Chapter 02 Ans

Carey, Knowles & Towers-Clark: Accounting - A Smart Approach Carey, Knowles & Towers-Clark: Accounting - A Smart Approach Carey,
Knowles & Towers-Clark: Accounting - A Smart Approach Carey, Knowles & Towers-Clark: Accounting - A Smart Approach
Chapter 02
You have answered 2 out of 10 questions correctly. You have answered 2 out of 10 questions correctly. You have answered 2 out of 10 questions correctly. You have answered 2 out of 10 questions correctly.
Your percentage score is 20%. Your percentage score is 20%. Your percentage score is 20%. Your percentage score is 20%.
Question 1 Question 1 Question 1 Question 1
Izzy sells chocolate cakes at 6 each and each one costs her 4 to produce. During June 2013, Izzy made 200 cakes and sold 180 cakes.
Her expenses amounted to 120 for the month. How much net profit did Izzy make in June 2013?
Your answer: Your answer: Your answer: Your answer:
b) b) b) b) 160
Correct answer: Correct answer: Correct answer: Correct answer:
c) c) c) c) 240
Feedback: Feedback: Feedback: Feedback:
Sales were 1,080, cost of sales 720, and expenses 120; giving a net profit of 240.
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Which of the following statements regarding trade payables is not not not not true?
b) b) b) b) Trade payables have supplied goods to the business.
Results Results Results Results
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a) a) a) a) Trade payables owe money to the business.
Trade payables are money owed by the business to creditors, vendors, suppliers and so on.
John has made the following predictions for his business for the first six months of trading to 30 June 2012:
Sales in Jan, Feb and March = 20,000 per month
Sales in Apr, May and June = 25,000 per month
Sales will be on one month's credit
The trade receivables figure as at 30 June 2012 will be:
b) b) b) b) 25,000.
Trade receivables at the end of June will be the May sales of 25,000.
Which of the following payments is revenue expenditure?
b) b) b) b) Purchase of a motor van
c) c) c) c) Cost of servicing the motor van
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c) c) c) c) Cost of servicing the motor van
Servicing a motor van is a revenue expenditure.
Which of the following is a capital expense?
b) b) b) b) Rent and rates
d) d) d) d) Purchase of a motor van
The purchase of a motor van is a capital expense.
Which of the following is a record of all the account balances at the year end, and is used to prepare the final accounts?
b) b) b) b) A statement of financial position
a) a) a) a) A trial balance
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a) a) a) a) A trial balance
A trial balance is a record of all the account balances at the year end, and is used to prepare the final accounts.
During the year ended 31 December, the business made sales of 45,000 and purchases of 25,000. The inventory at the beginning of the
year was valued at 8,000 and, at 31 December, 4,500. The gross profit for the year was:
d) d) d) d) 32,500.
c) c) c) c) 16,500.
Sales are 45,000, cost of sales 28,500 (8,000 + 25,000 - 4,500) and gross profit 16,500.
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Ben started trading on 1 January 2014. His trial balance at 31 December 2014 is given below:
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If the closing inventory at 31 December 2014 was 8,000 and depreciation is to be ignored, which one of the following is true?
d) d) d) d) Cost of sales are 64,000.
b) b) b) b) Net profit is 16,000.
The net profit is 49,000 (105,000-56,000) less expenses of 33,000 (6,000+27,000); giving a net profit of 16,000.
If the sale of a motor van for 25,000 by a hotel company is included in its sales, which of the following is correct?
d) d) d) d) Both gross profit and net profit will be overstated by 25,000.
The sale should not have been included in expense revenue and therefore gross and net profit will be overstated.
If the purchase of inventory for 25,000 is included in capital expenses, which of the following is correct?
c) c) c) c) Net profit only only only only will be understated by 25,000.
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c) c) c) c) Net profit only only only only will be understated by 25,000.
d) d) d) d) Both gross profit and net profit will be understated by 25,000.
The purchase of inventory should have been included in purchases and not in capital expenses, so both gross and net profit will be
understated.
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