Recording Financial Transactions

FA 1
By Md. Nabayeel Azim Chowdhury
Time 2 Hours
Marks 100

Time: 2 Hours

FA 1

Mock Exam

Marks: 100

1. Which of the following is not revenue?

A. Credit sales
B. Receipts from debtors.
C. Interest charge on debtors
D. Rent received.
2. Which item is capital expenditure for sole trader?
A. Drawings of proprietor for his own use.
B. Additional capital brought into the business.
C. Expenditure to finance day to day expenses.
D. Expenditure on the improvement of fixed assets.
3. Building $40000, stock $6000, cash $500, creditors $7000, bank overdraft $11000. What is the
amount of capital?
A. $64500
B. $28500
C. $38500
D. None of the above
4. Mr. A is recording the invoice for the purchase of a new non-current asset. As will as the basic
cost of the asset. The invoice shows the following items: Delivery, Installation, and Maintenance.
Which of the cost should be treated as revenue expenditure?
A. Delivery
B. Installation only
C. Maintenance only
D. All of the cost
5. What is the name of the person who signs the cheque?
A. Drawer
B. Drawee
C. Payer

D. Payee
6. A journal voucher is commonly known asA. Purchase invoice
B. Purchase day book
C. Purchase ledger
D. Journal
7. What is the purpose of a balance sheet?
A. To report current value of the business
B. To report the assets and liabilities of the business
C. To report the personal assets of the business owner
D. To indicate if the business is trading profitability
8. Which of the following statement is false?
A. Capital can be increased by introducing more capital.
B. Capital can be increased by making profit.
C. Capital can be increased by drawings
D. Capital can be decreased if the business incurred losses.
9. Mr. S is not registered for sales tax. His purchase was $2350 inclusive of tax and sales were
exclusive of tax $1000. The rate of tax is 17.5%. What will be tax amount in his ledger?
A. $350 receivable
B. $350 payable
C. $175 receivable
D. Note of them
10. A suspense a/c shows a credit balance of $130. This could be due toA. Omitting a sale of $130 from sales ledger.
B. Recording a purchase of $130 twice in the purchase a/c.
C. Failing to write off a bad debt of $130.
D. Recording a electricity bill paid of $65 by debiting the bank a/c and crediting the electricity
a/c.
11. Which of the following will not cause an entry to be made in suspense a/c?
A. Drawings shows on the credit side in the trial balance
B. Discount allowed shown on the debit side in the trial balance
C. Omission of a bad debt
D. Cash in hand of $1680 on trial balance as $1860
12. A payment for repair of a machine has been correctly recorded in the bank a/c but debited to
machinery cost a/c. this is an example ofA. Positing error
B. Error of omission
C. Error of commission
D. Error of principle
13. A pay slip is used to recordA. The salary received by employee

B. To record all transactions

C. To record the purchase cost
D. None of them
14. L sold 100 tables at total of $1000 to K. After one day K retried 20 tables to L. Now which will be
provided to correct this invoice and by whom?
A. $200 debit note by L.
B. $1000 credit note by L
C. $200 credit note by L
D. $200 credit note by K
15. A motor vehicle cost $80000 and the price includes $100 for petrol. The total payment of
$81000 was debited to the motor vehicle a/c. what is the effect of the error on the I/S and
balance sheet?
Net profit
Fixed assets
A. Overstated $100
overstated $100
B. Overstated $100
Understated $100
C. Understated $100
Overstated $100
D. Understated $100
Understated $100
16. i. Cash book balance before taking the items was $5670 overdraft.
ii. Bank charge $250 has not been entered in the cash day book.
iii. Bank has credited the a/c in error with $40 which belong to another customer.
iv. Cheque payment correctly entered in the cash book $325 but have not been presented for
payment.
v. Cheque $545 have been entered in the debit side of the cashbook bu have not been paid in at
the bank.
What was the balance as shown in the bank statement before taking the items into a/c?
A. $5670 overdraft
B. $5600 overdraft
C. $5740 overdraft
D. $6100 overdraft
17. Cash book opening balance of $485 credit.
Cash sales $1450 including sales tax $150.
Receipts from customer of $2400.
Payment to payable to $1800 less 5% discount.
Dishonored cheque from customers to $250.
The result balance in the bank column of the cash book should beA. $1255 Dr
B. $1405 Dr
C. $1905 Cr
D. $2375 Cr
18. Dr Cash $850

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Cr Sujon $850
Which of the following is the correct narrative for the journal entry?
A. Cash sales to Sujon
B. Cash purchase form Sujon
C. Cash payment to Sujon
D. Cash received from Sujon
Which of the following will not help to reduce its bad debt?
A. Improved credit control
B. Better credit check on customers
C. Higher settlement discount
D. Bigger trade discount
An employee is paid on a piecework basis.
1-100 units per day $0.25/unit
101-200 units per day $0.30/unit
>200 units per day $0.45/units
Only the additional units qualify for the higher rates. Rejected units do not qualify for payment.
Employee produced 190 units in a day of which 15 were rejected as faulty. how much did the
employee earn for the day?
A. $47.5
B. $52.5
C. $57
D. $85.5
Why does data protection legislation exist?
A. To ensure that information is maintained on employees
B. To preserve records of the business
C. To prevent business holding personal information without a legitimate reason.
D. To specify the records to be maintained in respected of information.
Which of the following errors would give rise to a difference on a trial balance in a business
where sales and purchase ledger control a/c are maintained?
A. Forward opening balance as $9390 instead of $9930
B. Understanding sales day book by $1000
C. Failure to record purchase of machine of $5000
D. Posting rent of $2000 to electricity a/c.
1 January 2016 payables balance of $15485. Year end paid cheque of $46570 and cash of $3450
to suppliers. Allowed prompt payment discount $2680 and return good from customer $550. At
the yearend owed to supplier of $17890. What were purchases in the year?
A. $55655
B. $52205
C. $55105
D. None
It is important to produce a trial balance prior to preparing the final accounts because-

A. It confirms the accuracy of the ledger accounts

B. It providers all the figure necessary to prepare the final a/c.
C. It shows that ledger a/c contains Dr. and Cr. Entries of an equal value.
D. It enables the accountants to calculate any adjustment required.
25. Opening balance of receivables $4529. Cash received from receivables $7231. Yearend balance
$7222. 40% of totals sales is cash sales.
What is the total sales amount?
A. $16540
B. $9224
C. $5144
D. $23060
26. Opening balance of VAT is $3210. Outpur $12400 excluding VAT and input $11280 including
VAT. $2890 was paid to HMRC. Standard rate of VAT 17.5%. what is balance on the VAT a/c at
the year end?
A. $170
B. $810
C. $2720
D. $3700
27. Which book is written up from the copies of credit notes issued by the business?
A. Purchased day book
B. Purchase return day book
C. Sales day book
D. Sales return day book

28. What is the purpose of crossing a cheque?

A. To stop it being paid into a/c other that payees
B. To speed up the time it takes to go through the clearing system.
C. To allow it to be paid into any a/c
D. To tell the bank to check that there is enough money in the a/c
29. Customer paid $600 to clear a debt of $620.85. what is the double entry for this?
A. Debit debtor $600, Debit discount allowed $20.85, Credit Cash $620.85
B. Debit debtor $620.85, Debit discount allowed $20.85, Credit Cash $600
C. Credit debtor 620.85, Debit discount received $20.85, Debit Cash $600
D. Debit Payable $620.85, Credit Discount received $20.85, Credit Cash $600
30. Balance on the payable ledger control a/c is $41554. Settlement discount $53 received from a
supplier. A supplier invoice for $622.
What amount should be reported for payables on balance sheet?
A. $40879
B. $40985

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C. $42123
D. $42229
Cash discount allowed will first be recorded inA. Sale day book
B. Petty cash day book
C. Journal
D. Cash day book
A sum of $350 withdrawn from the bank and placed in the cash till is entered asA. Debit bank $350, Credit Cash $350
B. Debit Bank $350, Credit Bank $350
C. Debit Cash $350, Credit cash $350
D. Debit cash $350, Credit Bank $350
Petty cash book shows a balance of $68 and reimbursement cheque $132 drawn by chief
cashier. The imprest amount isA. $132
B. $68
C. $64
D. $200
Customers a/c is opened in the
A. Cash book
B. Purchase ledger
C. Sales ledger
D. Journal
Which of the following is an advantage of using computerized accounting system?
A. Fewer ledger a/c need to be maintained
B. The final a/c can be prepared without the need for closing entries.
C. There will be no error in the books
D. Incomplete entries are recorded in the book.

36. General ledger balance Cr. $2450

Bank statement balance Dr. 1035
The difference between two balances is explained by unpresented cheque and outstanding
lodgment. How should the bank balance reported in the final a/c?
A. Current asset of $1035
B. Current liability of $1035
C. Current asset of $2450
D. Current liability of $2450
37. Opening inventory 1 May 2016 $23856
Trade receivable $55742

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Trade payable $32165

Bank overdraft $5855
Loan due for repayment in 2019 $15000
What is the value of current liability?
A. $38020
B. $53020
C. $61597
D. $76597
Bank statement shows an overdraft balance $2000. There are uncredited cheque $2800 and
unpresented cheque $500.
What is the cash balance to be reported in the balance sheet?
A. Dr. $4300
B. Cr. $4300
C. Cr. $300
D. Dr. $300
Which error will be detected by the trial balance?
A. Error of principle
B. Error of posting
C. Error of omission
D. Error of partial entry
What journal entry is required to record good taken from inventory by owner?
A. Dr. Drawing Cr. Inventory
B. Dr. Drawing Cr. Purchase
C. Dr. Sales Cr. Drawing
D. Dr. purchase Cr. Drawing
Which statement about discount received is true?
A. It increases cash balance
B. It is given to bulk purchase
C. It is given by the supplier when business pays is a/c promptly
D. It is given by the business to debtors who pay its a/c promptly

42. The book of original entry isA. Ledger

B. Journal
C. Transactions
D. Trial balance
43. An invoice shows two items sold at $5000 cash less 10% trade discount and 6% cash discount.
What is the amount to be paid if the invoice is settled within the stipulated period?
A. $10000
B. $9000

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C. $8400
D. $8460
Which of the following is an example of a long term liability for jeo?
A. Amount he will receive in 2 days
B. Amount he will pay in 2 months
C. Amount he will pay in 2 years
D. Amount he will received in 2 months
Employees pension contribution $8150
Gross basic wages $99000
Income tax $15000
Employers pension contribution $9500
What is the total charge for wages and salary in the final a/c?
A. $108500
B. $107150
C. $116650
D. $131650
i. Refund to customer is debited in the RLCA
ii. Receivables allowance is credited in the RLCA
Which of the statement is false?
A. Both
B. i only
C. ii only
D. none
Which of the following statement is true?
A. Assets increase, Capital Increase, Liability increase.
B. Assets unchanged, Capital increase, Liability increase
C. Assets unchanged, Capital increase, Liability Decrease
D. Assets increase, Capital decrease, Liability increase
Which of the following is capital expenditure?
A. Solicitor fee in connection with purchase
B. Salary of machine operator
C. Cost of inventory
D. Profit on the sales of building

49. A debt is considered as bad debt ifA. It is 3 years old

B. It is 6 years old
C. Allow customer greater credit period
D. Customer exceed its credit period
50. Top up amount vary but total amount fixed, it is-

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B
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Imprest system
Imprest amount
Non imprest system
Non imprest amount

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A
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