts. | 5% 4% Which entry for Provision ended 31 March 20167 A B c D Edison expects to sell the goods he holds in inventory at a mark up of 40%. How should he value inventory in his statement of financial position? A B c D $160 as an expense $160 as an income $240 as an expense $240 as an income at cost at cost less selling expenses at selling price at selling price less selling expenses Of doubtful debts appeared in his income statement for the year (1) 0} Benjamin and Cody's partnership agreement states that Benjamin is to receive an annual salary of $10000 and that profits and losses are to be shared in the ratio 3:2. Thi profit for the year is $45000. What is Benjamin's total allocation of profit? A B c D $14000 $23000 $27000 $31000 1@ partnership's t)32) An amount received from All i areal lice, a credit customer, was credited to the account of Alison in Which error was made? A commission compensating B C ofiginal entry D principle a 33) Maneck had a draft profit of $10500. He then discovered that the total of the discount allowed ‘column of the cash book, $200, had been entered on the credit side of the discount received account. What was the profit once this error had been corrected? A $10100 B $10300 c $10700 D $10900 (1) 34) How do discount received and sales ledger contras appear in a purchases ledger control account? discount received contras A | asacredit as a credit B | asacredit as a debit c | asadebit asa credit D | asa debit asa debit [1]i) eS Ath manufactures all the goods he sells. He provided the following information for the year. $ Opening inventory of raw materials 4000 Closing inventory of raw materials 6200 Opening inventory of work-in-progress 8100 Closing inventory of work-in-progress 10050 Purchases 121700 Carriage inwards 3500 Carriage outwards 4900 What was the cost of raw materials consumed? $119500 $121050 $123000 $124400 1]Multiple Choice Answers (Exam B) Question | Answer ee alol>l>lol>lwlal>|alo|m|>lolalola|>|>|>|t a |te)>/a]o] to] /O/O)t)>/>/0