Quaid-e-Azam Public College, Gujranwala

CANDIDATE INFORMATION
Cambridge Ordinary Level
Name:
Mid-Term Examination, Oct 2021 Paper/Subject: Accounting

READ THESE INSTRUCTIONS FIRST Code: 7707

Write in dark blue or black pen. CLASS: CAMBRIDGE-II

Section:
You may use an HB pencil for any diagrams or graphs.
Time: 3 HOURS
Do not use staples, paper clips, glue or correction fluid.
For examiner’s use only
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If working is needed for any question it must be shown in the space

Total Marks
below that question. Section
Marks Obtained
Omission of essential working will result in loss of marks. 100
Teacher’s Remarks
ELECTRONIC CALCULATORS CAN BE USED IN PAPER.

INFORMATION:
International Accounting terms and formats should be used as

appropriate.

When you are asked to complete a layout, you may not need all the

lines for your answer.

The number of marks is given in brackets [] at the start of each question

or part of question. The total of the marks for this paper is 100.
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Invigilator’s Signature Examiner’s Signature

This document consists of 14 printed pages Turn over

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Section –I
Multiple choice questions: Total marks [30]

1. A cashbook with cash, bank and discount column is commonly referred as

A. Cash book
B. Two columns cash book
C. Three columns cash book
D. Petty cash book

2. Discount received is recorded on which of the following side of the cash book?
A. Receipts
B. Payments
C. Incomes
D. Expenditures

3. Cash book records

A. Cash payments
B. Cash receipts
C. Cash payments and cash receipts
D. Neither cash payments nor cash receipts

4. An entry which is made on both sides of the cashbook is called

A. Cash entry
B. Contra entry
C. Payment entry
D. Compound entry

5. Which of the following is/are true?

A. A sale of an asset is recorded in the Sales Book

B. Total of Return Outward Book is debited to Return Outward Account
C. The balance of Petty Cash Book is a liability
D. Cash Book is a book of original entry as well as a ledger

6. Purchase of office equipment for cash is recorded on which side of the cash book?

A. Receipts
B. Payments
C. Incomes
D. Expenditures
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7. Sales on credit is recorded in which of the following daybook?

A. Purchase Daybook
B. Sales Daybook
C. Return inward Daybook
D. Return outward Daybook

8. Sales made to Henry on credit should be debited to?

(A) Account receivable
(B) Cash
(C) Account receivable-Henry
(D) Sales

9. Which of the following is the external users of accounting?

(A) Manager of the business
(B) CEO of the business
(C) Creditor of the business
(D) Employees of the business

10. What is the basic accounting equation?

(A) Asset=Liabilities +Capital
(B) Capital= Asset+liabilities
(C) Assets= Liabilities-Capital
(D) Capital+Assets= Liabilities

11. Sales and purchase journal doesn't record

(A) Credit Sales
(B) Credit Purchase
(C) Credit Sales and purchase
(D) Cash sales and purchases

12. The normal balance of capital account is

(A)Credit balance
(B) Debit Balance
(C) Cash balance
(D) Neither Debit nor Credit balance

13. Which of the following is true about a trial balance?

(A) It lists down the balances of accounts
(B) It lists down the balances of a balance sheet
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(C) It is a kind of financial statement
(D) It is not a part of accounting cycle

14. Debit balance = Credit balance in a trial balance indicates that

(A)No error in recording transaction
(B) No error in posting entries to ledger accounts
(C) Account balances are correct
(D) Mathematically Capital + Liabilities = Assets

15. Trial Balance is commonly prepared

(A) frequently during the year
(B) at the end of an accounting period
(C) at the end of the month
(D) at the end of year

16. Which of the following is an example of business liability?

(A) Land
(B) Building
(C) Cash
(D)Creditors

17. Which of the following account will be credited, if business bought goods on credit
from Mr. Z?
(A) Purchases account
(B) Mr.Z account
(C) Cash account
(D) Sales account

18. Which of the following item will be shown on debit side of debtors account?

(A) Discount received

(B) Return inwards
(C) Discount allowed
(D) Credit sales

19. Purchase book is maintained to record

(A) All credit purchases
(B) All cash purchases
(C) Purchases of goods
(D) None of the above
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20. Which of the following statement is correct?
Assets Liabilities
(A)We paid a creditor by cheque -Bank -Account Payable
(B) A debtor paid us £90 in cash + Cash +Account receivable
(C)J.Hall lends us £500 by cheque +Bank -Loan from Hall
(D) Bought goods on time +inventory +Capital

21. Which of the following should not be called ‘sales’?

(A) Office fixture sold
(B) Goods sold on time
(C) Goods old for cash
(D) Sale of item previously included in ‘purchases’

22.
2020 £ 2020 £
May 1. Sales 205 May 17. Cash 300
14. Sales 360 28. Returns 50
30. Sales 180
(A) A credit balance of £395
(B) A debit balance of £380
(C) A debit balance of £445
(D) A credit balance of £265

23. The person from whom the goods are purchased on credit are called

(A)Debtors
(B) Creditors
(C) Accounts Receivable
(D) None of these

24. 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

25. Is it true that the trial balance totals should agree?

(A) No, there are sometimes good reasons why they differ
(B) Yes, except where the trial balance is extracted at the year end
(C)Yes, always
(D) No, because it is not a balance sheet

26. Which of the following is not an asset?

(A) Buildings
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(B) Cash balance
(C) Account receivable
(D) Loan from K.Haris

27. The debts which are to be repaid within a short period (year or less) are known as
(A) Current Liabilities
(B) Fixed Liabilities
(C) Contingent Liabilities
(D) All of the above

28. Which of the following are incorrect?

Debit Credit
(A) Sold van for cash Cash Sales
(B) bought stationary by cheque Stationary Bank
(C) Took cash out of business for private use Cash Drawing
(D) Paid general expense by cheque General expenses Bank

29. The accounting process involves recording

(A) Quantifiable economic event
(B)Non Quantifiable event
(C) All of them
(D) None of them

30. In accounting, an economic event is referred to as

(A) Cash
(B) Bank statement
(C)Transaction
(D) Exchange of money
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Section II Total Marks=70

1 Rahat is a trader. [20]

The following transactions took place in March 2021.

March 3 Cash sales, $580, were paid directly into Rahat’s business bank account

6 Paid insurance, $360, by direct debit

9 Paid $196 to GH Limited by telephone transfer, having deducted 2% cash
discount from the amount due
13 Paid $75 cash for stationery

17 Cash sales, $140

27 Sold old office equipment to Burgess, who paid $50 by cheque in full

settlement.

30 Paid $340 to Colin by cheque in full settlement of a debt of $350

REQUIRED
(a) Complete Rahat’s cash book on the page opposite.
(b) Balance the cash book and bring down the balances on 1 April 2021.

2. M Ritchie, a sole trader, has the following purchases and sales:

2020 £
December 1 Sold goods on credit to S Ray 150
December 7 Sold goods on credit to L Reed 45
December 9 Bought goods on credit from C Lowe 89
December 14 Sold goods on credit to S Sledge 114
December 15 Bought goods on credit from N Tennant 76
December 18 Sold goods on credit to C Smith 90
December 21 Bought goods on credit from P Humphries 78
December 27 Sold goods on credit to A McCluskey 65
December 30 Sold goods on credit to M Almond 28

You are required to do the following:

1. Prepare the Sales and Purchases Day Book for M Ritchie for December [6]
2. Post the items to the personal accounts [9]
3. Transfer the totals the relevant accounts in the general ledger [5]
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4. Henry has the following purchases for May 2020.

May 1. From S.Turner 4 DVD player at £215 each less 20% trade discount.
3. From William: 1 TB drives at £45 each. Less 33 1/3 percent trade discount.
15. From C .Donald: 3 sets golf club £900 each, 6 footballs at £36 each. Less 25% trade
discount.
20. From Jack 5 cricket bats £48 each. Less 25% trade discount.
30. From A.Lane: 6 sets golf trophies at £55 each, 4 sets golf clubs at £720. Less 33 1/3 trade
discount.
Required:
Draw up a purchase invoice for each of the above purchase. [10]
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Q.5
April 1. Started in business by investing £3500 of his own money (£500 in cash and £3000 in
bank account.)
5. Bought goods for resale on time £475 on time from P.Thomas.
6. Bought machinery for £1,450, paying by cheque.
7. Paid insurance £120, paying by debit card.
8. Bought goods for resale on time, £255 from M. Wilkinson.

11. Sold goods on time to E Grant £700.

15. Sold goods for cash £300.
20. Paid £475 due to P.Thomas with a cheque.
22. Return goods to Wilkinson, £325.
24. Sold goods on time to Williams, £325.
25. Paid wages to employee, £45 by bank transfer.
27. E.Grant returned goods to M. Donnelly to the value of £80.
30. M. Donnelly took business cash for his personal use, £80.
Required:
(a) Enter the transactions in T-account. [10]
(b) Balance off your accounts as at 30 April. [5]
(c) Prepare a Trial balance as at 30 April. [5]
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