1.

X Ltd. receives a cheque for $ 100,records it in the cashbook and banks at on the same day. A statement sent by the bank that day does not show this $ 100. How is this $ 100 shown on the bank reconciliation statement? a) as an uncredited deposit added to the bank statement balance. b) as an uncredited deposit deducted from the bank statement balance. c) as an unpresented cheque added to the bank statement balance. d) as an unpresented cheque deducted from the bank statement balance. Bob returns goods bought on credit from Tariq. Which ledger account entries record this in Tariq s books? A B C D debit Bob Bob sales returns purchases returns credit sales returns purchase returns Bob Bob

2.

3.

Premises are purchased on 1 January 2000 using a bank loan repayable on 1 January 2010. How will this have affected the balanced sheet on 1 January 2000? a) increased fixed assets, decreased current liabilities. b) increased fixed assets, increased current liabilities. c) increased fixed assets, increased long-term liabilities. d) decreased fixed assets, increased long-term liabilities. What is the main purpose of changing depreciation? a) to provide funds for asset replacement. b) to reduce the cost of repairing assets. c) to show the assets at their realisable values in the balance sheet. d) to spread the cost of an assets over its useful life. On 1 January a machine is bought for $ 12800.Two methods of depreciating the machine are being considered as follows: straight line estimate useful life 4 years residual value $ 2800 reducing balance at the rate of 30 % per annum

4.

5.

How will the years net profit be affected if the reducing balance method is used rather than the straightline method? a) It will be increased by $ 200. b) It will be increased by $ 200. c) It will be decreased by $ 640. d) It will be decreased by $ 1340. 6. Details of an electricity account are given. $ owing at 31 December 1998 800 paid in 1999 10000 owing at 31 December 1999 1000 What amount will appear in the profit and loss account in 1999 for electricity? a) $ 9800 b) $ 10000 c) $ 10200 d) $ 11800 7. Lee maintains a bad debts account and a separate provision for doubtful debts account. He wishes to write off an amount due from Tan that had not been previously provided for. What entries will Lee make? A B C D debit bad debts Tan provision for doubtful debts Tan credit Tan bad debts Tan provision for doubtful debts
Grade: 10 Principles of Accounting Paper One Page 1 of

Madhrasathul Ahmadhiyya First Term Test 2002 5

8.

What is the purpose of control accounts? a) to calculate total accruals and payments. c) to calculate total purchases and sales. X ltd has the following balance sheet summary:

b) to calculate total debtors and creditors. d) to calculate total receipts and payments.

9.

fixed assets at net book value net current assets financed by capital and reserves

120000 30000 150000 150000

The fixed assets are valued at $ 180000 the net current assets at $ 20000.The business is required for $ 225000. What is the payment for Goodwill? a) $ 25000. b) $ 45000. 10. c) $ 75000. d) $ 105000.

After a traders net profit has been calculated it is discovered that the closing stock was under valued by $ 1000. What is the effect of correcting the error

A B C D
11.

gross profit decrease by $ 1000. decrease by $ 1000. increase by $ 1000. increase by $ 1000.

Net profit decrease by $ 1000. unchanged. increase by $ 1000.

unchanged.

A business calculates its net profit at $ 25000. It is later found that two items had been omitted. i) goods taken by the owner for own use costing $ 1200. ii) electricity owing at your end, $ 800. What is the correct net profit? a) $ 23000 b) $ 23800 c) $ 25400 d) $ 27000 In a partnership a separate capital account and current account is kept for each partner. What are the accounting entries for interest on a loan from a partner? debit credit A profit and loss account partners capital account. B profit and loss account partners current account C profit and loss appropriation account partners capital account. D profit and loss appropriation account partners current account. Some of the accounting records of X have been partially destroyed by fire. The remaining records show sales for the year of $ 85240. X has a gross profit margin of 20%. What is the cost of sales for the year? a) $ 17048. b) $ 21310. c) $ 63930. d) $ 68192. During the year an orchestral society bought $ 10000 of new musical instruments paying by cheque. Where will this item appear? a) Balance sheet only. b) Income and expenditure account and balance sheet. c) Income and expenditure account and receipts and payments account. d) Receipts and payments account and balance sheet. A company is formed with an authorised share capital of 10 million shares of $ 0.30 per share is called up. What is the issued share capital of the following? a) $ 3.3 million b) $ 3.5 million c) $ 5.3 million d) $ 7.0 million

12.

13.

14.

15.

Madhrasathul Ahmadhiyya First Term Test 2002 5

Grade: 10

Principles of Accounting Paper One Page 2 of

16.

The table shows the gross and net profits as percentages of sales for four businesses. From this information, which business controls its overhead most efficiently? business A B C D gross profit 40% 37% 35% 30% net profit 17% 15% 14% 12%

17.

On 31 July , X s bank statement shows a balance at bank of $ 2500, but the cash book shows a balance at bank of $ 1750. X finds cheques totalling $ 750 have not been presented for payment which bank balance figure appear in Xs balance sheet on 31 July? a) $ 1000 b) $ 1750 c) $ 2500 d) $ 3250 The months total sales of $ 2800 have been debited to the sales account. What is the effect of this on the sales account balance? a) overstated by $ 2800. b) overstated by $ 5600. c) understated by $ 2800. d) understated by $ 5600. A business receives rent for letting premises. How is this rent classified? a) capital expenditure b)capital income c) revenue expenditure d) revenue income An electricity accrual of $ 450 is treated as a prepayment when preparing a traders profit and loss account. What effect does this have on the traders net profit? a) It is overstated by $ 450. b) It is understated by $ 450. c)It is overstated by $ 900. d) It is overstated by $ 900. What is the effect of making contra entries in the sales and purchases ledger control accounts? A B C D debtors increase reduce increase reduce creditors increase reduce increase reduce profit increase reduce no effect no effect

18.

19. 20.

21.

22.

A sole trader writes off a bad debt. What will be the effect of this on the balance sheet? a) capital reduced and assets reduced. b) liabilities increased and assets reduced. c) liabilities reducced and assets increased. d) no effects on assets or liabilities. A clerk has not kept double entry records. He calculates purchases using a total creditors account. This account is not correct. debit 31 December purchase 31 December creditors c/f Total creditors account $ credit 36000 1 January creditors 6000 31 December cash 42000 c) $ 44000. $ 4000 38000 42000 d) $ 46000.

23.

What is the correct purchases amount? a) $ 38000. b) $ 40000. 24.

The information in the table relates to X for the last financial year. average stock gross profit rate of stock turn over What were the sales for the year?
Madhrasathul Ahmadhiyya First Term Test 2002 5

$15000 25% on cost 6:1

Grade: 10 Principles of Accounting Paper One Page 3 of

a) $ 47000. 25.

b) $ 90000.

c) $ 108000.

d) $ 1125000.

A business decides to records stocks of stationery as an asset only if they are over $ 100. Which accounting concept is being applied? a) conservatism b) dual aspect c) materiality d) money measurement. Which of the following business documents is the source of information for sales made on credit? a) invoice b) copy of the invoice c) credit note d) bank statement A document from a seller notifying the purchaser that an undercharge has been made is called a/an: a) advice note b) credit note c) consignment note d) debit note The debiting of the purchase of a fixed asset to the purchases account is an error of a) commission b) omission c) compensation d) principle Which of the following errors would be revealed by the trial balance? a) A sale for $ 10 to C Jones is posted to the debit of B Joness account b) A cheque received and entered in the cashbook as $25 is entered in B Greens account as $52. c) The purchase of a new van for $25 is entered in the debit of the purchases account as $520. d) An invoice from J smith is received but is not entered in the purchase day book or J Smiths account. Which one of the following is not a book of original entry? a) the cash book b) the ledger c) the journal d) the sales day book A society has 100 members and the subscription is $5 per year. During the course of the financial year. All have paid the correct amount except for four members who paid $10 each because they owed for the previous year, and two members who have paid for next year. The subscription income for this years Income and expenditure account is: a) $470 b) $480 c) $500 d) $530

26.

27. 28. 29.

30. 31.

32.

Prime cost in a manufacturing account is a) all factory indirect costs c) direct factory costs only The following information is available:

b) all factory costs d) direct materials ,plus direct expenses.

$

33.

Sales 100000 Purchases 80000 Opening stock 10000 Closing stock 15000 Expenses 10000 Gross a debtor for $85, is unable to settle his account in cash and offers you a type writer instead. The journal entry to record this in your accounts should be a) 20% and 10% b) 25% and 15 % c) 15% and 5% d) 10% and 20% 34. Smith a debtor for $85, is unable to settle his account in cash and offers you a typewriter instead. The journal entry to record this in your accounts should be
debit credit

A B C D 35.

Smiths account typewriter account typewriter account cash account

typewriter account bank account Smiths account Smiths account

At the end of the financial year a business has debtors of $10000 and a provision for bad debts of $480. It is proposed to maintain provision for bad debts at 5 percent. What amount will be passed to profit and loss Account for the year? a) a debit of $500. b) a credit of $20 c) a debit of $20 d) a debit of $480
Madhrasathul Ahmadhiyya First Term Test 2002 5 Grade: 10 Principles of Accounting Paper One Page 4 of

36.

The valuation of stock is carried out by a) counting the stock and valuing at selling price. b) counting the stock and valuing it at cost price. c) counting the stock and valuing it at the lower of cost price and market price. d) Balancing the stock account. Which is the double entry for closing stock? a) opening stock a/c debit, closing stock a/c credit. b) trading a/c debit, stock a/c credit . c) stock a/c debit, trading a/c credit. d) closing stock a/c debit, opening stock a/c credit. Good will is paid for a) good debts Work in progress means a) half- finished goods. c) fully- finished. The tuition fees received by a school is: a) a capital expenditure to the school. b) a revenue expenditure to the school. c) a capital receipt to the school. d) a revenue to the school. b) bad debts c) good reputation d) bad reputation

37.

38. 39.

b) partly-finished goods. d) work not yet started on materials.

40.

Madhrasathul Ahmadhiyya First Term Test 2002 5

Grade: 10

Principles of Accounting Paper One Page 5 of