When carrying out reconciliation between the non-current assets in her asset register and the

assets which she can physically identify, Wilma could not find one of the assets which is
recorded in her asset register.

Could each of the following reasons explain the discrepancy

Yes No
The supplier's invoice has not yet been received
No record was made when the asset was sold

Jerome's receivables ledger has balances totaling $57,840. He has decided to write off an
irrecoverable debt of $320. His receivables allowance at the last year end was $1,368. He has
calculated that this should be revised to $1,247.

What is the resulting charge to Jerome's statement of profit or loss?

A business should apply the same accounting treatment to similar items from one accounting
period to the next.'

What accounting principle is described by the statement above?

Materiality

Consistency

Business entity

Going concern

Which of the following statements describes the qualitative characteristic of 'relevance'?

Information which is capable of making a difference in the decisions made by users

Information which is unbiased

Information which can easily be understood

Information which is free from material error

Since Petra commenced trading the cost of the items she sells has increased. Petra is
trying to decide how her profit for the year will be affected by the method she uses to
value her inventory.

Which TWO of the following statements are correct?

Profit for the year is affected by the method of inventory valuation

First-in first-out will report a lower profit than weighted average

Weighted average will report a lower profit than first-in first-out

Petra should value inventory on the basis that reports the lowest profit

Agnes sold some items of inventory for $1,950 cash. She had bought the items for
$2,622.

How are her assets and capital affected by the sale?

Assets reduced by $2,622, Capital reduced by $672

Assets reduced by $672, Capital reduced by $672

Assets increased by $672, Capital increased by $2,622

Assets increased by $1,950, Capital reduced by $672

Wasim has prepared the

following receivables
$ reconciliation:
Total of list of balances 19,738
Discount not recorded in personal account (29)
Balance on receivables control account 19,709 What value should be
Invoice not recorded in day book 1,627 reported in Wasim's
statement of financial
21,336 position for receivables?
Contra with payables ledger not recorded (2,628)
18,708
 Bill uses the first-in first-out method of inventory valuation. At 1 May 20X8 he had 60 units
in inventory at a total value of $1,320. The movement in inventory in May 20X8 was:

14
Receipts 120 units at $22.20
May
26
150 units at $22.30
May
18
Sales 90 units
May
28
80 units
May

What is the value of Bill's inventory at 31 May 20X8?

Ethel's trial balance includes the following balances:

$
Trade receivables 136,853 Dr
Receivables allowance 14,862 Cr

Assuming there are no other balances, what current asset and current liability balances
should be reported on Ethel's statement of financial position?

. nil $14,862 $121,991 $136,853

Current liability
Current asset

At 31 October 20X6 Gina Dobbs owed her suppliers $13,856. During the year to 31 October
20X7 her payments to suppliers totalled $95,886 and at 31 October 20X7 she owed her
suppliers $11,552.

What is the value of Gina's credit purchases for the year to 31 October 20X7?

In the year to 30 November 20X7 Grace Smith obtained a 25% mark up on all her sales.

Her sales for the year totaled $120,600. Her opening inventory was valued at $9,340 and
her closing inventory was valued at $11,855.What was the value of Grace's purchases for
the year to 30 November 20X7?
 Estelle has prepared the following journal entry:
Dr Cash $500
Cr T Simpkins $500

What is the correct narrative for the journal entry?

Cash sale to T Simpkins

Cash paid to T Simpkins

Cash received from T Simpkins

In the general ledger what should the balance on the receivables ledger control account
show?

The total amount owed by the business to its suppliers

The total amount received from customers during the accounting period

The total amount due to the business from its customers

The difference between the amount owed to suppliers and due from customers

In the year to 30 November 20X7 Grace Smith obtained a 25% mark up on all her sales.

Her sales for the year totalled $120,600. Her opening inventory was valued at $9,340 and her
closing inventory was valued at $11,855. What was the value
of Grace's purchases for the year to 30 November 20X7?
In the year to 31 May 20X9 Ina's sales were $174,820 and her cost of sales was $139,856.

What were her gross profit margin and mark up?

. 20% 25%
Margin
Mark up

Does each of the following require an entry in a suspense account?

. Yes No
The debit and credit totals of the trial balance did not agree
A customer paid $190 to settle an invoice with a value of $109

A company has the following ledger accounts:

Receivables Control Account

Table and chair sales
$ $
3,000
Table Sales
$ $
Receivables control account 2,250
Chair Sales
$ $
Receivables control account 750

Which of the following accounting entries would result in the amounts shown in these
accounts?

Cr Receivables control account

Dr Table sales $2,250 Dr Chair sales $750
$3,000

Dr Chair sales returns Cr Receivables control account

Dr Table sales returns $2,250
$750 $3,000

Dr Receivables control account

Cr Table sales $2,250 Cr Chair sales $750
$3,000

Dr Receivables control account $3,000 Cr Table sales $3,000

In the year to 30 November 20X7 Grace Smith obtained a 25% mark up on all her sales.

Her sales for the year totaled $120,600. Her opening inventory was valued at $9,340 and
her closing inventory was valued at $11,855.

What was the value of Grace's purchases for the year to 30 November 20X7?

Val has extended and totalled her extended trial balance, but has not entered the profit or loss
for the period. The total of the statement of financial position debit column is less than the total
of the statement of financial position credit column.

Which of the following is correct?

Val has made a profit, and the total of the statement of profit or loss debit column will be
less than the total of the statement of profit or loss credit column
Val has made a loss, and the total of the statement of profit or loss debit column will be
greater than the total of the statement of profit or loss credit column
Val has made a profit, and the total of the statement of profit or loss debit column will be
greater than the total of the statement of profit or loss credit column
Val has made a loss, and the total of the statement of profit or loss debit column will be
less than the total of the statement of profit or loss credit column

Do each of the following correctly describe why a bank reconciliation is prepared?

. Yes No
To identify entries which have been generated by the bank, but not recorded in the cash
book
To identify errors in the entries in the cash book

P and Q are in partnership sharing profits equally.

On 30 June 20X5 R joined the partnership and it was agreed that from that date all three partners
should share equally in the profit.

In the year ended 31 December 20X5 the profit amounted to $300,000, accruing evenly over the
year, after charging an irrecoverable debt of $30,000 which it was agreed should be borne
equally by P and Q only.

What should P's total profit share be for the year ended 31 December 20X5?

Which of the following is the correct journal entry to record a credit note issued to a
customer for goods returned?

Dr Sales returns Cr Cash

Dr Cash Cr Sales returns

Dr Trade receivables Cr Sales returns

Dr Sales returns Cr Trade receivables

At 1 November 20X8 the value of Claudia's net assets was $127,554. At 31 October 20X9 the
value was $174,529. During the year to 31 October 20X9 Claudia introduced $35,000 of capital
and her drawings were $17,150.

What was Claudia's profit for the year to 31 October 20X9?

At 1 November 20X8 the value of Claudia's net assets was $127,554. At 31 October 20X9 the
value was $174,529. During the year to 31 October 20X9 Claudia introduced $35,000 of capital
and her drawings were $17,150.

What was Claudia's profit for the year to 31 October 20X9?

Bill obtains a 25% margin on all his sales. In the year to 31 March 20X0 he bought goods with a
total value of $69,000. His closing inventory cost $3,000 less than his opening inventory.

What is the value of Bill's sales in the year to 31 March 20X0?

Simeon has the following ledger balances in his general ledger at 30 September 20X8

$
Capital 6,260
Cash at bank 890
Expenses 17,410
Non-current assets 31,845
Opening inventory 4,820
Purchases 71,470
Payables 6,930
Receivables 15,870
Sales 129,270
Simeon thinks there could be an error in the ledger as he thinks he may have posted only one
side of a journal entry.

What is the total of the credit side of Simeon's trial balance?

What is the purpose of a trial balance?

To keep a record of the total value of a number of similar but individual items in the
ledger accounts
To keep the assets and liabilities of the business separate from the personal assets and
liabilities of the business owners
To highlight certain errors that may have occurred in the double entry accounting system

To use instead of a set of final accounts if the business is small

Shari is carrying out the reconciliation between the balance on her trade payables control
account in the general ledger and the list of balances in the purchase ledger. She has found the
following errors

(1) A credit balance on a supplier's account has been listed as a debit balance
(2) An invoice was recorded in the purchase day book for the wrong value
(3) No record has been made of discount received from a supplier

Which of these errors require an entry in the trade payables control account in the
general ledger?

2 and 3 only

1 and 2 only

1, 2 and 3

1 and 3 only
The totals of Kara's extended trial balance are:

Statement of profit or loss Statement of financial position

Debit Credit Debit Credit
$122,182 $113,528 $122,173 $130,827

What is Kara's result for the year?

A profit of $8,645

A loss of $8,645

A loss of $8,654

A profit of $8,654

Which of the following statements is correct?

Prepaid expenses reduce the value of assets

A prepayment arises when an expense is incurred before it is paid

An accrued expense is recorded when the payment is made

Accrued expenses increase the value of liabilities

Gayle paid for office cleaning in cash. She made the following entries in her general ledger:

Dr Trade payables
Cr Office cleaning expenses

Which accounts require an entry to correct this?

Office cleaning expenses and cash only

Office cleaning expenses, cash and trade payables

Office cleaning expenses and trade payables only

Cash and trade payables only

When goods are sold to a customer on credit, what accounting entries should be
 recorded?

Dr Cash account Cr Sales account

Dr Sales account Cr Cash account

Dr Trade receivables account Cr Sales account

Dr Sales account Cr Trade receivables account

In which of the following circumstances would an entry be made in the non-current asset
register?

(1) When an asset is traded-in

(2) When an asset is scrapped

Top of Form

2 only

Both 1 and 2

1 only

Neither 1 nor 2

When preparing the reconciliation between the balance on the receivables ledger control
account in her general ledger and the total of the list of balances from the personal ledger
Avril discovered the following errors:

(1) An invoice for $375 was entered in the daybook as a credit note
An addition error meant that a customer's balance was understated in the personal
(2)
ledger
(3)
Avril agreed to offset a balance in the receivables ledger against a balance in the
payables ledger, but no entries were made
Which of the errors require an entry in the general ledger?

1, 2 and 3

1 and 2 only

1 and 3 only

2 and 3 only

In Sally's cash receipts book for July the trade receivables column showed a total of
$2,500.

What does this amount represent?

The amount invoiced to customers during July

The amount owed to Sally by customers at the end of July

The discounts allowed to credit customers for July

The amount paid by credit customers during July