capital introduced on 30 June 2015 20 000

drawings for the year ended 31 December 2015 35 000

capital at 31 December 2015 90 000
3

5 What
A was thecompared
book-keeper profit for the
thebusiness
year ended
bank 31 December
statement 2015?
with the cash book. He then updated the
BAD   DEBTS  
cash book Aprepared
and finally ND  PROVISION   FOR  
a bank reconciliation DOUBTFUL  DEBTS  
statement.
A $10 000 B $30 000 C $35 000 D $40 000
  Why was the bank reconciliation statement prepared?
Q1.  
A to ensure no transactions had been omitted from the cash book
12 Draft financial statements showed the following:
B to establish the value of unpresented cheques
C $ bank statement balance
to explain the difference between the cash book balance and the
D to find out if any cheques had been
profitdishonoured
for the year 18 700
total current assets 41 200
6 A suspense account was opened to record the difference on a trial balance.
total current liabilities 36 050
The following errors were then discovered.

It was then decidedallowed

1 Discount to create a provision
of $2000 forbeen
had only doubtful debts
entered in theof $2100.
sales ledger control
account.
Which figures were shown in the final financial statements?
2 A cheque for $1500 paid for repairs had been entered as $5100 in the repairs
account.
profit for the year current assets current liabilities
What was the opening balance on the suspense account?
$ $ $
A $1600 credit
A 16 600 39 100 36 050
B $1600 debit
B 16 600 41 200 33 950
C $5600 credit
C 20 800 41 200 38 150
D $5600 debit
D 20 800 43 300 36 050
7 Inventory costing $1200 has been damaged. It would normally be sold for $1800.

It can be sold for $1700 if repairs are undertaken at a cost of $600. To replace the inventory
would cost $1000.  
(Nov   16  /13/Q12)  
At which value should the damaged inventory be shown in the financial statements?
 
A $1000
Q2.   B $1100 C $1200 D $1800
 
8 A company’s trial balance showed trade receivables of $14 600 and an existing provision for
doubtful
© UCLES 2016 debts of $470. 9706/13/O/N/16 [Turn over
It was discovered that the trade receivables included an irrecoverable debt of $500. A contra
entry of $400 was also to be made.

The provision for doubtful debts is to be maintained at 5% of trade receivables.

Which amount for doubtful debts was charged in the income statement?

A $215 B $235 C $470 D $685

 
 
(Nov  16  /11/Q8)  
  2016
© UCLES 9706/11/O/N/16 [Turn over
 
 
 
 
 
 
 
 Q3.   35

11
5 AAt sales
31 December the following
ledger control accountinformation wasAn
was prepared. available.
irrecoverable debt of $40 was omitted and a
discount allowed of $68 was entered as $86.
$
What was the total effect of these errors on the closing balance of the sales ledger control
account? non-current assets at net book value 10 000
A $22 overstated current assets 5 000
B $22 understated provision for doubtful debts (1 500)
C $58 overstated current liabilities (3 000)
D $58 understated
It was decided to reduce the provision for doubtful debts to $800.

6 Which
The trialeffects
balancewilltotals
this adjustment have on the profit for the year and on net assets?
are as follows:

profit for the debit

year $500 150
net assets credit $500 000

A error could
Which decrease decrease
have caused the difference?

A B A cash sale
decrease increase
has only been recorded in the sales account.
B C A credit purchase
increase has only beendecrease
recorded in a supplier’s account.
C D A credit sale
increase increase
has not been recorded.
 
(June16  
D A credit/13/Q11)  
sale has only been recorded in a customer’s account.
12 Q4.  
The table shows information relating to closing inventory.
7 A business maintains a provision for doubtful debts of 5% per annum. It has trade receivables
balances of $560 000 at the start and $468 000 at the end of$ the financial year.

Which statements are correct? cost 50 000

realisable value 45 000
1 Customers’ accounts have been credited with $4600.
costs of realisation 5 000
2 $4600 is treated as income in the income statement.
replacement cost 35 000
3 $4600 is deducted from current assets in the statement of financial position.
What
A 1,is2 the
andvalue
3 ofBthe 1closing
only inventory?
C 2 only D 2 and 3 only
A $35 000 B $40 000 C $45 000 D $50 000

(March  16  /12/Q7)  

Q5.   4

8 A business makes a provision for doubtful debts equal to 10% of trade receivables.

The provision at 31 March 2013 was $8300.

The trade receivables after the provision on 31 March 2014 were $55 800.

What is the change in provision over the 12 months?

A $2100 decrease
B $2100 increase
© UCLES
C 2016
$2700 decrease 9706/12/F/M/16 [Turn over

© UCLES
D 2016 9706/13/M/J/16 [Turn over
 
$2700 increase
(Nov  15  /13/Q8)  
9 An entry of $700 in the discount received account had not been entered in the purchases ledger.
During the year a machine was sold for $1000. There was only one entry made and it was a
credit in the bank account.

What is the balance on the suspense account?

A $1700 credit
 A provision
credit for depreciation
credit 40 000
income statement 180 000
B credit debit
C debit credit
C land and buildings 140 000
D debit debit
revaluation reserve 140 000
Q6.  
6 A trial balance at 30 June, before making end of year adjustments, showed the following.
D land and buildings 140 000
provision for depreciation 000
40 debit credit
revaluation reserve $ $ 000
180
trade receivables 35 600 –

8 At 1 January 2014provision for doubtful

a business had debts – of $700.
prepaid rent 1 160 In July it paid an invoice for $9300 and
on 31 December it transferred an expense of $9000 to the income statement.
At 30 June, it was decided to write off a bad debt of $1600 and to make a provision for doubtful
debts equal to 2% of trade receivables.
Which value appeared in the statement of financial position at 31 December 2014?
What was the total decrease in the profit for the year ended 30 June arising from the bad and
doubtful
A $400 debts?
other payables
A $680 B $1120 C $2080 D $2280
B $400 other receivables
 
(Nov   15  /12/Q6)  
C $1000 other payables
 
  D $1000 other receivables
Q7.  
9 Which cost should be treated as revenue expenditure?

A installing a new sound system in a car

B purchase of a trailer for a car
C replacing a damaged engine of a car
D replacing an old car with a new one

 
(Nov  15  /12/Q9)  
 
  5
Q8.  
13 A business has the following balances at the end of its financial period.

$
© UCLES 2015 9706/12/O/N/15 [Turn over
© UCLES 2015 trade receivables 9706/12/O/N/15 10 620
bad debt not yet written off 260
provision for doubtful debts brought forward 460

What should the business do if it wishes to maintain the bad debt provision at 5% of trade
receivables?

A Decrease the existing provision by $58.

B Increase the existing provision by $58.
C Decrease the existing provision by $71.
D Increase the existing provision by $71.
 
(Nov15/11/Q13)  
14  Motor vehicles purchased for $530 000 at the start of the year have been incorrectly depreciated
 
for the whole year at 10% instead of 25%.

Ledger balances after the entries have been posted:

motor vehicles at cost 530 000

provision for depreciation 53 000
   3
Q9.  
4 A business provides the following information.

trade provision for

receivables doubtful debts
$ $

31 December 2013 46 200 1386

31 December 2014 43 100 1724

Which statement must be correct?

A The rate of provision for doubtful debts has decreased.

B The rate of provision for doubtful debts has increased.
C The value of bad debts incurred has decreased.
D The value of bad debts incurred has increased.
 
(June  15/13/Q4)  
5   The following information relates to a manufacturing business.
Q10.   3
$
4 A business started on 1 January 2013. At 31 December 2014 the following information is
available. factory overheads 590 000
prime cost 2 000 000
31 December 2013 31 December 2014
work in progress at start of $year 83 000 $

trade receivableswork in progress at end of

80year
000 65 000100 000
increase in provision for doubtful 4 000 2 000
What was theincost
debts of production?
income statement
A $1 392 000 B $1 428 000 C $2 572 000 D $2 608 000
What is the rate for provision for doubtful debts in 2014?

A 2% B 3.33% C 5% D 6%
6  
A summary of a trader’s bank statements for his first year of trading showed the following
(June  
amounts. 15/12/Q4)  
5   A business purchases inventory on a credit basis.
Q11.  
Which item affects the amount paid to suppliers?
$
  2
receipts from credit customers 25 000
  A bad debts
1 Which entries
B contra withare
takings
therequired
from
to show
sales ledger
cash sales
a decrease banked
in the 82 000 for doubtful debts?
existing provision

discount
C trader
The allowed
took $2000 adebit
month from takings as drawings beforecredit banking them. Trade receivables
atDthereturns
year end amounted
inwards to $9500.
A bad debts account provision for doubtful debts account
What was total revenue for the year?
B income statement provision for doubtful debts account
6 A business depreciates its non-current assets at 20% using the straight-line method. Depreciation
$73 500 on a time
Ais calculated $92in500
B basis the year of C $121 500
acquisition D $140 500
and disposal.
C provision for doubtful debts account bad debts account
D provision for doubtful debts account income statement
$
 
 
non-current assets, at cost, 31 December 2013 200 000
2 A trader, whose year end was 31 December 2014, paid business rates of $3000 on
(June   15/11/Q1)  
1 November
purchase of machinery 1 January 2014 50 000
2014. The business rates were for the six months ending 31 March 2015, but no
adjustment haddisposal
© UCLES 2015
been made for the prepayment.
of machinery 30 September 2014
9706/13/M/J/15 40 000 [Turn over
non-current
Which effect does assets,have
this omission at cost, 31 December
on the 2014
profit for the year? 210 000

Whatoverstated
A is the depreciation
$1500 charge for non-current assets for the year ended 31 December 2014?
B
A overstated
$42 000 $2000
B $48 000 C $50 000 D $52 000
 accrued expenses 8 125
bank balances 14 920 3 612
trade payables 18 148
loan (10 years) 15 000

 
What is the total for current liabilities?

  A $26 273 B $26 380 C $29 885 D $44 885

Q12.  
2 The provision for doubtful debts at 1 January 2013 was $1580.

Trade receivables at 31 December 2013 were $44 750.

An irrecoverable debt of $12 500 had not been written off.

The provision for doubtful debts was 5%.

Which entry for doubtful debts was included in the income statement for the year ended
31 December 2013?

A credit $32.50
B credit $657.50
C debit $32.50

 
D debit $657.50

(Nov  14/13/Q2)  
3 Q13.  
On 1 October 2011 a company purchased machinery for $26 000. It was depreciated at a rate of
 
20% per annum using the reducing balance method.
2
On 30 September 2013 the machinery was sold for $12 000.
1 At the end of its financial year a business had trade receivables of $16 000 and had provision for
doubtful debts
What is the of $640.
profit or lossThe provision is to be maintained at 5%.
on disposal?
Which amount
A $3600 lossis shown in the income
B $3600 profit statement?
C $4640 loss D $4640 profit

A $160 credit B $160 debit C $800 credit D $800 debit

 
2   The non-current assets of a business are shown in the table.
(Nov  14/12/Q1)  
Q14.   end of year start of year
  3 $ $

4 The following information

cost is available for a business.
360 000 300 000
accumulated depreciation 120 000 75 000
© UCLES 2014 9706/13/O/N/14 $
net book value 240 000 225 000
trade receivables at 1 January 63 000
During the year, non-current
provision assets costing
for doubtful debts at$110 000 were bought and non-current
1 January 1 890 assets with a
net book value of $20 000 were sold.
total credit sales for January 327 000
What was the depreciation charge for the year?
cash from customers after 4% settlement discount 324 000
A $35 000 B $45 000 C $50 000 D $75 000
A provision for doubtful debts of 2% is to be made.

3 AWhat
sole adjustment
trader calculated a draftinprofit
is required for the year
the income of $56 750.
statement?

He
A then
$570discovers
credit that discounts received of $580 and discounts allowed of $665 had been
recorded on the wrong sides of their respective accounts.
B $570 debit
What is the correct profit for the year?
C $840 credit
AD $56 580
$840 debit B $56 665 C $56 835 D $56 920
 
 
(Nov  
$6500.14/11/Q4)  
4 Opening inventory is found to be overstated by $8000 and closing inventory is overstated by
5 The following information relates to non-current assets.
 
$
What is the effect of the correction of these errors on profit for the year?

A decrease of $1500 net book value at 1 January 2013 20 000

B net book value at 31 December 2013

decrease of $14 500 18 000

C increase of $1500 receipts from disposals 3 500

 return basis. He provides the following information.
A credit 17 500
B credit 19 100 $ per unit
C debit 17 500
historic cost paid 60
D debit 19 100
selling price 85
Q15.   current replacement cost 65
3 On 31 December 2012 John’s statement of financial position showed the following.
Which value should appear in the statement of financial position for inventory?
4 $
A $6000 B $6300 C $6825 D $8500
8 A company’s purchases ledger
tradecontrol account showed an opening
receivables 18 000 balance of $24 640 credit.

2 The
When following information
preparing isprovision
available
a sole trader’s
for
fordoubtful
annual the debts
year.
accounts,
720
no adjustment was made for a prepayment at
the end of the year.
On 31 December 2013 John decides to increase the rate of provision to 5%. His income
$
statement
What is theshows
effect aofdebit of $80 for the change in the provision.
this omission?
purchases journal (including invoice for $910 entered twice) 17 100
What is the value of John’s total trade receivables on 31 December 2013?
A current
sales assets
ledger overstated
control account contraowner’s capital overstated 850
A $12 800 B $14 400 C $16 000 D $20 000
B current assets
credit notes understated
issued by suppliers owner’s capital understated 1 250  
(June  
C 14/13/Q3)  
profit for thereceived
discounts year overstated trade payables understated 420
4   company sells goods at a mark up of 25%.
A

  TheD profit for the year understated

Thepurchases ledger control
following information account at
is available balance
trade payables understated
the endat of
the year
the end was
financial $19 870 credit.
year.
Q16.  
How much cash was paid to creditors during the year?
3 Which statementgoods in warehouse
is correct? $300 000 (cost)
A $18 440 $20 140
B sent C $20 940 (atD $22 640
A The balancegoods on the on debts
bad sale orrecovered
return $200 000 is
account invoice
carried price) to the next accounting
down
period.
9 AWhat was the
suspense value of
account closing
was inventory
opened when a in trial
the financial
balance statements?
failed to balance. It was then discovered
B The balance on the bad debts recovered account is credited to the income statement.
that returns of $200 had been correctly entered in the supplier’s account but debited in the sales
A $300 000 B $450 000 C $460 000 D $500 000
returns
C The account.
balanceThis wasprovision
on the the only error.
for doubtful debts account is calculated before the deduction of
bad debts.
What was the balance on the suspense account before this error was corrected?
D The balance on the provision for doubtful debts account is not included in a trial balance.
A credit $200  
(June  
B credit14/12/Q3)  
$400
 
4 A trader took out a 6% bank loan of $30 000 on 1 November 2013, to be repaid in full in 10 years’
© UCLES 2014 9706/13/M/J/14
Ctime. Interest
$200is to be paid annually. No interest had been paid by 30 April 2014.
 
debit

Q17.  
DHowdebit $400
should this be recorded in the statement of financial position at 30 April 2014?
 
current liabilities non-current liabilities
10 Trade receivables at 31 December 2013 were $350 000. It is later found that $33 000 should be
$ $
written off as bad debt. The provision for doubtful debts at the year end includes a specific
provision of $2500 and a general provision of 4%.
A 0 30 000
What
B is the net amount
900 of trade receivables at 31 December 2013?
30 000
A C$300 500 1 800
B $301 820 30
C 000
$301 920 D 303 000
 
  D 30 900 0
11 (June   14/11/Q10)  
A business has a draft profit for the year of $182 750.
  The2014
following adjustments have not yet been included in the financial statements.
Q18.  
© UCLES 9706/12/M/J/14

  1 a decrease of $2800 in the provision 3 for doubtful debts

5 2 a prepayment
At the beginning of the yearofa$3900
companyfor rent
hasreceivable
a provision for doubtful debts of $1000. At the end of
the year the required provision is $2500. During the year debts of $1500 are written off and $100
What is the actual
is received profitoffor
in respect the year?
a debt written off many years ago.
A $176 050 B $181 650 C $183 850 D $189 450
What is the net amount charged to the income statement for bad and doubtful debts?

A $1500 B $2500 C $2900 D $3000

 
(Nov  13/13/Q5)  
©6UCLES 2014would
What 9706/11/M/J/14
be treated as part of the capital cost of the purchase of a building?
 
1 legal costs of the purchase
2 redecoration of the building
3 installation of air conditioning needed for the machinery in the building

A 1 only B 1, 2 and 3 C 1 and 3 only D 2 and 3 only

 Q19.  
  3

5 The table shows information about a business.

provision for doubtful debts at 1 January 2012 700

trade receivables at 31 December 2012 (after writing off a bad 15 000
debt of $30)
charge to income statement for bad and doubtful debts for year 200
ended 31 December 2012 (including the bad debt written off)
2
What is the total percentage provision that has been made for doubtful debts at
1 Which
31 item would
December 2012?result in a credit entry in an income statement?

A an increase in the
3.5% B provision
4.7% for doubtful
C debts
5.8% D 6.0%
 
  B a reduction in the provision for doubtful debts
6 (Nov  
The
C the13/11/Q5)  
following information
creation is extracted
of a provision from debts
for doubtful the statement of financial position of a business.
  D the writing off of a trade receivable
 
$
2
Q20.   bank loan (repayable 2019) 16 200
2 A business prepares its financial statements on 31 December. Insurance premiums paid were as
1 Which item would result
follows. bankinloan interestentry
a credit owingin an income
1 880
statement?
bank overdraft 11 600
A an increasedate
in the provision for doubtful debts
period covered $
capital 20 710
B January
a reduction in2012 1 July 2011
the provision for to 31 December
doubtful debts2011 940
drawings 19 100
July 2012 1 January 2012 to 30 June 2012 1120
C the creation of a inventory
provision for doubtful debts 14 610
January 2013 1 July 2012 to 31 December 2012 1245
D the writing off of prepayments
a trade receivable 1 420
March 2013 1 January 2013 to 30 June 2013
trade payables 14 110
1880  
(June  13/13/Q1)  
2   A business prepares trade
Which amount should be shownreceivables
in the income statement for the050
year ended 31 December 2012?
its financial statements on 319December. Insurance premiums paid were as
Q21.  
follows.
A $1120 B $2060 C $2365
What is the value of the net current liabilities?
D $3305
 
A $1590 $2510
B date C $18 710period covered
D $20 320 $
3 A company has the following balances.

7
January 2012 1 July 2011 to 31 December 2011
A business sells computers. When they value their inventory they $exclude the value of the
940
inventory that is over one year old, as they may be obsolete.
July 2012
trade receivables at131January
December2012 to 30 June125
2012 2012
400 1120
Which accounting principle does this demonstrate?
January
provision2013 1 July
for doubtful debts2012 to 31 December
at 1 January 2012 12012
800 1245
A going concern
During the yearMarch
ended2013
31 December 1 January
2012 bad2013debtstoof30$20
June
500 2013
had been written 1880
off. The
B historical
company cost for 5% of trade receivables at each year end.
provides
Which amount should be shown in the income statement for the year ended 31 December 2012?
Whatprudence
C is the doubtful debts expense for the year ended 31 December 2012?
A realisation
D $1120 B $2060 C $2365D $6270 D $3305
 
A $3445 B $4470 C $5245

(June  13/13/Q3)  
3   A company has the following balances.
  [Turn over
 
© UCLES 2013 9706/11/O/N/13
$
 
  trade receivables at 31 December 2012 125 400
provision for doubtful debts at 1 January 2012 1 800

During the year ended 31 December 2012 bad debts of $20 500 had been written off. The
company provides for 5% of trade receivables at each year end.
 account to be debited account to be credited

A customer bank
B customer sales
C sales bank

  D sales customer

Q22.  
3 A statement of financial position includes a 10% provision for doubtful debts totalling $7800. The
income statement shows bad debts written off of $750 and bad debts recovered of $150.

What was the original value of trade receivables?

2
 
A $78 000 B $78 600 C $78 750 D $78 900
1   A bank statement showed an overdraft of $750.
4 (June   13/11/Q3)  
A club’s income and expenditure account for 2012 showed rent and rates of $4000.
A cheque issued in payment of rent for $570 had not been presented, and a cheque for $624
  On
received was omitted
31 December 2012from
rentthe statement.
owing was $600 and rates paid in advance was $800.
Q23.   3
The statement
What included
was the amount a bank
shown in charge of $50
the receipts butpayments
and it had notaccount
been entered
for rentinand
the rates
cash for
book.
the year
At the31
5 ended beginning of the
December 2012? year a business has a provision for doubtful debts of $2600. At the year
end the
What provision
amount shouldis toappear
be 5%inofthe
trade receivables.
balance sheet?
A $3800 B $4000 C $4200 D $5400
AThebank balance
balance on the$646sales ledger control account at the year end is $69 200, before writing off a
bad debt of $480.
B bank balance $1894
The business operates a separate bad debts account.
C bank overdraft $494
DWhat is the
bank entry in$696
overdraft the income statement for the provision for doubtful debts?

A $836 credit B $836 debit C $860 credit D $860 debit

2 A company pays rates annually in advance on 1 April each year. $4000 is paid by them on  
6   The table below shows how a non-current asset appears in the statement of financial position.
1 April 2009 and $4800 on 1 April 2010. The company’s accounting year end is 31 December.
(June  
What is1the
3/11/Q5)  
charge for rates in the 2010 income statement?
  $
Q24.  
A $4000 B $4200 C
non-current asset
$4600
at cost
D $4800
120 000
 
© UCLES 2013 9706/11/M/J/13

accumulated depreciation (18 000)

3 At the end of its financial year a business had accounts receivable of $16 000 and had a bad
debts provision of $640. Thenetprovision
book value
is to be maintained102 000
at 5 % of accounts receivable.

Which amount
The asset is shown
is revalued to in the 000.
$136 income statement?

$160
AWhat credit
is the B $160
journal entry debitthe revaluation?
to record C $800 credit D $800 debit
 
4   What might stop financial statements showing
debit credit
a true and fair view?
(Nov  11/13/Q3)   $ $

  A Achanges in depreciation methods from year to year

non-current asset at cost 16 000
  B income
changes in statement
dividend policy 16 000
Q25.  
3
non-current
C Bcreation assetrevaluation
of an asset at cost 16 000
reserve
4 accumulated
At 30 June depreciation
the balance 18 000
sheet of a business includes the following.
D inclusion of purchased
revaluation reserve goodwill in a balance34sheet
000
non-current asset at cost
C 34 000 $
revaluation reserve
5 A company has been depreciating 34
its IT equipment 000
trade receivables (debtors) over 5 years,
46 000but now finds that it is becoming
obsolete in 3 years.asset at cost
D non-current 16 000
provision for doubtful debts 5 % 2 300
revaluation reserve 16 000
What does the consistency principle permit the company to do?
During July, sales of $350 000 were made of which 20 % were in cash. Credit customers paid
$303 800 after
change deducting
thepart a 2 % cash discount.
depreciation
7 AA vehicle was exchanged policy
for a newto vehicle.
3 years and highlight the effect of this in its financial
statements
How much did the trade receivables (debtors) owe to the business at 31 July?
BWhich entries
change therecord the partpolicy
depreciation exchange?
to 3 years without indicating the effect on profits
A $15 200 B $16 000 C $22 200 D $76 000
C continue
accountto depreciate
debited over 5 years
account as per the existing policy
credited  
  Acontinue
5 DWhich tocash
error will depreciate over
not affect the 5balance?
motor
trial years but note that after 3 years the equipment will be obsolete
vehicles
(Nov  10/13/Q4)  
disposal
A B posting of motor
$3000 purchases to thevehicles
debit of the motor vehicle account
motor
B C posting vehicles
of $3000 cash
purchases to the credit of the motor vehicle account
© UCLES 2011 9706/13/O/N/11
motor
C D posting vehicles
of $3000 disposal
road tax refund to the debit of the motor vehicle account
D posting of $3000 sales to the debit of the motor vehicle account
2 A business paid $15 000 for electricity in the year. The opening prepayment was $1000 and the
closing accrual was $2000.

What was the charge for electricity for the year?

  A $15 000 B $16 000 C $17 000 D $18 000

Q26.  
3 A business makes a provision for doubtful debts equal to 5 % of its debtors.

At 31 March 2008 the provision for doubtful debts was $850.

2
At 31 March 2009 the debtors after the provision for doubtful debts were $17 100.
1 Which
How itemisisthe
much revenue expenditure?
increase in the provision for doubtful debts for the year ended 31 March 2009?
A
A cost of painting B
$45 new$50
office premisesCduring
$850constructionD $900
B cost of repairs to factory plant and machinery  
(Nov  09/12/Q3)  
  in
4 A
C business is separate
legal fees from its owner.
for the purchase This results
of new factory in only business transactions being recorded
premises
the accounts.
  D wages of a company’s own workmen for building an office extension
Q27.  
Which accounting principle applies?
3
2   A customer
businesspaid
entity
a deposit in advance for goods to be supplied at a later date.
4 A trial balance at 30 June, before making end of year adjustments, showed:
B materiality
How should this be recorded in the seller’s books?
C money measurement debit credit
debit credit $ $
D prudence
A cash trade debtors
customer 35 600 -

B cash provision
sales for doubtful debts - 1 160

customer
AtC30 June, prepayment
it was decided to write off a bad debt of $1600 and to make a provision for doubtful
debts equal to 2 % of trade debtors.
D customer sales
What was the total expense in the profit and loss account for bad and doubtful debts for the year
ended 30 June?
3 On 1 October 2004 a company purchased machinery for $26 000. It was decided to depreciate
the asset
$680 using the reducing
A 2009
© UCLES B $1120 balance method
C $2080
9706/12/O/N/09 % per
at a rate of 20 D annum.
$2280
 
  On 30 September 2006 the asset was sold for $12 000.
5 (June   08/1/Q4)  
A company has two fixed assets. Details are given in the table.
 
What is the profit or loss on disposal?

  A asset
cost residual
date bought
$3600 loss B $3600 profit C $4640 depreciation
loss method
D $4640 profit
$ value
Q28.  
X 1 Jan, Year 1 10 000 straight line life 5 years $2000
4 A trial balance shows:
Y 1 Jan, Year 1 20 000 reducing balance rate 20 % nil
Dr Cr
What is the depreciation charge for the year ended 31 December,
$ Year$2?

A $4800 B $5200 C $5600 D $6000

provision for doubtful debts 1200
debtors 28 000
6 Which transaction applies the matching concept?
$2100 of the debtors are irrecoverable and are to be written off. The owner of the business
A a machine acquired on long-term rental is included in fixed assets
wishes to make the provision for doubtful debts equal to 5 % of his outstanding debtors.
B computer equipment is depreciated over two years
What is the amount debited to the profit and loss account for the provision for doubtful debts?
C a building is revalued following a fall in property prices
A $95 B $1295 C $1400 D $2600
D a waste-paper basket is treated as revenue expenditure

 
7   The following debit balance appears on a trial balance after preparing the manufacturing account
(June  
for the 0 7/1/Q4)  
year.
  loose tools $18 000

What is this item?

© UCLES 2007 9706/01/M/J/07
A a creditor for loose tools
B the annual charge for loose tools
C a prepayment for loose tools
 How much should be debited to the motor van account?
3 A company’s net profit is $20 000. Capital receipts of $5000 have been treated as revenue
A $13 500
receipts. B $13 700
Capital expenditure $13 900
C been
of $4000 has D $13 950
treated as revenue expenditure.

What is the correct net profit figure?

2 A company has completed arrangements for the closure of part of its business next year.
29.  
A $11 000 B $19 000 C $21 000 D $29 000
 
What should the company create in this year’s accounts for the closure costs?

4 A a contingency
At the beginning of the year a business has a provision for doubtful debts of $2600. At the year
end the provision is to be 5 % of trade debtors.
B a liability
The abalance
C on the debtors’ control account at the year end is $69 200, before writing off a bad
provision
debt of $480.
D a reserve
The business operates a separate bad debts account.
3 The
Whatjournal entry in‘Debit
is the entry Subscription
the Profit and LossIncome,
Account Credit
for the Creditors’ was
provision for made debts?
doubtful in the accounting
records of a club.
A $836 debit B $860 debit C $836 credit D $860 credit
What does this represent?
 
5
  AA company
subscriptions owed by members
has issued non-cumulative preference shares and ordinary shares.
(Nov   06/1/Q4)  received by cheque
B subscriptions
  Which statement is correct?
  A If no preference dividend is paid, it is carried forward to a future year.
C subscriptions received in advance

30.  
D subscriptions refunded to members
 
B Preference shareholders always get a dividend.

4 Preference
C business
A shareholders
makes anddoubtful
a provision for ordinarydebts
shareholders
equal to 5always
% of itsget a dividend.
debtors.
D Preference shareholders may get a dividend.
At 31 March 2003 net debtors were shown in the Balance Sheet as $17 100.

At 31 March 2004 the balance on its Sales Ledger Control account was $19 000. In the year
© UCLES 2006 9706/01/O/N/06
ended 31 March 2004 a bad debt of $800 had been written off.

How much should be debited in the Profit and Loss Account for the year ended 31 March 2004
for the provision for doubtful debts?

A $10 B $50 C $55 D $95

 
 
(June  05/1/Q4)  
© UCLES 2005 9706/01/M/J/05

 
31.  
3

5 At the end of a financial period, a business has the following balances.

total debtors balances 10 620

bad debt not yet written off 260
provision for doubtful debt brought forward 460

What should the business do if it wishes to maintain the bad debt provision at 5 % of debtors?

A decrease the existing provision by $58

B increase the existing provision by $58
C decrease the existing provision by $71
D increase the existing provision by $71
 
 
6 (June  
A fixed0asset
4/1/Q5)  
is purchased on 1 April 2000 at a cost of $240 000. It has an estimated residual
  basis at the rate of 30 % each year.
value of $40 000 at the end of its 5 year life and is to be depreciated on the reducing balance

What is the depreciation charge for the year ending 31 March 2002 (to the nearest $)?

A $42 000 B $50 400 C $98 000 D $117 600

7 What does the ‘going concern’ principle mean?