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Institute :.................................................................. Index No :......................................................

PART 01
01. Which of the following statements given the best definition of the objective of accounting?
(1) To provide useful information to users in making economic decision
(2) To record, categories and summaries financial transactions
(3) To calculate the taxation due to the government
(4) To calculate the amount of dividend to pay to the shareholders
(5) To ensure the safeguard of the business assets (……….)

02. Profits of a business may be calculated by using which one of the following formulas?
(1) Opening capital – Drawings + Capital introduced – Closing capital
(2) Opening capital + Drawings – Capital introduced – Closing capital
(3) Closing capital + Drawings – Capital introduced – opening capital
(4) Closing capital – Drawings + Capital introduced – Opening capital
(5) None of the above (……….)

03. Nimal bought goods from Saman for which the payment was made within two weeks by issuing a
cheque. However, Nimal found that some of the items were defective and returned them to Saman.
The relevant source document respectively to record the transactions in Nimal’s prime entry books
are.
(1) Payment Voucher, Cheque counter foil, Credit note
(2) Invoice, Payment voucher, Credit note
(3) Invoice, cash receipt, Credit note
(4) Invoice, Payment voucher, Debit note
(5) Invoice, Payment voucher, Credit note (……….)

04. Bank statement of Mami Ltd. Shown a debit balance of Rs. 718 500 as at 31 March 2022. The
following additional information is also available for your consideration
• Unpresented cheques as at 31 March 2022 Rs. 595 600.
• Bank charges of Rs. 18 130 and overdraft interest of Rs. 55 000 have not been recorded in the
cash control account.
• A cheque payment amounting to Rs. 108 000 had been recorded twice in the cash control
account.
• Unrealized deposits as at 31 March 2022 Rs. 180 000.
• Bank statement contains Rs. 50 000 worth of cheque which has been issued by other current
account holder.

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 What is the amount of bank overdraft that should be shown in the Statement of financial position
as at 31 March 2022, after making the relevant adjustments stated above?
(1) 1,048,100 (2) 1,084,100 (3) 1,184,100
(4) 1,148,100 (5) None of the above (……….)

05. A business has changed its inventory valuation policy two times within last two financial years. This
change violates?
(1) Prudence concept (2) Materiality concept (3) Consistency concept
(4) Separate entity concept (5) Fully discourser concept (……….)

06. Which of the following statement is false relating to sales ledger control account?

(1) Total of the VAT column in the sales journal is debited to sales ledger control account
(2) Provision for expected losses on trade receivable will be credited to sales ledger control
account.
(3) Sales ledger control account is maintained in the general ledger.
(4) Sales ledger control account is mostly updated on monthly basis.
(5) Sales ledger control account may have both debit & credit balances. (……….)

07. Name four (04) output of management accounting.

(1) ………………......................................................................…………………….
(2) ………………......................................................................…………………….
(3) ………………......................................................................…………………….
(4) ………………......................................................................…………………….

08. State the source documents for the following transactions.

Transactions Source Document
(1) Return inwards
(2) Depreciations
(3) Direct deposits by debtors
(4) Cash receipts by petty cashier

09. Would each of the following errors require a use of suspense account to correct. Tick the
appropriate box.

Transaction Suspense No suspense

Account Account
1. The total of the sales book Rs. 25 600 has
been credited to the sales account as 26 500
2. Motor vehicle repair expenses of Rs 15,000, has
been debited to the motor vehicle account
3. Balance of the sales return account Rs 96,000
has not been taken in to the trial balance
4. Total of the discount column in the receipt
journal has been overstated by Rs 2,000

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10. Balance of the trade receivable control account as at 31. 03. 2022 was Rs. 640 000, which was
not agreed to ledger listing balance. Subsequent investigate identify the following errors.
(1) Total of the sales journal was overstated by Rs. 60 000.
(2) Credit note of Rs. 10 000 has been completely omitted from the books of accounts.
(3) A debtor balance of Rs. 20 000 has been omitted from ledger listing.
(4) Interest charged on debtors Rs 15,000 has been updated only in the general ledger
You are required to calculate.
(1) Amended trade receivable control account balance as at 31. 03. 2022
........................................................................................................................................................
(2) Debtors ledger listing balance as at 31. 03. 2022
........................................................................................................................................................

PART 02

Question 01
Lanka Coconut Ltd. Which has been in business since 1990 manufactures and distributes coconuts-based
production. Given below is the trading and profit and losses Account for the period ended March 31, 2023
prepared by a trainee accounts assistant.

Required
You are required to prepare Comprehensive income statement for the year ended 31.03.2023, as per
LKAS 01 (20 Marks)

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Question 02

(a) Prepare journal entries to correct the following errors. (Narrations are required)
(1) Even though a credit sales amounting to Rs. 123,560 had been correctly recorded in the Trade
receivable control account, the sales account had been credited as Rs. 132,560.
(2) Nothing had been recorded relating to the purchase of office furniture amounting to
Rs. 65,000, otherthan recording the cash paid in the cash control account.
(3) A discount received amounting to Rs. 2,860 had been accurately recorded in the Trade payable
control account; however, it has been credited to the discount allowed account.
(4) Motor vehicle repair expense of Rs. 40,000 has been debited to motor vehicle account
(5) Electricity bill received for the month Rs. 32 000 has not been accounted. (05 Marks)

(b) The cash account of Melwin’s Trading Company on 31/01/2022 showed an overdrawn balance of
Rs. 130 700 while the bank statement showed an overdrawn balance of Rs. 91,100.
Comparison of receipt and payment journal entries with entries of the bank statement has revealed
the following:
(i) Bank charges of Rs. 350 was not taken into the business books of Accounts
(ii) A cheque deposit of Rs. 132 100 made on 27/01/2022 was not realized as at 31/01/2021.
(iii) A cheque payment of Rs. 4,271 during the month was erroneously recorded in the receipt
journal
(iv) A standing order payment of Rs. 37 500 being owner’s insurance premium, was not taken into
the cash control account
(v) A cheque to the value of Rs. 132 142 issued during the month had not been presented for
payment up to 31/01/2022.
(vi) A direct deposit of Rs. 85 950 made in the bank by a customer was not taken into the receipt
journal

Required prepare
(a) Amended Cash Control Account as at 31.01.2022 (5 Marks)
(b) Bank Reconciliation Statement as at 31.01.2022

Question 03

Following information relates to a Tile manufactories firm “Siyana” for the year ending 31/03/2023

Rs.
Material Purchase 90 250
Material Purchase return 1 000
Direct Factory Salaries 30 200
Machinery Depreciation 4 000
Factory Electricity 4 000
Factory Sunday expenses 3 000
Payment made to patent holder 5 250
Salaries - Administration & Supervision 12 000
Sales 137 500

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Additional information

(1) Closing Stock of the business, consist with followings

2022/04/01 2023/03/31
Material 3,900 4,850
Work in Progress 550 800
Finished Goods 10,000 ?

(2) 2/3 of the Administration & Supervision Salaries is related to production division.
(3) Finished goods inventory as at 01/04/2022 included 4 000 tiles
(These have been sold during the year)
Total no. of tiles produced during the year and sold during the year was respectively 47 500 and 42 500.

Required:
(1) Prepare the manufacturing account for the year ending 31/03/2023
(2) Calculate the cost of a tile
(3) Calculate the value of the closing finish goods inventory
(4) Calculate the gross profit for the year ending 31/03/2023 (10 Marks)

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