28 questions · 72 marks · ≈ 72 min · spans 21 of 40 topics
Assembled from the topic question banks — not an official Cambridge International paperLiara is a business owner. Which of the following would let her know that she is receiving a return on her investment in the business?
Choose your answer
Her bank overdraft has gone down.
Her income statement shows a profit for the year.
She has been able to increase her drawings.
She has been able to increase her working capital over the year.
When writing up the sales journal and the sales returns journal, which business documents are used to provide the information?
| sales journal | sales returns journal | |
|---|---|---|
| A | invoices issued | credit notes issued |
| B | invoices issued | credit notes received |
| C | invoices received | credit notes issued |
| D | invoices received | credit notes received |
Choose your answer
Which one of the following documents is provided by a supplier and reduces the amount owed by a customer?
Choose your answer
credit note
debit note
invoice
statement of account
Yaoti bought goods on credit from Tizoc. Later she returned some of the goods to Tizoc.
How should Tizoc record the return in his books?
| account debited | account credited | |
|---|---|---|
| A | purchases returns | Yaoti |
| B | sales returns | Yaoti |
| C | Yaoti | purchases returns |
| D | Yaoti | sales returns |
Choose your answer
On 1 October 2024 the bank column of Madwen's cash book had a credit balance of $130.
During October cheques totalling $830 were received and cheques totalling $780 were paid to suppliers. In addition, bank charges of $18 incurred in September were entered in the cash book.
What was the balance of the bank column in the cash book on 1 November 2024?
Choose your answer
$98 credit
$98 debit
$162 credit
$162 debit
According to the bank column in his cash book, Bob had $420 in the bank on 31 October. On that same date, the statement from the bank showed a credit balance of $495 for the account.
Bob found that a bank charge for $37 had not been recorded in the cash book, and also that a cheque he had written to a supplier for $112 had not yet been debited by the bank.
What is the bank balance that Bob should show in his statement of financial position for 31 October?
Choose your answer
$383 asset
$420 liability
$457 asset
$607 liability
Why is a purchases ledger control account prepared?
Choose your answer
to enable the income statement to be prepared quickly
to ensure that all purchases ledger accounts are accurate
to provide a summary of transactions with credit suppliers
to show the amount owed to each trade payable
After a trial balance had been completed, the following errors were found.
The total of the purchases account was overstated by $50
The total of the rental income account was overstated by $50
Which of the following statements is correct about the trial balance that had been completed?
Choose your answer
The total of the credit column was $50 more than that of the debit column.
The total of the credit column was $100 more than that of the debit column.
The total of the debit column was $100 more than that of the credit column.
The total of the debit column and the credit column were equal.
The payments shown below were made when a business purchased a new machine.
| $ | |
|---|---|
| cost of the machine | 24 000 |
| charge for delivery of the machine | 800 |
| insurance for the machine | 1 500 |
| wages of employees installing the machine | 1 100 |
How much was the capital expenditure?
Choose your answer
$24 000
$25 100
$25 900
$27 400
Why should Ahmed, the owner of a manufacturing business, charge depreciation on his factory equipment?
Choose your answer
to plan ahead for replacement of the equipment
to set an appropriate resale value for the equipment
to spread cash flow over a number of years
to spread the cost of the equipment over its useful life
Mary sells goods on credit and maintains a provision for doubtful debts. She wants to decrease her provision for doubtful debts by $650.
Which journal entry records this decrease in the provision for doubtful debts?
| debit $ | credit $ | ||
|---|---|---|---|
| A | credit customer income statement | 650 | 650 |
| B | income statement credit customer | 650 | 650 |
| C | income statement provision for doubtful debts | 650 | 650 |
| D | provision for doubtful debts income statement | 650 | 650 |
Choose your answer
At the end of his financial year on 31 October 2024, Alex had prepaid towards his phone bill.
How will this appear in Alex's statement of financial position and phone account at 31 October 2024?
| statement of financial position | phone account | |
|---|---|---|
| A | current asset | credit balance carried down |
| B | current asset | debit balance carried down |
| C | current liability | credit balance carried down |
| D | current liability | debit balance carried down |
Choose your answer
Felipe sells one product in two different colours, red and yellow.
The following information is available about his inventory at the end of the financial year.
| colour | number of units | cost price per unit $ | net realisable price per unit $ |
|---|---|---|---|
| red | 900 | 2.20 | 2.10 |
| yellow | 700 | 1.60 | 1.90 |
Felipe also found that 50 units of the yellow product were damaged and were unsaleable.
What was the total value of Felipe's inventory?
Choose your answer
$2 930
$3 020
$3 125
$3 220
A tennis club sells refreshments to its members. The suppliers of refreshments were owed $150 on 1 June 2023 and $500 on 31 May 2024. Payments to suppliers during the financial year were $5 400.
The inventory at the end of the financial year was $200 more than the inventory at the start of the financial year.
What was the cost of sales of refreshments for the year ended 31 May 2024?
Choose your answer
$4 850
$5 250
$5 550
$5 950
What are the features of a debenture?
| return received | rate of return | voting rights | |
|---|---|---|---|
| A | dividend | based on profit | yes |
| B | dividend | fixed rate | no |
| C | interest | based on profit | yes |
| D | interest | fixed rate | no |
Choose your answer
Which costs of a manufacturing business are indirect costs?
Choose your answer
1 and 3 only
2 and 4
1, 2 and 3
1 only
The partnership agreement for Xylo and Yana states that:
The profit for the year ended 31 May 2024 was $18 400. During the financial year, Yana took drawings of $2 500.
On 1 June 2023, the partners’ current account balances were as follows.
| $ | |
|---|---|
| Xylo | 3 000 credit |
| Yana | 1 000 debit |
What was the balance on Yana's current account on 1 June 2024?
Choose your answer
$300 debit
$6 450 credit
$7 700 credit
$9 700 credit
Which group does not contain an intangible asset?
Choose your answer
vehicles, bank balance, goodwill
brand names, trade payables, inventory
trade receivables, trademarks, bank overdraft
bank loan, cash in hand, machinery
Diego provided the following information.
| revenue | $300 000 |
|---|---|
| gross margin | 15% |
| opening inventory | $10 000 |
| rate of inventory turnover | 6 times |
What was the value of Diego's inventory at the end of the year?
Choose your answer
$5 000
$42 500
$45 000
$75 000
The table shows the gross margin and profit margin for businesses owned by four different people.
| Owner | gross margin % | profit margin % |
|---|---|---|
| Aiyana | 39 | 18 |
| Bidziil | 36 | 17 |
| Chayton | 34 | 16 |
| Doli | 31 | 11 |
Which owner's business controls its overheads most efficiently?
Choose your answer
Aiyana's
Bidziil's
Chayton's
Doli's
Jill is a shareholder in a company. She received the company’s financial statements.
Why did she find the financial statements reliable?
Choose your answer
The information was presented clearly in the financial statements.
The layout was similar to last year's financial statements.
She was confident that the financial statements did not contain errors.
The financial statements were produced within a week of the end of the financial year.
Fozia opened a factory manufacturing wheelchairs on 1 May 2022. Fozia purchases an additional piece of equipment for the factory on credit.
For the above transaction, identify
(i) the business document,
(ii) the book of prime entry.
Shvan is considering whether to stop keeping cash at his business premises. He would require all customers to transfer payment directly into his bank account and he would make all business payments from his bank account.
REQUIRED
(i) State one way Shvan could pay his suppliers, from his bank account, other than by cheque
(ii) Advise Shvan whether he should stop using cash. Justify your answer by providing two advantages and two disadvantages of stopping using cash.
Seok buys and sells goods on credit. He allows a credit customer, Naomi, trade discount of 10%. All customers pay Seok by bank transfer.
The following balance was extracted from Seok’s sales ledger at 1 August 2023.
| $ | |
|---|---|
| Naomi | 450 |
The following transactions took place in August 2023.
| Aug 3 | Sold goods on credit, to Naomi, list price $410 |
|---|---|
| 10 | Naomi returned goods, list price $20 |
| 11 | Naomi paid $423 in full settlement of the amount she owed at 1 August |
| 22 | Sold goods on credit, to Naomi, list price $230 |
REQUIRED
Prepare the account for Naomi for August 2023 as it would appear in the books of Seok. Balance the account and bring down the balance at 1 September 2023.
Seok Naomi account
| Date | Details | $ | Date | Details | $ |
|---|---|---|---|---|---|
Shvan maintains a petty cash book using the imprest system. The imprest amount, which is $200, is restored every Wednesday.
All payments of less than $75 are made from petty cash. All cash receipts of less than $75 are paid into petty cash.
On 1 March 2023 Shvan had $61 in his petty cash box. He provided the following information for the first week in March 2023.
| March 1 | Restored petty cash imprest from the business bank account |
|---|---|
| 2 | Paid $55 to Giles, a trade payable |
| 3 | Paid taxi fare, $21 |
| 6 | Paid $18 for notepads and pens |
| 6 | Received cash, $25, from Mitchell, a trade receivable |
| 7 | Paid $30 for office cleaning |
REQUIRED
Prepare Shvan’s petty cash book for the first week of March 2023, on the page opposite. Balance the petty cash book at 7 March 2023 and bring down the balance at 8 March 2023
Shvan Petty Cash Book
| Total received | Date | Details | Total paid | Office expenses | Travel | Ledger accounts |
|---|---|---|---|---|---|---|
| $ | $ | $ | $ | $ | ||
On 30 September 2025, the bank balance in Hashim's cash book was $1 061. A bank statement dated 30 September 2025 showed that Hashim has $1 529 in the bank account, Hashim compared the bank statement and the cash book and found the following.
Electricity, $87, has been paid by direct debit but not recorded in the cash book. The cheque for rent, $630, dated 3 September does not appear on the bank statement. The cheque received by Jai, $196, on 24 September had not yet been cleared by the bank. A refund, $121, had been received by credit transfer from a supplier but not recorded in the cash book.
REQUIRED
Calculate the corrected bank balance.
Seok buys and sells goods on credit. He has three credit customers. All customers pay Seok by bank transfer.
The following balances were extracted from Seok’s sales ledger at 1 August 2023.
| $ | |
|---|---|
| Naomi | 450 |
| Siena | 155 |
| Bwana | 386 |
| 991 |
The following transactions took place in August 2023.
| Aug 11 | Naomi paid $423 in full settlement of the amount she owed at 1 August |
|---|---|
| 29 | Bwana paid $400 |
The following totals are available for August 2023.
| $ | |
|---|---|
| Sales journal | 845 |
| Sales returns journal | 37 |
REQUIRED
On 31 August Seok decided to write off the amount owing by Siena as an irrecoverable debt.
REQUIRED
Prepare Seok’s sales ledger control account for August 2023. Balance the account and bring down the balance at 1 September 2023.
Seok Sales ledger control account
| Date | Details | $ | Date | Details | $ |
|---|---|---|---|---|---|
Ramla has calculated her draft profit figure for the year ended 28 February 2023. Adjustments in Ramla’s ledger accounts have still to be made for the following items
REQUIRED
Prepare the journal entries required for items 1–5. Narratives are not required.
Ramla Journal
| Item number | Details | Debit $ | Credit $ |
|---|---|---|---|
Complete the following table by entering the amount of each adjustment required to calculate Ramla’s adjusted profit. If an item has no effect on profit, enter zero (0) in the ‘no effect on profit’ box.
| Item | Increase in profit $ | Decrease in profit $ | No effect on profit | Profit $ |
|---|---|---|---|---|
| Draft profit | 11 650 | |||
| 1 | ||||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| Adjusted profit |