Mirchawala’s Hub Of Accountancy:

FA1:Recording Financial Transactions

Mock Exam 1:
Question#1:
Kevin operates his petty cash with an imprest of $120. At the end of one particular week he had
vouchers in the petty cash tin of $17.45, $32.16 and $21.94.No other transactions took place.
In order to restore the petty cash balance what transaction should Kevin post?
A. Dr Petty cash $71.55 Cr Bank $71.55
B. Dr Bank $48.45 Cr Petty cash $48.45
C. Dr Petty cash $48.45 Cr Bank $48.45
D. Dr Bank $71.55 Cr Petty cash $71.55
Question#2:
The following statements relate to the trade payables control account:
(1) It is used to record transactions with credit customers
(2) Amounts posted to it are not part of the double entry system of accounting
Which of the above statements are correct?
A. Both statements
B. Neither statements
C. Statement 1 only
D. Statement 2 only
Question#3:
Simon was owed $496.70 from Trevor. He subsequently found out that Trevor had gone bankrupt
and could not pay. Simon therefore wanted to write off Trevor debts.
What would be the correct double entry to write off Trevor’s debt?
A. Dr Receivables $496.70 Cr Sales $496.70
B. Dr Receivables $496.70 Cr Irrecoverable debts $496.70
C. Dr Irrecoverable debts $496.70 Cr Receivables $496.70
D. Dr Sales $496.70 Cr Receivables $496.70
Question#4:
The trade receivables control account has a balance of $4,214. The total on the list of individual
customer balances is $4,890.
Which of the following would explain the difference?
A. An irrecoverable debts of $676 has been written off a customer’s individual account but has not
yet been written off the control account
B. A contra with the payables ledger for $676 has been accounted for in the list of customer
balances but not accounted for in the control account
C. A customer owing $676 has been omitted from the list of customer balances
D. The sales day book is understated by $676
Question#5:
Dorien owns a shop and rents out the flat above the shop.
What is the correct double entry to account for the rent she receives?
A. Dr Rental income Cr Cash
B. Dr Cash Cr Sales
C. Dr Cash Cr Rental income
D. Dr Sales Cr Cash

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Question#6:
Brian issues a document to a customer indicating that the amount owed is being reduced to reflect
sales return.
What is the document?
A. Advice note
B. Credit note
C. Delivery note
D. Debit note
Question#7:
Desmond is performing a control account reconciliation between the trade payables control account
and the list of supplier’s balances. He finds that a purchase day book total has been understated by
$3,000
Where will the error need to be corrected to ensure the two balances reconcile?
A. Control account only
B. Neither the control account nor the list of supplier’s balance
C. Both the control account and the list of supplier’s balance
D. List of supplier’s balances only
Question#8:
The balance on the trade payables control account should be equal to which other figure in the
accounting system?
A. The total of the balances on the individual customer’s account
B. The total of the balances on the individual supplier’s account
C. The balance on the trade receivables control account reconciled for items in transit
D. The balance on the trade receivables control account
Question#9:
Which of the following accounts would show a credit balance?
Account 1: Total Dr $400 Total Cr $200
Account 2: Total Dr $200 Total Cr $100
Account 3 Total Dr $300 Total Cr $300
Account 4: Total Dr $200 Total Cr $300
A. Account 4 only
B. Accounts 3 and 4
C. Accounts 2 and 3
D. Accounts 1 and 2
Question#10:
Which of the following should be reported in the statement of profit or loss?
A. Revenue
B. Receivables
C. Non-current assets
D. Payables
Question#11:
Warren is a window cleaner. He cleaned Millie’s windows and she paid him $10 in cash.
What kind of transaction is this?
A. Sale of goods by Warren
B. Sale of service by Millie
C. Purchase of a service by Millie
D. Purchase of goods by Warren

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Question#12:
Which of the following would be classified as revenue expenditure?
(1) Rental income
(2) Purchase of machine
(3) Purchase of goods for resale
(4) Employees’ wages
A. 3 and 4
B. 1 and 2
C. 2 and 4
D. 1 and 3
Question#13:
In error Tariq posted goods he purchased for his own use into the business purchases account
Which of the following journals will correct this error?
A. Dr Sales Cr Drawings
B. Dr Purchases Cr Drawings
C. Dr Drawings Cr Purchases
D. Dr Drawings Cr Sales
Question#14:
Arthur sold to Maebh for $5400 he subsequently realized he had overcharged Maebh by $200
Which of the following documents would Arthur issue to correct this overcharge?
A. Credit note
B. Debit note
C. Invoice
D. Remittance advice
Question#15:
When the trial balance was prepared the following two ledger accounts were omitted and a
suspense account had to be created to make it balance:
$
Irrecoverable debts expense 5,780
Discounts received 4,920
What was the balance on the suspense account?
A. $860 Cr
B. $860 Dr
C. $10,700 Cr
D. $10,700 Dr
Question#16:
What is the correct double entry to write off an irrecoverable receivables balance?
A. Dr Irrecoverable debt expense Cr Trade receivables
B. Dr Irrecoverable debt expense Cr Trade payables
C. Dr Trade payables Cr Irrecoverable debt expense
D. Dr Trade receivables Cr Irrecoverable debt expense

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Question#17:
Fatima has made an error in posting a sales return from the sales returns day book to the general
ledger.
Which book of prime entry should be used to record the correction of the error?
A. Journal
B. General ledger
C. Sales return day book
D. Sales day book
Question#18:
The following extract of account codes is taken from a business’s accounting manual:
Current assets (Account number 20000 to 25999)
Bank 20000
Cash 21000
Petty cash 22000
Trade receivables 23000
Other receivables 24000
Inventory 25000
Current liabilities (Account number 40000 to 44999)
Trade payables 40000
Other payables 42000
Bank overdraft 44000
Which of the following would be an appropriate account code for Parkers, a credit customer?
A. 25545
B. 44564
C. 23274
D. 40402
Question#19:
Cash sales of $15,800 have been correctly entered in the cash account but entered as $18,500 in the
sales account.
What is the double entry to correct this transaction?
A. Dr Sales $2,700 Cr Cash $2,700
B. Dr Sales $2,700 Cr Suspense account $2,700
C. Dr Cash $2,700 Cr Sales $2,700
D. Dr Suspense account $2,700 Cr Sales $2,700
Question#20:
Which of the following entries correctly records a purchase of materials on credit?
A. Dr Materials Cr Cash book payment
B. Dr Materials Cr Purchase day book
C. Dr Cash book payment Cr Materials
D. Dr Purchase day book Cr Materials
Question#21:
At the start of the year Bharvinder had an interest free loan of $20,000.During the year he repaid
$10,000
Which part of the accounting equation will change as a result of the loan repayment?
A. Liabilities and profit
B. Capital and liabilities
C. Assets and liabilities

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D. Capital and assets

Question#22:
Alvin received a supplier statement from Darcy showing Alvin owed Darcy $21,980. Alvins
records showed he only owed Darcy $20,140
Which of the following could be responsible for the discrepancy?
A. Darcy has recorded a payment made by Alvin twice in error
B. Alvin has made a payment not yet received by Darcy
C. Darcy has performed a contra against a balance she owes to Alvin
D. Darcy has issues a credit note to Alvin which he has not yet received
Question#23:
In Khalid’s cash payments book for the month of May, the trade payables column totalled $7,400.
What does this amount represent?
A. The amount owed to Khalid’s suppliers at the end of May
B. The amount paid to Khalid’s suppliers during May
C. The amount invoiced by Khalid’s suppliers in May
D. The discounts received from Khalid’s suppliers in May
Question#24:
Which of the following would appear on a supplier’s statement?
(1) Invoices issued during the period
(2) Trade discounts given during the period
(3) Credit notes issued during the period
(4) Payments made during the period
A. 2 and 3 only
B. 1,3 and 4 only
C. 1,2,3 and 4
D. 1 and 4 only
Question#25:
Which of the following correctly represents the accounting equation?
A. Capital $49,000 Assets $27,000 Liabilities $22,000
B. Capital $49,000 Assets $22,000 Liabilities $27,000
C. Capital $22,000 Assets $27,000 Liabilities $49,000
D. Capital $27,000 Assets $49,000 Liabilities $22,000
Question#26:
The total of the discounts column in the cash payments book is $140.
How should this be posted in the ledger?
A. Dr Discounts received $140
B. Cr Trade payables $140
C. Dr Trade payables $140
D. Cr Discounts received $140
Question#27:
The trade receivables control account shows a balance of $42,500 but the list of customer balances
shows a total of $45,200
Which of the following could explain the difference?
A. A customer balance of $2,700 has been omitted from the list of balances
B. The sales day book is overcast by $2,700
C. A credit note of $2,700 has been correctly treated in the customer’s individual account but not
entered into the control account
D. The trade receivables column of the cash receipts book is overstated by $2.700

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Question#28:
Esther received $4,418 from a customer to whom she had sold goods on credit for $3,760 plus sales
tax of $658
What is the double entry for this receipt in the account of Esther?
A. Dr Sales $3,760 Cr Cash $3760
B. Dr Cash $4,418 Cr Account receivables $4,418
C. Dr Cash $3,760 Cr Sales $3,760
D. Dr Accounts receivables $4,418 Cr Cash $4,418
Question#29:
Which of the following are valid reasons for preparing an aged receivables analysis?
(1) It is part of the double entry system
(2) To identify receivables which need to be followed up to ensure payment
(3) To help calculate allowance for irrecoverable debts
(4) To ensure the trial balances
A. 2 and 3
B. 1 and 4
C. 1 and 3
D. 2 and 4
Question#30:
The following is an extract from a ledger account:
Cash ledger:
$ $
9 Oct Cash 1,270 26 Oct Cash 587
19 Oct Cash 1,959
30 Oct Cash 1,035
What is the closing balance on the cash account?
A. Debit balance of $4,264
B. Debit balance of $3,677
C. Credit balance of $4,264
D. Credit balance of $3,677
Question#31:
Joanna makes regular payments to a specific charity. The cash goes straight from her account and
the charity cannot amend the amount paid.
What method of payment is Joanna using?
A. Petty cash payment
B. Direct debit
C. Standing order
D. BASC payment
Question#32:
When performing a bank reconciliation which of the following would require adjustments to the
cash book balance?
(1) Unpresented cheques
(2) Bank chargers not yet accounted for
(3) Outstanding lodgements
(4) Standing order payment not accounted for
A. 1 and 3
B. 2 and 4

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C. 1 and 4
D. 2 and 3
Question#33:
Which of the following checks should the petty cashier make prior to paying out petty cash?
(1) That the claim is supported by appropriate documentation
(2) That the claim has been authorised by an appropriate signature
(3) The credit rating of the business receiving the payment
(4) That the amount is within the petty cash limit
A. 1,2 and 4
B. 3 and 4
C. 2 and 3
D. 1 and 2 only
Question#34:
The bank statement of Hugo showed a debit balance of $12,800. The bank reconciliation showed
there were outstanding lodgements of $3,400 and unpresented cheques of $4,700
What is the correct amount of cash that should be recorded in Hugo’s accounts?
A. $11,500 Cr
B. $14,100 Cr
C. $14,100 Dr
D. $11,500 Dr
Question#35:
Manfred runs his own business and operates an imprest system of petty cash maintaining a float of
$200.At the end of November there is cash of $37.20 and vouchers of $162.80.
How much will Manfred need to pay into petty cash to maintain the float?
A. $200
B. $125.60
C. $37.20
D. $162.80
Question#36:
The following is extracted from the trial balance at the year-end:
$
Capital 9,000
Sales 32,000
Purchases 26,000
Trade receivables 23,000
Inventory 14,000
Trade payables 12,000
Bank overdraft ?
What is the figure for the bank overdraft?
A. $28,000
B. $10,000
C. $22,000
D. $12,000
Question#37:
Eddy has purchased a van paying by cheque. Eddy uses account codes in his ledgers. His account
codes include:
Bank 2150
Motor vehicles 4270

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Purchases 3820
Which of the following is the correct double entry to record the transaction to the correct
account?
A. Dr 2150 Cr 4270
B. Dr 4270 Cr 2150
C. Dr 2150 Cr 3820
D. Dr 3820 Cr 2150
Question#38:
A transaction has been recorded in the ledger of Samir as follows:
$ $
Equipment
19 Oct Bank 16,800
Bank
19 Oct Equipment 16,800
What was the transaction?
A. Banking of the proceeds from the sale of equipment
B. Receipt of a bank loan to purchase equipment
C. Purchase of equipment paid for by cheque
D. Purchase of equipment on credit
Question#39:
The following information for wages and salaries has been taken from the accounts of Roman:
$
Wages and salaries (gross) 65,708
Income tax 15,770
Employer’s pension contributions 5,257
Employees’ pension contributions 3,942
There are no statuary or non-statutory deductions other than the above.
What is the Roman’s total wages and salaries expense?
A. $70,965
B. $74,907
C. $90,677
D. $65,708
Question#40:
Jan is employed at an annual salary of $18,720. She is contracted to work 30 hours per week. She is
not paid for the first seven hours of overtime worked in a week. Any overtime in excess of seven
hours in a week is paid for at double time.
During one week Jan worked 12 hours of overtime.
What will be Jan’s overtime pay for the week?
A. $288
B. $60
C. $120
D. $480
Question#41:
Jasminder had correctly recorded a wages and salaries expense of $32,000 in her accounts. She only
has two employees who each earn a gross salary of $14,000 per annum.
Which of the following could explain the difference between the gross salaries and total wages
and salaries in the accounts?
A. Employee pension contributions

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B. Jasminder’s Drawings
C. Pension contributions paid by Jasminder on behalf of her employees
D. Employee income tax payments
Question#42:
Velma sent an invoice to Marion for goods purchased. Velma subsequently issued a debit note to
Marion.
Which of the following would explain the issue of debit note?
A. The invoice was incorrectly totalled and overstated by $500
B. Packing and posting costs payable by the customer were omitted from the invoice
C. The invoice should have been sent to a customer called Maureen not Marion
D. Marion has refused some of the goods as they were faulty
Question#43:
Bob bought $2,000 of goods from Harvey on 1 November 20X7. He agreed to pay Harvey on 31
January 20X8
What kind of transaction is this from Harvey’s point of view?
A. Credit sales
B. Credit purchases
C. Cash sales
D. Cash purchases
Question#44:
Which of the following items would appear on opposite sides of the trial balance?
A. Sales and capital
B. Trade receivables and purchases
C. Motor vehicles and inventory
D. Trade payables and expenses
Question#45:
Alfredo runs his own business maintaining receivables and payables control accounts as part of his
accounting system.
When preparing the trial balance which one of the following errors would require the creation of a
suspense account?
A. Alfredo’s drawings of $320 have been recorded as wages and salaries
B. A bank overdraft of $880 is recorded as a positive cash balance
C. The purchase day book is overstated by $420
D. $250 of motor vehicle repairs is posted to the motor vehicles account
Question#46:
Jenny has trade receivables of $92,320 at the start of November. During November she had the
following transactions:
$
Cash sales 15,200
Cash receipts from customers 46,420
Credit sales 38,170
Irrecoverable debts written off 2,600
What is the balance on Jenny’s trade receivables at the end of November?
A. $96,760
B. $97,970
C. $81,470
D. $66,270

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Question#47:
Xena buys goods from Alex for $20,800 on credit. She subsequently returns goods worth $3,100 and
pays him $9,200.
In Xena’s ledges, what is the balance with Alex as a result of these transactions?
A. $26,900 Cr
B. $26,900 Dr
C. $8,500 Cr
D. $8,500 Dr
Question#48:
Rodger is registered for sales tax which is charged at 17.5%. A customer is invoiced for goods
with a list price of $240,000.  The customer is given a trade discounts of 25%
How much sales tax should be included on the invoice?
A. $26,809
B. $31,500
C. $35,745
D. $42,000
Question#49:
What is the purpose of a journal?
A. To record unusual movements between accounts
B. To record when all transactions were made between accounts
C. To record the purpose of all transactions made in the accounts
D. To record all individual transactions entered into the sales day book
Question#50:
Which of the following are valid reasons for having a formal document retention policy?
(1) To help minimise costs associated with maintaining business records
(2) To ensure that all business records are kept for the maximum time possible
(3) To help locate business records
(4) To ensure the trial balance balances
A. 1 and 4
B. 2 and 4
C. 2 and 3
D. 1 and 3

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