) » 9 © What does the term ‘limited liability’ mean in relation to a company? A Acompany can only issue a limited number of shares. B_ Acompany can only pay a fixed amount of dividends. © Shareholders are not at risk of losing personal possessions. D Shareholders’ liability Is not limited to the amount paid for their shares. CQ (Et0m €) M1) Pia sells two products, X and Y. She provided the following information about her inventory at the year end. Product | Cost$ | Selling price $ x 1750 1850 Y 924 858 ‘What was the total value of inventory to be includediin the financial statements? ‘A $2608 B $2674 © $2708 D 82774 What is the role of a bookkeeper? ‘A toadvise on business plans B to analyse the profit or loss for the period C _ tomaintain records of financial transactions D 10 prepare financial statements Baljit paid rent, $2700, in advance for the three months ended 31 March 2018. 1) ft] He adjusted his financial statements for the year ended 31 January 2018 for rent prepaid. Which effect did this have on the total expenses for the year? A. decrease by $900 B decrease by $1800 € increase by $900 o increase by $1800 a6) i] Abdul started a business by transferring his own vehicle to the business at a valuation of $9000 and introducing a sum of cash. In the first year of trading profit was $2000. At the end of the first year the balance on his capital account was $51 000. How much cash did Abdul introduce? A $40 000 B $44000 Cc $58 000 D $62000 0] ‘A manufacturing business provided the following information. $ é Opening inventory of finished goods 47 000 Closing inventory of finished goods 12,000 Cost of production for the year 100 000 Purchases of finished goods forthe year 70 000 What was the cost of sales for the year? A $75000 B $105000 c $170000 D $175000 ty Agnes and Brian operate in similar businesses. They provide the following information. ‘Agnes Brian Trade receivables collection period 3idays 40 days Which statement is true? A Agnes receives money from customers sooner than Brian. B Agnes pays her suppliers sooner than Brian. © Brian receives money from customers sooner than Agnes. D__ Brian pays his suppliers sooner than Agnes. (1)| Hiro wishes to increase his provision for doubtful debts at the end of the year. ® How does he record this increase? debit entry credit entry A bad debts provision for doubtful debts B provision for doubtful debts bad debts c income statement provision for doubttul debts | [| D provision for doubtful debts income statement i 4) Thang bought goods costing $20 each. At the end of the year Thang valued inventory of unsold goods at the selling price of $30 each. ‘What is the effect of this valuation? profit is overstated profit is understated purchases are overstated purchases are understated 10) The directors of a limited company increased the general reserve. Which item decreased? A B c D balance at bank ordinary share capital preference share capital retained earings 1] 1]12) @ Which statement is true about capital expenditure? A c D ‘Nusswan's rates are $100 a month. He pays six month 1 July each year. He also receives six months’ rent of $150 a mo! It consists of the purchase of goods for resale. It includes the costs of operating a non-current asset. It involves the buying of an asset to be used in the business for more than a year. It should be written off during the year in which the expenditure arises. vi .s' rates in advance, on 1 January and nth in advance on the same dates. Which amounts appear in the statement of financial position on 31 January? incurrent assets | in current liabilities A | $100 $150 B | $500 $750 c | $750 $500 D | $1250 nil Atrader has an increasing for doubtful debts over the years. One year he debts account. Which effect does this have on his financial statements? profit forthe year | current assots A | overstated overstated B | overstated understated C | understated overstated D | understated understated What Is meant by the term net realisable value? A B c D selling price selling price less costs of completion selling price less costs of completion less selling expenses seling price less selling expenses 1 level of trade receivables and maintains the same rate of provision forgets to update his provision for doubtful i) f] {Turn over@ 15) A sports club charges its members an annual fee of $1 iptions innual fee . lbscri Malis chee of $100. Its subscriptions account for the Subscriptions account $ $ Balance bid 400 Balance bid 600 Income and expenditure account 12000 Bank 11300 Balance c/d 300 Balance cid 800 42700 42700 Balance bid 800 Balance b/d 300 Which statement is true? A Four members had paid in advance at the start of the year. B 120 members paid their fee during the year. Subscriptions in arrears decreased during the year. D The club had 120 members during the year. 1 16) A business provided the following information. $ Inventory at start of year 4000 Purchases 76000 Inventory at end of year 8000 Mark-up 60% What were the sales for the year? A $115200 $128000 B © $180000 D 200000 1)18) © Wher i iliati n Jack prepared his bank reconciliation Statement it included an unpresented cheque. Which cheque is unpresented? A acheque Jack received and banked but whic whi on his bank statement deli teaieritd Boa cheque which appears on Jack's bank statement but which has been omitted from his cash book © acheque which Jack has issued to a supplier who has not banked it D_acheque debited twice in Jack's bank statement in an error by the bank a ‘Ahmed bought a motor vehicle and paid the following amounts. motor vehicle 8000 number plates 100 insurance 400 What was Ahmed’s capital expenditure? A $400 $500 $8000 ooo $8100 1]@ 49) Which statement describes the purpose fa trial balance? A , Itchecks the arithmetical Accuracy of the double entry. B ttensures the ledger accounts contain no errors. c Itindicates areas where errors have arisen. D_Itprevents errors from occurring, [] 1 20) _ Asstatement of financial position showed the following. $ Non-current assets 790 000 Non-current abil 27000 Current assets 56.000 Current liabilities 71.000 ‘What was the owner's capital? A $8000 CO B $148 000 c $176.000 pb $232000 ol ‘On 4 April 2017 trade receivables owed $4250 and on 31 March 2018 they owed $3940. 21) During the year $46750 was received from trade receivables and they retumed goods, $1130. ‘What were the credit sales for the year? A $46440 B_ $47060 © $47570 D $48190 L| M123) 24) : The directors of a Company ensured that the financial statements Which accounting objective was ie Tepresented actual events. A B c D comparability relevance reliability understandability O f] A receipt of $800 from Jamal, a credit customer, i i pet of 9200 | , was recorded as a receipt of $880 in the Which entries are needed to correct this error? * ‘Account(s) debited $ | Account(s) credited $ [A | Jamal ‘800 | James 880 ‘Suspense 80 B | Jamal ai ‘880 | James 800 Suspense 80 ‘Cc | James 800 | Jamal ‘880 ‘Suspense 80 'D | James 880 | Jamal 800 Suspense 80 What is true about a bank reconciliation statement? A c It forms part of the double entry system. itis a statement prepared by the bank. It is prepared to look for errors in the cash book and the bank statement. It reconciles the opening and closing cash book balances. (1 a1Ezevir had been in busin Y that period his sales were greeny out months when $1200. He pa a fire destroyed all of hisi was unpaid. His cost of sales ‘was $800. ‘inventory. In id $820 to suppliers and a supplier's invoice or G70 ‘What was the cost of the inventory which was destroyed? A $50 B $90 © $310 D $380 (1 26) , Jane maintains a provision for doubtful debts at 5% of her trade receivables. The following account appeared in her ledger. . Jane Provision for doubtful debts account 2015 2014 $ 30 June Income statement _50 1 July Balance bid 600 Balance c/d 550 600 600 2015 1 July Balance b/d 550 ‘Which statement is correct? ‘A Bad debts recovered during the year amounted to $50. B Bad debts written off during the year amounted to $50. Total trade receivables decreased during the year. D Total trade receivables increased during the year. TT 2t) An item of inventory has an original cost of $18 and a replacement cost of $13. packing and delivery when the item is sold will amount to $3. It Is expected $20. Atwhich value should it be included in the financial statements? A $13 B $16 c $i7 D $18 a)(3) 24) 30) 3i) © Who benefits from a company’s limited liability? A eo 6a its credit customers its credit suppliers its debenture holders its shareholders The it work in progress of a ‘manufacturing business increased during the year. Which effect does this have? ©n cost of production on gross profit A | decrease increase B | decrease no effect C | increase decrease D | increase no effect ‘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 D 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 fy) fi {1 tl@ which item limits the usefulness of financial statements? y ‘A Debs which can no longer be collected are written off, Depreciation is provided on all non-current assets except land. ‘Long term loans are disclosed separately from short term loans, D Cider assets may be recorded at values which are no longer up to e. OF 33) Whenis accounting information relevant? A when it can be compared with information for other periods when it can be understood by the users of the accounts © whenit changes business decisions D__ whenitis free from error and bias, a 34) A manufacturing business provided the folowing information about fs frst year of trading. s Purchases of raw materials 128 000 Closing inventory of raw materials, 13.000 Purchases of finished goods 65.000 Closing inventory of finished goods 29 000 Factory direct wages 77 000 ‘Supervisor's salary 24.000 Depreciation of machinery 19.000 ‘What was the prime cost? A $3800 B $7400 © $152000 D $192000 io)35)' Abusiness provided the following information. @ year 1 year 2 percentage of gross profit to revenue 30% 25% percentage of profit for the year to revenue 12% 8% The revenue was the same in both years. Which statements are correct? 1 Cost of sales was higher in year 2. 2 Cost of sales was lower in year 2. 3 Expenses were higher in year 2. 4 Expenses were lower in year 2. 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