HOI PING CHAMBER OF COMMERCE SECONDARY SCHOOL

First Term Test, 2019/2020

S.4 BAFS Time Allowed: 1 Hour
Total Marks: 90
A. Multiple Choice (10 marks)
Choose the best answer in each question.

1. Which of the following statements is incorrect?

A. Accounting can provide information to both internal users (e.g., management)
and external users (e.g., Inland Revenue Department).
B. An accounting cycle refers to a series of standard procedures for the recording
and processing of a firm’s accounting data in a certain period.
C. The double-entry system is used in bookkeeping.
D. The details of all business transactions should be included in a business’s
financial statements.

2. A firm sold a van for $2,000 in cash, then paid $800 for electricity charges and put
the remaining amount in the business bank account. What is the effect on the totals
of the accounting equation?
A. Increased by $2,000
B. Increased by $1,200
C. Decreased by $1,200
D. Decreased by $800

3. Which of the following accounts would be debited to record a decrease in the

amount?
(1) Bank
(2) Office equipment
(3) Capital
(4) Creditor: Bobby Co
A. (1) and (2) only
B. (2) and (3) only
C. (3) and (4) only
D. (1), (2) and (4) only

4. When a trial balance is prepared during the accounting period,

A. it will disagree.
B. the trial balance must agree if the principles of double entry have been
correctly applied.
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 C. the total of credit balances will be larger than the total of debit balances.
D. the total of debit balances will be larger than the total of credit balances.

5 Joy Company sold a motor vehicle for $35,000 by cheque and recorded the
transaction as follows: Dr Bank $30,000, Cr Motor vehicles $30,000. What is the
effect of this error on the trial balance?
A. Debit balance would be $5,000 more than it should be.
B. Debit balance would be $5,000 less than it should be.
C. No effect
D. Debit balance would be $10,000 more than it should be.

B. Fill in the Blanks (8 marks)

Refer to the Answer Sheet.

C. Short Question (72 marks)

QUESTION 1

‘When a trial balance agrees, it means no errors have been made in the books of accounts.’ Do
you agree? Explain your answer. (3 marks)

QUESTION 2

Record the following transactions in the ledger accounts of Lemon Tam’s business. Balance
off the accounts at the end of the month, carry the balances to next month and then prepare a
trial balance as at 30 June 2019. (48 marks)

Jun 1 Started business with cash of $30,000 and $140,400 in the bank.

Jun 5 Bought goods on credit from David Ma for $50,000.

Jun 9 Made cash sales of $12,250.

Jun 11 Paid David Ma $42,300 by cheque.

Jun 12 Bought office equipment on credit from Sam Lee for $25,100.

Jun 14 Purchased goods on credit from Ken Wu for $53,200.

Jun 17 Sold goods on credit to: Siu Ming $125,850; Ben So $31,000.
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 Jun 18 Ben So returned half of the goods bought.

Jun 22 Paid Lemon Tam’s personal expenses of $10,000 by cheque.

Jun 24 Siu Ming settled her account by cheque.

Jun 28 Paid Ken Wu $41,000 by cheque.

Jun 30 Paid rent of $20,000 by cheque.

QUESTION 3

Bruno Ko operates a retail shop. The following balances were extracted from the books of his
business as at 30 September 2019:

$
Bank overdraft 280,539
Postage and stationery 136,540
Bank interest received 78,550
Cash on hand 14,963
Electricity and water 142,660
Rent and rates 179,820
Loan from BAFS Ltd. 100,000
Inventory 69,120
Motor vehicles 553,798
Purchases 881,150
Sales 2,366,950
Repairs and maintenance 84,490
Salaries 122,860
Insurance 32,920
Drawings 182,000
Overdraft interest 38,910
Furniture and fixtures 2,960,830
Office equipment 979,790

Required:

Prepare a trial balance as at 30 September 2019 and insert the missing balance of the
capital account. (21 marks)

- END OF PAPER -
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