JAN 2018

1. Which of the following financial statements shows the value of a business’ assets?
(a) Balance sheet
(b) Trading account
(c) Cash flow statement
(d) Profit and loss account

2. Which of the following accounts are nominal?

(a) Wages and rent
(b) Inventory and accounts receivable
(c) Machinery and plant
(d) Accounts payable and fixtures

3. Partnerships are formed for the purpose of

i. Combining capital from different persons
ii. Benefiting from different skills and specializations
iii. Sharing ideas, experience and responsibilities
(a) i and ii only
(b) i and iii only
(c) ii and iii only
(d) i, ii and iii

4. Rent expense which is still owing at the end of the period must be debited in the Profit and Loss
accounts and shown in the Balance sheet as a liability. Which accounting concept does this
represent?
(a) Accruals
(b) Consistency
(c) Going concern
(d) Money measurement

5. R.A. David operates a small grocery. You have been asked to assist in the preparation of the final
accounts for 2016 and have been provided with the following information:

Balance sheet as at 31 December, 2016

$
Debtors/receivables 40,000
Creditors/payables 25,000
Bank overdraft 35,000
Inventory of goods for resale 80,000
Non-current assets 180,000
Long-term loans 130,000

What was the capital at 1 January, 2017?

(a) $ 95,000
(b) $110,000
(c) $130,000
(d) $180,000
 Item 6 refers to the following information as shown in a cash account.

Cash Account

$ $
(opening balance) 400 3 May 2017 50
1 May 2017 Sales 150 7 May 2017 20
5 May 2017 Sales 75 9 May 2017 150
(closing balance) 405
625 625

6. From the accounts above, which of the following figures will be posted to the Trial Balance?
(a) $ 150
(b) $400
(c) $405
(d) $625

7. The working capital of P. Young and Sons is $15,500, and current assets is $16,500. What is the
TOTAL current liabilities?
(a) $ 1,000
(b) $15,500
(c) $16,500
(d) $32,000

8. Item 8 refers to the following balances at the end of a financial period:

$
Motor vehicles 2,000
Creditors 3,000
Debtors 2,000
Capital 11,000
Building 10,000
What is the TOTAL amount for the assets?
(a) $12,000
(b) $13,000
(c) $14,000
(d) $15,000

9. In which of the following accounting books would personal accounts be found?

(a) Sales Journal
(b) General Ledger
(c) Debtors’ and Creditors’ Ledger
(d) Purchases and Returns Journal

10. A wholesaler gives a 20% trade discount and a 2% cash discount. How much would a customer
pay for goods originally priced at $700?
(a) $548.80
(b) $571.20
(c) $722.00
(d) $851.00

11. Which of the following accounts is NOT nominal?

(a) Discount Allowed
(b) Carriage Inwards
(c) Commission
(d) Furniture
 Item 12 refers to the following information:
On 1 March 2015, Mr Arthur purchased $600 worth of goods for resale. He received a 3% trade
discount on this amount. The invoice also stated 2% 20 days, net 30 days. Mt Arthur settled the
amount, paying by cheque on 15 march 2015.
12. What was the amount Mr Arthur received as trade discount?
(a) $16
(b) $18
(c) $20
(d) $22

13. Which of the following persons monitors a company’s financial statements to discover a
desirable rate of return on capital?
(a) Investors
(b) Suppliers
(c) Customers
(d) Employees

14. W,X,Y and Z are partners sharing profits and losses in proportion to their capital. The capital of
each partner is shown in the table below:
Partner Capital $
W 300
X 200
Y 100
Z 300
What is Z’s share of a profit of $7,200?
(a) $ 800
(b) $1,200
(c) $1,800
(d) $2,400

15. The purchase of a motor van on credit from Things Caricom Motors Co. for use in a business
should be recorded as:
(a) Dr Motor Vehicle; Cr Bank
(b) Dr Motor Van expense; Cr Bank
(c) Dr Purchases; Cr Things Caricom Motors Co.
(d) Dr motor Vehicle; Cr Things Caricom Motors Co

16. In which of the following ledgers are nominal accounts found:

(a) General
(b) Sales
(c) Purchases
(d) Cash

17. In order to avoid writing numerous cheques for small amounts, a firm may set up a
(a) Bank draft
(b) General journal
(c) Petty cash fund
(d) Bank standing order
18. A businessman bought a new computer for $6,000. He paid $4,000 in cash an traded in his old
computer. What is the entry to record this transaction?
(a) Dr new computer $2,000
Dr cash $4,000
Cr New Computer $6,000
(b) Dr New Computer $4,000
Dr Cash $2,000
Cr Old Computer $6,000
(c) Dr Old Computer $2,000
Dr Cash $4,000
Cr New Computer $6,000
(d) Dr New Computer $6,000
Cr Old Computer $2,000
Cr Cash $4,000

19. Goods were sold on credit to John Brown. Which of the following double entries is a correct
record of this transaction?
(a) Dr Sales; Cr John Brown
(b) Dr John Brown; Cr Sales
(c) Dr John Brown; Cr Cash
(d) Dr Cash; Cr John Brown

20. Amalgamated Components was a private company until it admitted additional shareholders by
selling shares on the stock exchange. Amalgamated Components can now be described as a
(a) Private limited company
(b) Public limited company
(c) Statutory corporation
(d) Partnership

21. S. Thomas purchased a machine for $3,250 from Grell & Co Ltd, paying $1,250 in cash and
promising the balance in ten days. Which is the correct procedure for recording this transaction?
(a) Dr Machinery $3,250; Cr Cash $3,250
(b) Dr Purchase $3,250; Cr Grell & Co $3,250
(c) Dr machinery $3,250; Cr Cash $ 1,250 and Cr Grell & Co $2,000
(d) Dr Grell & Co$ 2,000 and Dr Cash $1,250; Cr Purchases $3,250

Items 22-24 refer to the following balance sheet

$ $ $ $
Capital at start 24,000 Leasehold premises 10,000
Less: Loss for year 2,200 Furniture, fittings 4,500
21.800 14,500
Less Drawings 1.800 Inventory 2,500
20,000 debtors 3,700
Creditors 2,100 Bank current a/c 2,100
Accrued expenses 1,200 Cash in hand 500
3,300 8,800
23,300 23,300
22. What is the total value of the fixed assets?
(a) $23,300
(b) $20,000
(c) $14,500
(d) $11,200

23. The closing capital is

(a) $20,000
(b) $20,700
(c) $21,800
(d) $22,800
24. The working capital is
(a) $2,600
(b) $5,500
(c) $6,200
(d) $6,800

Items 25 and 26 refer to the following information

Extract from Trading A/c of Retail Trader
Sales $36,000
Purchases $22,000
Gross Profit $11,000
Closing Inventory $ 6,000
Sales returns $ 1,000
Opening Inventory $ 8,000
25. What is the cost of goods sold?
(a) $ 7,000
(b) $ 9,000
(c) $24,000
(d) $30,000

26. What is the cost of goods available for sale?

(a) $ 7,000
(b) $ 9,000
(c) $24,000
(d) $30,000

27. Which of the following financial statements shows a net earnings of a business?
(a) Trial Balance
(b) Balance Sheet
(c) Profit and Loss Account
(d) Appropriation Account

Item 28 refers to the following information

Insurance A/c

2017 $ 2017 $
2 January Balance b/d 700 31 December P&L a/c 8,100
15 January Bank 8,000 31 December Balance c/d 600
8,700 8,700
28. What is the amount of insurance prepaid at the end of the year?
(a) $ 600
(b) $ 700
(c) $8,000
(d) $8,100

29. How would the purchase of equipment on credit affect a firm’s balance sheet?
(a) Increase asset; Increase liability
(b) Increase asset; Decrease liability
(c) Decrease asset; Increase liability
(d) Decrease asset; Decrease liability

30. An increase in the provision for bad debts will be

(a) Added to sales in the Trading a/c
(b) Subtracted from sales in the Trading a/c
(c) Included as revenue in the Profit and loss a/c
(d) Included as an expense in the Profit and loss a/c
31. To which of the following accounts would depreciation of office machines be transferred?
(a) Trading
(b) Appropriation
(c) Profit and loss
(d) Manufacturing

32. Under which of the following conditions would a ‘trial balance’ still balance?
I. A transaction was completely left out
II. Both a debit entry and a credit entry were overstated by the same amount
III. Both a debit entry and a credit entry were understated by the same amount
(a) I, II, III
(b) II and III only
(c) I and II only
(d) I only

Item 33 refers to the public limited company which issued a prospectus offering shares,
described in the table below, for sale at par value

Type of Share No. of Units Par Value

Ordinary 200,000 $2
5% preference 10,000 $5
33. If the issue was fully subscribed, how much capital did the company raise?
(a) $ 40,000
(b) $ 45,000
(c) $400,000
(d) $450,000

Item 34 refers to the following data which pertain to Tarisha Ali, an employee of a bank.
Monthly salary $3,500
Overtime $ 800

Income tax rate:

- 25% on every dollar above $2,000 of monthly salary
- 30% on overtime earned
34. The TOTAL income tax to be deducted from Tarisha Ali is
(a) $ 615
(b) $ 740
(c) $ 875
(d) $1,075

Item 35 refers to the following information

PC Bank
Bank Statement

Date: Dr $ Cr $ Balance $
December
1 Balance b/f 60
5 Cheque 90
14 Unit Trust: Standing Order 100
20 P. Palmer: Credit Transfer 30
29 Bank charges 85

35. What is the balance as per bank statement on 29 December?

(a) Cr $5
(b) Dr $65
(c) Cr $125
(d) Dr $5
36. In calculating the gross profit percentage, gross profit should be divided by
(a) Net sales
(b) Net profit
(c) Net purchases
(d) Cost of goods sold

37. Mrs Allen invested $20,000, Mrs Brown invested $5,000 and Mr Cable invested $5,000 in the
same business. The loss sustained during the year was $1,000. The partnership agreement is
silent on the item of losses, although profits are to be split in the ratio 2:2:1 in favour of Allen,
Brown and Cable respectively. How much of the loss would be borne by Mr Cable?
(a) $140
(b) $200
(c) $300
(d) $400

38. A non-trading organisation is MAINLY concerned with

(a) Importing goods for resale
(b) Trading only with wholesalers
(c) Making maximum profit for the proprietor
(d) Providing various services for its members

39. A trader had an opening capital of $3,900. If his drawings were $900 and his closing capital was
$4,860, what was the net profit?
(a) $ 900
(b) $ 960
(c) $1,860
(d) $3,000

40. In a partnership, which of the following is compulsory?

(a) Salary
(b) Interest on capital
(c) Interest on drawings
(d) Sharing of profits/losses

41. In a cooperative society, the daily affairs are administered by

(a) A majority of shareholders
(b) All members meeting together
(c) The chairman of the board only
(d) Persons elected or appointed to do so

42. A Suspense account shows a debit balance. Which of the following is LIKELY to give rise to such a
balance?
(a) The Discount Received was undercast in the Cash Book
(b) The figure taken from an invoice is incorrect but the postings are correct
(c) Cash received had been credited twice to the debtor’s account
(d) A sales invoice has been omitted

43. The term accounting refers to the

(a) Use of information in making business decisions
(b) Use of special ways of recording business information
(c) Journalizing, posting and balancing of accounts in special books
(d) Recording, analysing and interpreting of business information

44. A photocopying machine valued at $5,000 is depreciated at 10% using the straight line method.
What is its book value after TWO years?
(a) $4,000
(b) $4,050
(c) $4,500
(d) $4,980
45. In an effort to raise capital, a company offered 200 five per cent debentures at $100 each for
subscription. Five per cent is an indication that the company will
(a) Increase its capital by 5%
(b) Receive 5% of $20,000 as capital
(c) Pay 5% of $20,000 in interest to the debenture holders
(d) Receive 5% of $20,000 in interest from the debenture holder

46. The reward of profit received by a shareholder in a limited company is called

(a) Interest
(b) Drawings
(c) Dividends
(d) Commission

Item 47 refers to the following table

Period of debt Amount of Accounts Provision for Bad Debt
Receivable
Over 3 years $6,000 3% of Accounts Receivable
Over 2 years $4,000 2% of Accounts Receivable
Over 1 year $8,000 1% of Accounts Receivable
47. What is the TOTAL provision for bad debts for the year?
(a) $180
(b) $340
(c) $400
(d) $500

48. Which of the following documents acknowledges a loan to a company at a fixed rate of interest?
(a) Stock
(b) Debenture
(c) Certificate
(d) Memorandum

49. How does an increase in bad debt affect a sole trader’s financial statement?
(a) Decreases gross profit
(b) Increases gross profit
(c) Decreases net profit
(d) Increases net profit

50. Salaries paid to the administrative staff in a factory would be classified as which of the following
type of cost?
(a) Prime
(b) Direct
(c) Indirect
(d) Manufacturing

51. Charity-is-We, a non-trading organization, hired an accountant to prepare a statement showing

all its expenses and revenues. The statement to be prepared is called the
(a) Income statement
(b) Revenue and capital statement
(c) Receipts and payments account
(d) Income and expenditure account

52. When a company declares a dividend of 15%, the dividend warrant of a shareholder owning
1,500 one-dollar ordinary shares is
(a) $ 100
(b) $ 225
(c) $1,500
(d) $1,515
53. An example of a capital expenditure is money spent for
(a) Paying rent
(b) Paying wages
(c) Purchasing goods
(d) Purchasing a new building

54. A club’s income and expenditure account performs the same function as firm’s
(a) Balance sheet
(b) Bank statement
(c) Petty cash book
(d) Income statement

Item 55 refers to the following information

J. Bayes manufacturing Account for the period ended 31/12/2017
$ $
Inventory of raw materials 1/1/17 800 Balance c/d 6,800
Purchases of raw materials 4,500
5,300
Less closing inventory of raw 1,400
materials 31/12/17
3,900
Productive wages 1,300
Fuel and power 900
Lubricants 100
Rent and tares 400
Insurance 200
6,800 6,800
55. What is the cost of raw materials consumed?
(a) $ 800
(b) $1,200
(c) $3,900
(d) $4,500

56. S&B Limited’s net income for the year was $89,000. Of this amount, $8,000 was transferred to
the general reserve, preference dividend paid was $2,400 and ordinary dividends proposed was
$6,500. The value of retained profits for the year was
(a) $72,100
(b) $80,100
(c) $81,000
(d) $89,000

57. Which of the following would be found in the equity section of a limited liability company?
I. Share capital
II. Director’s fees
III. General reserve
(a) I and II only
(b) I and III only
(c) II and III only
(d) I,II and III

58. A credit union is an example of which of the following cooperatives?

(a) Financial
(b) Producer
(c) Consumer
(d) Commercial
59. Which of the following formulae is used to calculate take-home pay?
(a) Gross pay- net pay
(b) Net pay+ gross pay
(c) Net pay + deductions
(d) Gross pay- deductions

60. P. Amos is employed by a construction company at a rate of $7 per hour. During a week, he
worked his basic week of 40 hours. The income tax due on his pay is $20, and he is also liable to
pay National Insurance contributions of 5% of his gross pay. What is his net pay?
(a) $246
(b) $260
(c) $266
(d) $280

END OF TEST