M C Q s

-1

Topic . Accounting
1 ACCOUNTING Which of the following statements is incorrect? Assets - Capital = Liabilities Liabilities + Assets = Capital Liabilities + Capital = Assets

Assets - Liabilities = Capital

2 Which of the following is not an asset? Buildings ebtors Loan from ! "arris

Cash balance
# Which of the following is a liabilit$? %otor &ehicles %achiner$ Creditors for goods

Cash at Bank
' Which of the following is incorrect?

(A) (B) (C)

(D )
* Which of the following statements is correct?

(A)

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M C Q s

-2

Topic . Accounting
(B) (C)

(D )
+ Which of the following are correct?

(i), (ii) and (ii) (i) and (ii) (i) and (iii)

(ii) and (iii)

Which of the following are correct?

(i) and (i.) onl$ (i), (ii) and (iii) onl$ (i), (ii) and (i.) onl$

(ii), (iii) and (iv) only

/ Which of the following are incorrect?

(i) and (iii) onl$ (ii) and (i.) onl$ (iii) and (i.) onl$

(ii) and (iii) only

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M C Q s

-3

Topic . Accounting
0 Which of the following best describes the meaning of 12urchases3? 4oods bought on credit 4oods paid for 4oods bought for resale

Items bought
15 Which of the following should not be called 16ales3? 4oods sold for cash 6ale of item pre.iousl$ included in 12urchases3 7ffice fi8tures sold

oods sold on c!edit

11 7f the following, which are correct?

(iii) and (i.) onl$ (ii) and (i.) onl$ (i) and (ii) onl$

(i) and (iii) only

12 Which of the following are incorrect?

(ii) and (i.) onl$ (i.) onl$ (iii) onl$

(i) and (iii) only

1# 4i.en the following, what is the amount of Capital? Assets9 2remises :25,555; 6toc< :/,*55; Cash :155= Liabilities9 Creditors :#,555; Loan from A Adams :',555 :21,155 :21,'55 :21,+55
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M C Q s

-4

Topic . Accounting "#$,%&&

1' Which of the following is correct? 2rofit reduces capital 2rofit increases capital Capital can onl$ come from profit

'!o(it does not alte! capital

1* Which of the following are correct?

(i), (ii) and (iii) onl$ (i) and (ii) onl$ (i), (ii) and (i.) onl$

(i), (iii) and (iv) only

1+ 7f the following, which are incorrect?

(ii) and (ii) onl$ (ii) and (i.) onl$ (i) and (iii) onl$

(ii) and (iii) only

1What is the balance on the following account on #1 %a$ 25>*?

A debit balance of :#0* A credit balance of :#0* ?here is a nil balance on the account

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M C Q s

-5

Topic . Accounting A debit balance o( "#)&

1/ What would ha.e been the balance on the account of C e @reitas in %C1- on 10 %a$ 25>*? A credit balance of :''* A credit balance of :0* A credit balance of :2+* A debit balance of :2+* 10 Which of the following best describes a trial balance? 6hows all the entries in the boo<s At is a list of balances on the boo<s 6hows the financial position of a business

It is a special account
25 As it true that the trial balance totals should agree? Bo, there are sometimes good reasons wh$ the$ differ Ces, alwa$s Ces, e8cept where the trial balance is e8tracted at the $ear end

*o, because it is not a balance sheet

21 4ross profit is9 Cost of goods sold + 7pening stoc< D8cess of sales o.er cost of goods sold 6ales less 2urchases

*et p!o(it less e+penses o( the pe!iod,

22 Bet profit is calculated in the9 2rofit and loss account Balance sheet ?rial balance ?rading account 2# ?o find the .alue of closing stoc< at the end of a period we do this b$ stoc<ta<ing deduct cost of goods sold from sales deduct opening stoc< from cost of goods sold
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M C Q s

-6

Topic . Accounting
loo< in the stoc< account

2'

?he credit entr$ for net profit is on the credit side of9 ?he trading account ?he drawings account ?he capital account ?he profit and loss account

2*

Which of these best describes a balance sheet? A statement of assets A listing of balances An account pro.ing the boo<s balance A record of closing entries

2+

?he descending order in which current assets should be shown in the balance sheet is9 ebtors, 6toc<, Ban<, Cash Cash, Ban<, 6toc<, 6toc<, ebtors, 6toc<

ebtors, Cash, Ban< ebtors, Ban<, Cash

2-

Which of these best describes fi8ed assets? Are bought to be used in the business Are e8pensi.e items bought for the business Are items which will not wear out Euic<l$ Are of long life and are not bought specificall$ for resale

2/

Carriage inwards is charged to the trading account because9 Carriage outwards goes in the profit and loss account At is an e8pense connected with bu$ing goods At is not part of motor e8penses At should not go in the balance sheet

20

4i.en figures showing9 6ales :/,255; 7pening stoc< :1,#55; Closing stoc< :055; 2urchases :+,'55; Carriage inwards :255, the cost of goods sold figure is9
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M C Q s

-7

Topic . Accounting
Another figure :+,255 :+,/55 :-,555 #5 ?he costs of putting goods into a saleable condition should be charged to9 ?rading account 2rofit and loss account Balance sheet Bone of these #1 6uppliers3 personal accounts are found in the9 6ales ledger Bominal ledger 2urchases ledger 4eneral ledger #2 ?he 6ales a$ Boo< is best described as9 Containing customers3 accounts Containing real accounts 2art of the double entr$ s$stem A list of credit sales ## Which of the following are personal accounts? (i) Buildings (ii) Wages (iii) ebtors (i.) Creditors (ii) and (iii) onl$ (i) and (i.) onl$ (ii) and (i.) onl$ (iii) and (i.) onl$ #' When Lee ma<es out a cheEue for :*5 and sends it to Coung, then Lee is <nown as9 ?he pa$ee ?he ban<er

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M C Q s

-8

Topic . Accounting
?he drawer ?he creditor #* Af $ou want to ma<e sure that $our mone$ will be safe if CheEues sent are lost in the post, $ou should9 Alwa$s pa$ b$ cash Cross $our CheEues 1Account 2a$ee onl$, Bot Begotiable3 Alwa$s ta<e the mone$ in person Bot use the postal ser.ice in future #+ When ban<ing mone$ in to $our current account $ou should alwa$s use9 A general ledger A cheEue boo< A cash boo< A pa$ing-in slip #A debit balance of :155 in a cash account shows that9 ?here was :155 cash in hand ?he total of cash recei.ed was less than :155 :155 was the total of cash paid out Cash has been o.erspent b$ :155 #/ :*5 cash ta<en from the cash till and ban<ed is entered9 ebit cash column :*59 Credit ban< column :*5 ebit ban< column :*59 Credit ban< column :*5 ebit ban< column :*59 Credit cash column :*5 ebit cash column :*59 Credit cash column :*5 #0 A credit balance of :255 on the cash columns of the cash boo< would mean9 We ha.e :255 cash in hand 6omeone has stolen :255 cash We ha.e spent :255 more than we ha.e recei.ed ?he boo<<eeper has made a mista<e '5 12osting3 the transactions in boo<<eeping means9 %a<ing the second entr$ of a double entr$ transaction

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M C Q s

-9

Topic . Accounting
Dntering items in a cash boo< %a<ing the first entr$ of a double entr$ transaction 6omething other than the abo.e '1 A cash discount is best described as a reduction in the sum to be paid9 Af pa$ment is made b$ cash, not cheEue Af purchases are made for cash, not on credit Af pa$ment is made either b$ cash or cheEue Af pa$ment is made within a pre.iousl$ agreed period '2 iscounts recei.ed are9 educted b$ us when we pa$ our accounts educted when we recei.e cash 4i.en b$ us when we sell goods on credit Bone of these '# ?he total of the 1 iscounts Allowed3 column in the Cash Boo< is posted to9 ?he debit of the iscounts Fecei.ed account ?he debit of the iscounts Allowed account ?he credit of the iscounts Allowed account ?he credit of the iscounts Fecei.ed account '' 6ales in.oices are first entered in9 ?he Cash Boo< ?he 2urchases Gournal ?he 6ales Gournal ?he 6ales Account '* ?he total of the 6ales Gournal is entered on9 ?he debit side of the 6ales Account in the 4eneral Ledger ?he credit side of the 4eneral Account in the 6ales Ledger ?he credit side of the 6ales Account in the 4eneral Ledger ?he debit side of the 6ales '+ a$ Boo<

4i.en a purchases in.oice showing * items of :/5 each, less trade discount of 2* per cent and cash discount of * per cent, if paid within the credit period, $our cheEue would be made out for9
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M C Q s

- 10

Topic . Accounting
:2+5 :2/5 :2/* Bone of these 'An alternati.e name for a 6ales Gournal is9 6ales a$ Boo< 6ales Ledger 6ales An.oice ail$ 6ales '/ Dntered in the 2urchases Gournal are9 iscounts recei.ed 2urchases in.oices 2a$ments to suppliers ?rade discounts '0 ?he total of the 2urchases Gournal is transferred to the9 Credit side of the 2urchases Account Credit side of the 2urchases Boo< ebit side of the 2urchases Account ebit side of the 2urchases *5 a$ Boo<

Credit notes issued b$ us will be entered in our9 6ales Account Feturns 7utwards Gournal Feturns Anwards Gournal Feturns Anwards Account

*1

?he total of the Feturns 7utwards Gournal is transferred to9 ?he debit side of the Feturns 7utwards Account ?he credit side of the Feturns 7utwards Boo< ?he credit side of the Feturns 7utwards Account ?he debit side of the 2urchases Feturns Boo<

*2

We originall$ sold 2* items at :12 each, less ##1H# per cent trade discount= 7ur customer
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M C Q s

- 11

Topic . Accounting
now returns ' of them to us= What is the amount of credit note to be issued? :#+ :#5 :#2 :'/ *# epreciation is9 ?he sal.age .alue of a fi8ed asset ?he amount of mone$ spent in replacing assets ?he part of the cost of the fi8ed asset consumed during its period of use b$ the firm ?he amount spent to bu$ a fi8ed asset *' A firm bought a machine for :#,255= At is to be depreciated at a rate of 2* per cent using the Feducing Balance %ethod= What would be the remaining boo< .alue after 2 $ears? :2,'55 :1,/55 :1,+55 6ome other figure ** A firm bought a machine for :1+,555= At is e8pected to be used for * $ears then sold for :1,555= What is the annual amount of depreciation if the straight line method is used? :#,-*5 :#,155 :#,255 :#,555 *+ At the balance sheet date the balance on the Accumulated 2ro.ision for Account is9 ?ransferred to epreciation Account ?ransferred to the Asset Account ?ransferred to 2rofit and Loss Account 6impl$ deducted from the asset in the Balance 6heet *An the trial balance the balance on the 2ro.ision for epreciation Account is9 Bot shown, as it is part of depreciation 6ometimes shown as a credit, sometimes as a debit epreciation

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M C Q s

- 12

Topic . Accounting
6hown as a credit item 6hown as a debit item */ Af an accumulated pro.ision for depreciation account is in use then the entries for the $ear3s depreciation would be9 Credit Asset Account, debit 2ro.ision for epreciation Account ebit Asset Account, credit 2rofit and Loss Account Credit 2ro.ision for epreciation Account, debit 2rofit and Loss Account epreciation Account

Credit 2rofit and Loss Account, debit 2ro.ision for *0 When the final accounts are prepared, the Bad the9 ?rading Account 2ro.ision for Balance 6heet 2rofit and Loss Account +5 A 2ro.ision for oubtful ebts is created9 When debtors cease to be in business ?o pro.ide for possible bad debts When debtors become ban<rupt ?o write off bad debts +1 Wor<ing Capital is a term meaning9 ?he total of @i8ed Assets - Current Assets ?he capital less drawings ?he amount of capital in.ested b$ the proprietor ?he e8cess of the current assets o.er the current liabilities A credit balance brought down on a Fent Account means9 We ha.e paid too little in rent We ha.e paid too much rent We owe that rent at that date oubtful ebts Account

ebts Account is closed b$ a transfer to

+2

+#

We ha.e paid that rent in ad.ance at that date A debit balance brought down on a 2ac<ing %aterials Account means9

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M C Q s

- 13

Topic . Accounting
We ha.e a stoc< of pac<ing materials unused We are owed for pac<ing materials We ha.e lost mone$ on pac<ing materials We owe for pac<ing materials +' Af we ta<e goods for own use we should9 ebit rawings Account9 Credit 2urchases Account ebit rawings Account9 Credit 6toc< Account

ebit 6ales Account9 Credit 6toc< Account ebit 2urchases Account9 Credit +* rawings Account

Capital D8penditure is9 ?he costs of running the business on a da$-to-da$ basis %one$ spent on bu$ing fi8ed assets or adding .alue to them %one$ spent on selling fi8ed assets ?he e8tra capital paid in b$ the proprietor

++

An the business of C 6ongster, who owns a clothing store, which of the following is Capital D8penditure? (i) 6hop fi8tures bought (ii) Wages of assistants (iii) Bew .an bought (i.) 2etrol for .an (ii) and (i.) (i) and (iii) (i) and (ii) (ii) and (iii)

+-

Af :*55 was shown added to 2urchases instead of being added to a fi8ed asset9 Bet profit onl$ would be o.erstated Both gross and net profits would be understated Bet profit onl$ would be understated At would not affect net profit

+/

A cheEue paid b$ $ou, but not $et passed through the ban<ing s$stem, is9 A credit transfer

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M C Q s

- 14

Topic . Accounting
A dishonored cheEue An un-presented cheEue A standing order +0 A Ban< Feconciliation 6tatement is a statement9 6ent b$ the ban< when we ha.e made an error rawn up b$ the ban< to .erif$ the cash boo< 6ent b$ the ban< when the account is o.erdrawn rawn up b$ us to .erif$ our cash boo< balance with the ban< statement balance -5 Which of the following are not true? A Ban< Feconciliation 6tatement is (i) 2art of the double entr$ s$stem (ii) Bot part of the double entr$ s$stem (iii) 6ent b$ the firm to the ban< (i.) 2osted to the ledger accounts= (i), (ii) and (i.) (i), (iii) and (i.) (i) and (ii) (ii), (iii) and (i.) -1 Which of the following should be entered in the Gournal? (i) 2a$ment for cash purchases (ii) @i8tures bought on credit (iii) Credit sale of goods (i.) 6ale of surplus machiner$= (i) and (i.) (ii) and (i.) (iii) and (i.) (ii) and (iii) -2 ?he Gournal is9 Ised when other Journals ha.e been mislaid A supplement to the Cash Boo< Bot part of the double entr$ s$stem 2art of the double entr$ s$stem -# 4i.en desired cash float of :255, if :1'+ is spent in the period, how much will be reimbursed at the end of the period?

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M C Q s

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Topic . Accounting
:*# :1'+ :2*' :255 -' When a pett$ cash boo< is <ept there will be9 Bo entries made at all in the general ledger for items paid b$ pett$ cash ?he same number of entries in the general ledger @ewer entries made in the general ledger %ore entries made in the general ledger -* Which of the following do not affect trial balance agreement? (i) 6ales :15* to A "enr$ entered in 2 "enr$3s account (ii) CheEue pa$ment of :1#' for %otor e8penses entered onl$ in Cash Boo< (iii) 2urchases :''5 from C Browne entered in both accounts as :'5' (i.) Wages account added up incorrectl$, being totaled :15 too much= (i) and (iii) (ii) and (iii) (i) and (i.) (iii) and (i.) Which of the following are not errors of principle? (i) %otor e8penses entered in %otor &ehicles account (ii) 2urchases of machiner$ entered in 2urchases account (iii) 6ale of :2*5 to C 2hillips completel$ omitted from boo<s (i.) 6ale to A "enriEues entered in A "enr$3s account= (iii) and (i.) (ii) and (iii) (i) and (ii) (i) and (i.) -Drrors are corrected .ia the Gournal because9 At sa.es the boo<<eeper3s time At pro.ides a good record e8plaining the double entr$ records At sa.es entering them in the ledger At is much easier to do -/ Which of these errors would be disclosed b$ the trial balance?
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-+

M C Q s

- 16

Topic . Accounting
A purchase of :2*5 was omitted entirel$ from the boo<s Credit sales of :#55 entered in both double entr$ accounts as :#5 6elling e8penses had been debited to 6ales Account CheEue :0* from C 6mith entered in 6mith3s account as :*0 -0 Af a trial balance totals do not agree, the difference must be entered in9 ?he 2rofit and Loss Account A Bominal Account ?he Capital Account A 6uspense Account /5 What should happen if the balance on a 6uspense Account is of a material amount? Write it off to 2rofit and Loss Account 6hould be written off to the balance sheet Carr$ forward the balance to the ne8t period @ind the error(s) before publishing the final accounts /1 4i.en opening debtors of :11,*55, 6ales :'/,555 and receipts from debtors :'*,555, the closing debtors should total9 :1',*55 :/#,*55 :1/,*55 :/,*55 /2 An a 6ales Ledger Control Account the Bad ebts written off should be shown in the account9 As a credit As a debit As a balance carried down Both as a debit and as a credit %C/# Af cost price is :05 and selling price is :125, then9 (i) %ar<-up is 2* per cent (ii) %argin is ##1H# per cent (iii) %argin is 2* per cent (i.) %ar<-up is ##1H# per cent (i) and (ii)
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M C Q s

- 17

Topic . Accounting
(i) and (iii) (iii) and (i.) (ii) and (i.) /' 4i.en cost of goods sold :1+,555 and margin of 25 per cent, then sales figure is9 :21,555 :25,555 :1#,+55 :25,1+5 /* Af opening stoc< is :#,555, closing stoc< :*,555, sales :'5,555 and margin 25 per cent, then stoc< turn is9 - K times / times * times + times /+ Af creditors at 1 Ganuar$ 25># were :2,*55, creditors at #1 ecember 25># :',255 and pa$ments to creditors :#2,555, then purchases for 25># are9 :#1,+55 :#/,-55 :##,-55 :#5,#55 /4i.en opening capital of :1+,*55, closing capital as :11,#*5 and drawings were :#,#55, then9 2rofit for the $ear was :/,'*5 Loss for the $ear was :/,'*5 2rofit for the $ear was :1,/*5 Loss for the $ear was :1,/*5 // A Feceipts and 2a$ments Account is one9 An which the surplus of income o.er e8penditure is calculated An which the opening and closing cash balances are shown Which is accompanied b$ a balance sheet

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M C Q s

- 18

Topic . Accounting
An which the profit is calculated /0 2rime cost includes9 (i) irect labour (ii) @actor$ o.erhead e8penses (iii) Faw materials consumed (i.) irect e8penses (i), (iii) and (i.) (i), (ii) and (iii) (ii), (iii) and (i.) (i), (ii) and (i.) 05 Which of the following should be charged in the 2rofit and Loss Account? Carriage on raw materials Wor< in progress 7ffice rent irect materials 01 An the %anufacturing Account is calculated9 ?he production costs paid in the $ear ?he total cost of goods produced ?he gross profit on goods sold ?he production cost of goods completed in the period 02 ?he best method of departmental accounts is9 ?o allocate e8penses in proportion to purchases ?o allocate e8penses in proportion to sales ?o charge against each department its uncontrollable costs ?o charge against each department its controllable costs 0# Where there is no partnership agreement then profits and losses9 %ust be shared eEuall$ %ust be shared in same proportion as capitals %ust be shared eEuall$ after adJusting for interest on capital Bone of these 0' Af it is reEuired to maintain fi8ed capitals then the partners3 shares of profits must be9 Credited to capital accounts
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M C Q s

- 19

Topic . Accounting
ebited to capital accounts ebited to partners3 current accounts Credited to partners3 current accounts Cou are to bu$ an e8isting business which has assets .alued at buildings :*5,555, %otor .ehicles :1*,555, @i8tures :*,555 and 6toc< :'5,555= Cou are to pa$ :1'5,555 for the business= ?his means that9 Cou ha.e made an arithmetical mista<e Cou are pa$ing :'5,555 for 4oodwill Buildings are costing $ou :#5,555 more than their .alue Cou are pa$ing :#5,555 for 4oodwill 0+ Assets can be re.alued in a partnership change because9 ?he depreciation charged on them needs to be re.ersed At helps pre.ent inJustice to some partners ?he law insists upon it Anflation affects all .alues 0An$ loss on re.aluation is9 ebited to old partners in old profit-sharing ratios Credited to old partners in old profit-sharing ratios Credited to new partners in new profit-sharing ratios ebited to new partners in new profit-sharing ratios 0/ An a limited compan$ which of the following are shown in the Appropriation Account? (i) ebenture interest (ii) 2roposed di.idend (iii) ?ransfers to reser.es (i.) irectors3 remuneration (i) and (ii) (i) and (ii) (ii) and (iii) (ii) and (i.) ?he Assued Capital of a compan$ is9 Alwa$s the same as the AuthoriLed Capital ?he same as 2reference 6hare Capital
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0*

00

M C Q s

- 20

Topic . Accounting
DEual to the reser.es of the compan$ Bone of the abo.e 155 A compan$ wishes to pa$ out all a.ailable profits as di.idends= Bet profit is :2+,+55= ?here are 25,555 /M 2reference shares of :1 each, and *5,555 7rdinar$ shares of :1 each= :*,555 is to be transferred to 4eneral Feser.e= What 7rdinar$ di.idends are to be paid, in percentage terms? '5 per cent +5 per cent 15 per cent 25 per cent

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