28 questions · 80 marks · ≈ 1 hour · spans 21 of 40 topics
Assembled from the topic question banks — not an official Cambridge International paperA business had the following closing balances in its books at the end of the year.
| $ | |
|---|---|
| non-current assets | 32 000 |
| trade receivables | 14 500 |
| bank overdraft | 2 000 |
| other payables | 700 |
What was the business's capital at the end of the year?
Choose your answer
$11 800
$14 800
$43 800
$47 800
Ben sold goods to Abigail on credit, but some of the goods were damaged in transit.
Which one of the following documents would Abigail send to Ben?
Choose your answer
credit note
debit note
invoice
statement of account
What does the purchases ledger of a business contain?
Choose your answer
accounts of trade payables
accounts of trade receivables
purchases account
purchases ledger control account
Hwan settled the account of Tae, one of his credit suppliers. Hwan made the following entries on the credit side of his cash book.
| discount $ | cash $ | bank $ | |
|---|---|---|---|
| Tae | 8 | 152 |
Which entries did Hwan make on the debit side of Tae's account?
| $ | ||
|---|---|---|
| A | bank | 152 |
| B | bank | 160 |
| C | bank discount allowed | 152 8 |
| D | bank discount received | 152 8 |
Choose your answer
The bank account in Ina's cash book showed a debit balance of $230. After comparing her cash book to the bank statement, she used the information in the bank statement to update the cash book with the following items.
| $ | |
|---|---|
| bank interest paid | 23 |
| credit transfer from a credit customer | 80 |
| credit transfer to a credit supplier | 110 |
What was the debit balance on the bank account after Ina updated her cash book?
Choose your answer
$63
$177
$223
$237
A sales ledger control account had a debit balance of $13 500.
It was found that a $1 500 entry for irrecoverable debts had been entered on the wrong side of the sales ledger control account.
What was the correct debit balance on the sales ledger control account?
Choose your answer
$10 500
$12 000
$15 000
$16 500
A trader prepared a trial balance for his business at 31 March 2024.
Which of the following statements about this trial balance is correct?
Choose your answer
It shows a summary of the financial position at 31 March 2024.
It shows the gross profit for the year ended 31 March 2024.
It shows the ledger account balances as of 31 March 2024.
It shows the sales transactions for the year to 31 March 2024.
After his financial statements had been prepared, a trader discovered the following errors.
What was the overall effect of these errors on the profit for the year?
Choose your answer
overstated by $500
overstated by $900
understated by $500
understated by $900
Hayal depreciates his delivery vehicle using the straight-line method, at 20% per annum.
The delivery vehicle cost $18 000.
The depreciation for the current financial year was incorrectly calculated at 25% per annum.
How will correcting the error affect the profit for the year?
Choose your answer
decrease $900
decrease $4 500
increase $900
increase $4 500
Gerdan Duo Limited maintains a provision for doubtful debts account. This account had a balance of $5 400 on 1 January 2023.
The provision should have been decreased to $4 100 on 31 December 2023, but this adjustment was not made.
What was the effect of this error on the retained earnings in the statement of financial position on 31 December 2023?
Choose your answer
overstated $1 300
overstated $4 100
understated $1 300
understated $4 100
A business's books contained the following ledger account.
rent receivable account
| $ | $ | ||||
|---|---|---|---|---|---|
| Dec 31 | income statement | 4 200 | Jan 1 | balance b/d | 150 |
| Dec 31 | bank | 3 850 | |||
| balance c/d | 200 | ||||
| 4 200 | 4 200 |
What does the balance of $200 on 31 March represent?
Choose your answer
accrued expense
accrued income
prepaid expense
prepaid income
How should inventory be valued?
Choose your answer
cost
net realisable value
lower of cost and net realisable value
higher of cost and net realisable value
What is included in the income and expenditure account of a badminton club?
Choose your answer
the profit for the year from the club's shop
all amounts received and paid during the year
the opening and closing balances on the accumulated fund
the club's bank balance
Which of the following increases the total equity of a limited company?
Choose your answer
1 only
2 and 3
1 and 3
3 only
A manufacturer provided the following information at the end of his financial year.
| $ | |
|---|---|
| work in progress at the start of the year | 5 400 |
| work in progress at the end of the year | 4 600 |
| prime cost | 87 200 |
| factory overheads | 19 500 |
What was the cost of production for the year?
Choose your answer
$66 900
$68 500
$105 900
$107 500
Elena and Alessandro are in partnership. The following information relates to Alessandro for the financial year.
| $ | |
|---|---|
| salary | 5 000 |
| drawings | 3 200 |
| share of profit | 8 500 |
The opening credit balance on Alessandro's current account was $31 400.
What was the closing balance on his current account?
Choose your answer
$36 700
$41 700
$44 900
$48 100
Amy started a taxi business. She provided the following information at the end of her first financial year.
| $ | |
|---|---|
| fees receivable from customers | 17 500 |
| motor expenses | 5 300 |
| vehicles | 20 000 |
| drawings | 3 000 |
| bank | 2 700 |
Amy bought her vehicle at the start of the year. Amy depreciates motor vehicles at 20% per annum using the reducing balance method. Amy charges depreciation in the year of purchase.
What was her profit or loss for the year?
Choose your answer
$7 900 profit
$8 200 profit
$12 200 profit
$11 800 loss
What are advantages of keeping a full set of accounting records?
Choose your answer
4 only
1 and 4 only
2, 3 and 4 only
1, 2, 3 and 4
Yakub made credit sales of $120 450 in each of the years 2022 and 2023.
In 2023, his trade receivables turnover was exactly three days longer than it had been in 2022.
What was the change in his total trade receivables in 2023?
Choose your answer
$110 decrease
$110 increase
$990 decrease
$990 increase
Halina started a business and transferred $10 000 from her personal bank account into a business bank account.
This transaction was debited to the business bank account and credited to the capital account.
Which accounting principles did she apply?
Choose your answer
duality and business entity
going concern and business entity
duality and materiality
going concern and materiality
Shakir started trading in the year ended 31 August 2023 but did not keep proper books of account. His assets and liabilities at 1 September 2023 are as follows.
| $ | |
|---|---|
| Motor vehicle | 9 500 |
| Inventory | 1 240 |
| Cash at bank | 1 682 |
| Trade payables: | |
| Latif | 200 |
| Harrison | 237 |
REQUIRED
Prepare the journal for Shakir’s opening entries at 1 September 2023. A narrative is not required.
Shakir Journal
| Date | Details | Debit $ | Credit $ |
|---|---|---|---|
Logan is a trader who sells goods on credit. His year end is 30 September. Logan has provided the following information.
| $ | |
|---|---|
| At 1 October 2022 | |
| Inventory | 8 400 |
| At 30 September 2023 | |
| Inventory | 8 675 |
The provision for doubtful debts is to be maintained at 4% of trade receivables.
REQUIRED
Prepare the inventory account for the year ended 30 September 2023.
Logan Inventory account
| Date | Details | $ | Date | Details | $ |
|---|---|---|---|---|---|
Omer is a trader.
The following transactions took place in April 2023
| April 3 | Paid $1000 into the bank from his own personal money |
|---|---|
| 7 | Paid $360 to a supplier, Alexander, by telephone transfer |
| 10 | Cash sales, $695, were paid directly into the bank account |
| 12 | Purchased goods, $340, on credit from Alexander |
| 15 | Paid $68 cash for petrol |
| 16 | Paid rent, $400, by standing order |
| 23 | Received a cheque, $384, from a credit customer, Esme, in full settlement of an invoice for $400 |
| 27 | Paid $323 by cheque to Alexander, having deducted $17 cash discount |
| 28 | Purchased goods, $235, on credit from Alexander |
REQUIRED
Complete Omer’s cash book. Balance the cash book and bring down the balances on 1 May 2023.
Omer Cash Book
| Date | Details | Discount allowed | Cash | Bank | Date | Details | Discount received | Cash | Bank |
|---|---|---|---|---|---|---|---|---|---|
| $ | $ | $ | $ | $ | $ | ||||
| 2023 | 2023 | ||||||||
| Apr 1 | Balance b/d | 120 | Apr 1 | 477 | |||||
Shakir received a bank statement dated 30 September 2023. The bank statement showed that Shakir had $763 in the bank account. The bank balance in the cash book was $1 013. On comparing the bank statement to his cash book, Shakir noted the following.
Bank charges, $35, were charged by the bank in September. Cash Sales, $175, had been paid for by credit transfer but not recorded in the cash book. The cheque received from Sydney had not yet been cleared by the bank. The cash sales, $290, had been omitted from the bank statement in error.
REQUIRED
Calculate the corrected bank balance.
Asia is a trader. She prepared her trial balance at 31 August 2023. The credit side totalled $273 more than the debit side. Asia placed the difference in a suspense account.
Asia later discovered the following errors.
REQUIRED
Prepare the journal entries to correct errors 1–5. Narratives are not required.
Asia Journal
| Error number | Details | Debit $ | Credit $ |
|---|---|---|---|
Prepare the suspense account, including the original difference on the trial balance
Asia Suspense account
| Date | Details | $ | Date | Details | $ |
|---|---|---|---|---|---|
Complete the following table by placing a tick (✓) to show the effect of each error. The first one has been completed as an example.
| Error number | Error | Gross profit | Profit for the year | No effect | ||
|---|---|---|---|---|---|---|
| + | - | + | - | |||
| 1 | A credit purchase, $112, from Jacques, had been debited twice to the purchases account. | ✓ | ✓ | |||
| 2 | The wages account had been overcast by $300. | |||||
| 3 | Cash received, $75 from Savanah, a trade receivable, had only been entered in the cash book. | |||||
| 4 | The total of the sales returns journal for August 2023, $198, had been credited to both the sales returns account and the purchases returns account. | |||||
| 5 | A payment to Sophie, $93, had been recorded as $39 in Sophie’s account. |
Stalla had an extension to her retail premises built during 2023. The extension will be used as an office.
REQUIRED
Place a tick (✓) in the correct box below to indicate whether each cost is capital expenditure or revenue expenditure
| Capital expenditure | Revenue expenditure | |
|---|---|---|
| Legal fees for obtaining permission to build the extension | ||
| Building costs for the extension | ||
| Insurance for the office | ||
| Painting the office extension | ||
| Office calendar for 2023 | ||
| Purchase of office equipment | ||
| Installation of office equipment | ||
| Stationery for office |
Stalla charges depreciation at 25% per annum, using the reducing balance method. She charges a full year’s depreciation in the year a vehicle is purchased and none in the year it is sold.
On 31 December 2022, Stalla sold a vehicle for $9 500. The vehicle had cost $16 000 on 1 September 2020.
REQUIRED
Calculate the gain or loss on disposal of the vehicle
The balances on Stalla’s ledger accounts at 1 January 2022 included the following
| $ | |
|---|---|
| Motor vehicles | 48 000 |
| Provision for depreciation on motor vehicles | 21 000 |
Prepare Stalla’s motor vehicles account for the year ended 31 December 2022. Balance the account at 31 December 2022 and bring down the balance at 1 January 2023.
Stalla Motor vehicles account
| Date | Details | $ | Date | Details | $ |
|---|---|---|---|---|---|
Prepare Stalla’s provision for depreciation on motor vehicles account for the
year ended 31 December 2022. Balance the account at 31 December 2022 and bring down the balance at 1 January 2023.
Stalla Provision for depreciation on motor vehicles account
| Date | Details | $ | Date | Details | $ |
|---|---|---|---|---|---|
Logan is a trader who sells goods on credit. His year end is 30 September. Logan has provided the following information.
| $ | |
|---|---|
| At 1 October 2022 | |
| Trade receivables | 7 500 |
| 1 June 2023 | 2 490 |
| At 30 September 2023 | |
| Trade receivables | 8 700 |
| Irrecoverable debts to be written off | 325 |
The provision for doubtful debts is to be maintained at 4% of trade receivables.
REQUIRED
Prepare the provision for doubtful debts account for the year ended 30 September 2023. Balance the account at 30 September 2023 and bring down the balance at 1 October 2023.
Logan Provision for doubtful debts account
| Date | Details | $ | Date | Details | $ |
|---|---|---|---|---|---|