1. Applying money measurement principle, what is recorded in a balance sheet?

A. Better staff morale following redecoration of premises

B. Improved public roads to the business premises
C. Increase in efficiency following staff training
D. Installation of air-conditioning to improve staff comfort

2. Business makes use of both book- keeping and accounting procedures.

What is the purpose of book- keeping?
A. to interpret the double entry records
B. to prepare financial statement at regular intervals
C. to record all financial transactions of the business
D. to summarize the financial position of the business

3. Which would be recorded a credit entry in an account?

A. A decrease in capital
B. A decrease in liabilities
C. An increase in assets
D. An increase in capital

4. Which is true about computer accounting system?

A. Anyone with a computer can gain access to the accounting records.
B. Data input can only use for one specific purposes.
C. Data output can only understood by computer programmers.
D. Operator error may result in inaccurate information.

5. Which is accounting equation?

A. Assets – current liabilities = Capital
B. Assets – liabilities = capital
C. Current assets – liabilities = capital
D. Non- current assets – liabilities = capital

6. Which document is issued to a customer to show all the transactions that have taken place during a
month?
A. Credit note
B. Invoice
C. Receipt
D. Statement

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7. Hassan maintain a sales journal, purchase journal, sales return journal and purchase return journal.
At the end of his first month’s trading, Hassan transfers the total of each of these journals to the general
ledger.
Which entries will Hassan make in his general ledger to record these totals?
Account to be debited Account to be credited
A Purchase return Purchases
Sales Sales returns
B Purchase returns Purchase
Sales returns Sales
C Purchase Purchase returns
Sales Sales returns
D Purchases Purchases returns
Sales returns sales

8. Jane, a trader, withdraws $ 50 from the businesses bank account for office use.
How is this recorded in Jane’s books?
Account to be debited Account to be credited
A Bank Cash
B Bank Drawings
C Cash Bank
D Drawings bank

9. A trader prepares financial statement (final accounts) each year.

What do these assist the trader to so?
A. Calculate the amount owing to creditors
B. Calculate the cash drawings
C. Check the bank statement balance
D. Make decisions about the future

10. Which does not reduce the owner’s capital?

A. Businesses expenses paid using a personal cheque
B. Cash withdrawn from the business bank account for personal use
C. Goods taken from inventory (stock) for personal use
D. Personal expenses paid using business cash

11. A customer returns goods to a supplier.

How does the supplier record this in his ledger?

Account to be debited Account to be credited

A Customer Purchase return
B Customer Sales returns
C Purchases return Customer
D Sales returns customer

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12. Which transaction is recorded in the purchases ledger?
A. Cash purchases
B. Cheque paid to a creditor
C. Cheque received from a debtor
D. Purchases of non- current (fixed) assets

13. Which document may be sent by a purchaser to a supplier when damaged goods are returned?
A. Credit not
B. Debit note
C. Invoice
D. Statement of account

14. Where the total of the purchase journal posted?

A. Credit trading account
B. Debit trading account
C. Credit purchase account
D. Debit purchase account

15. What is the benefit of using information and communication technology in book – keeping and
accounting?
A. Anyone with a computer can access the information.
B. It is cheap to install.
C. Large quantities of information can be stored.
D. Staff requires special training.

16. Zafar returns goods bought on credit from Khalid.

How is this recorded in Zafer’s books?

Account to be debited Account to be credited

A Khalid Purchase returns
B Khalid Sales returns
C Purchase returns Khalid
D Sales returns Khalid
17. Which is recorded in sales ledger?
A. Cash sales
B. Cheque paid to a customer
C. Cheque received from a debtor
D. Sales of fixed assets

18. Which document does a trader send to a customer to summarize the transactions for the month?
A. Credit note
B. Debit note
C. Receipt
D. Statement of account
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19. Which is entered in business General journal?
A. Purchase of new motor vehicle on credit
B. Return of faulty goods by a credit customer
C. Standing order for payment of insurance premium
D. Transfer of surplus office cash into the bank

20. A trader prepares a ledger account using running balance method.

Which statement is correct?
A. The balance is shown after each transaction.
B. The balance is shown only at the month end.
C. There are fever calculations than in a traditional “T” account.
D. This method is not suitable for computerized accounts.

21. Which group contains only trading business?

A. Driving school, motor insurance agent, motor vehicle repair
B. Driving school, motor insurance agent, petrol station
C. Motor parts shop, motor repairer, used car dealer
D. Motor parts shop, petrol station, used car dealer

22. What is true of a computerized accounting?

A. Data inputs can be used for several accounting processes.
B. Installation costs are low.
C. It is always simple to design and modify a computer system.
D. Staffs do not require special turning.

23. Which is entered in the general Journal?

A. Cash payment to an employee for expenses
B. Correction of an error
C. Credit purchases of goods for resale
D. Return of goods by a customer

24. Which will appear in the credit column of a trial balance?

A. Cash at bank
B. Cash in hand
C. Discount allowed
D. Discount received

25. Which is a capital income?

A. Cash received from the sale of office equipment
B. Cheque received from the sale of stock
C. Discount received from trade creditors
D. Rent received from tenants

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26. A trader provides the following information.
$
Sales 120 000
Cost of sales 48 000
Expenses 43 000
What is the net profit?
A. $5000
B. $29 000
C. $72 000
D. $77 000

27. Which appears in a balance sheet?

A. Capital expenditure
B. Cost of goods sold
C. Gross profit
D. Revenue expenditure

28. Which best describes the assets of a business?

A. Cash and items that should turns into cash in the near future
B. Cash invested by the owner of the business
C. Items bought for long term use by businesses
D. Items owing to or owned by the business

29. What is true of a computerized accounting system?

A. The computer will automatically correct inaccurate inputs
B. The date can be used for a number of different uses
C. The design of the system cannot be modified
D. The possibility of the financial fraud is eliminated

30. Which is recorded in the purchase ledger?

A. Cash paid to creditor
B. Cash purchases
C. Cheque received from a debtor
D. Purchase of a fixed assets

31. A business maintains a full set of books of prime entry.

Which book is written up from credit notes received?

A. Purchase journal
B. Purchase return journal
C. Sales journal
D. Sales return journal

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32. A business keeps three column cash book.
How is the total of the discount column on the debit side posted?
A. Credit discount allowed account
B. Credit discount received account
C. Debit discount allowed account
D. Debit discount received account

33. What is trial balance?

A. A list of balances remaining on the books of a business on a certain date
B. A statement of the assets, liabilities and capital of a business on a certain date
C. A statement showing the profit made by business for a financial period
D. A summary of the trading transactions of a business for a financial period

34. What is the main purpose of charging depreciation on fixed assets?

A. To provide fund for the replacement of assets
B. To record the assets at their market value
C. To reduce the cost of repairing assets
D. To spread the cost of assets over their useful lives

35. A trader provides the following information.

$
Fixed assets 12 000
Current assets 6 000
Current liabilities 4 000
What is her capital employed?
A. $2000
B. $10 000
C. $14 000
D. $22 000

36. Which businessman is operating a trader business?

A. Accountant
B. Computer software developer
C. Hairdresser
D. Second hand car dealer.

37. Winston sold goods on credit to Leory.

What entries should Winston make in his ledger?
Sales Ledger General Ledger
A Credit Leory Debit sales
B Credit sales Debit Leory
C Debit Leory Credit sales
D Debit sales Credit Leory

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38. How is gross profit calculated?
A. Sales less expenses
B. Sales less purchases
C. Sales less sales return less closing stock
D. Sales less sales return les cost of the goods sold

39. Which is a service business?

A. Business installing computer system
B. Business selling computers and printers
C. Stationery shop
D. TV and video shop

40. How can the owner of the business make use of annual financial statement?
A. To calculate the cash drawing for the year
B. To determine the amount due to creditors
C. To measure the change in the bank balance
D. To monitor the progress of the business

41. Which increase owner’s capital?

A. A bank loan extended from five to ten years
B. Purchase of machinery by cheque
C. Purchase of stock on credit
D. Transfer of vehicle to business from private use

42. Anna keeps a full set of accounting records.

Goods purchased by Anna from Winston were returned before they were paid for.
Where will Anna record the return of goods?
A. Cash and purchase ledger
B. General ledger only
C. General ledger and purchase ledger
D. Purchase ledger only.

43. Which statement about a debit not is correct?

A. It is sent to a customer to request payment of an account
B. It is sent to a customer when his order cannot be supplied in full
C. It is sent to a supplier to order additional goods
D. It is sent to a supplier when goods are received damaged

44. Which is both a book of prime entry and a ledger account?

A. Cash book
B. General journal
C. Purchase journal
D. Sales journal

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45. A trader prepares a ledger account using the running balance method.
Which statement is correct?
A. The balance is shown after each transaction
B. The balance is shown only after a credit transaction
C. The balance is shown only after a debit transaction
D. The balance is shown only at the month end

46. Which transaction is recorded in the purchase ledger?

A. Cash purchases
B. Cheque paid to a creditor
C. Cheque received from a debtor
D. Purchase of fixed assets

47. A business purchases a new motor vehicle on credit.

Which book of original entry is used to record this transaction?
A. Cash book
B. General journal
C. Purchase journal
D. Sales journal

48. Which is a debit balance?

A. Accrual
B. Assets
C. Liability
D. Revenue

49. Which is a capital income?

A. Purchase of machinery by cheque
B. Rent received in cash
C. Sales of machinery in cash
D. Stationary bought by cheque

50. A business keeps three column cash book.

Where is the total of the discount column on the credit side posted?
A. To the credit side of the discount allowed account
B. To the credit side of the discount received account
C. To the debit side of the discount allowed account
D. To the debit side of the discount received account
51. Which is a fixed asset?
A. Bank balance
B. Debtors
C. Motor vehicle
D. Prepayments

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52. What would a business use to pay for goods?
A. Cheque
B. Invoice
C. Receipt
D. Statement of account

53. What is credited in the cash book?

A. Bank charges
B. Cheque received
C. Discount allowed
D. Trade discount

54. What is the effect of treating capital expenditure as revenue expenditure?

A. To reduce the gross profit
B. To increase the net profit
C. To reduce the fixed assets
D. To increase the fixed assets

55. Final account should include all the costs and incomes for the accounting period to which they relate.
What accounting principle is being observed?
A. Accounting entity
B. Going concern
C. Matching
D. Money measurement

56. What is effect of paying for motor vehicle expenses?

A. Decrease gross profit
B. Decrease net profit
C. Increase current assets
D. Increase fixed assets

57. Which will appear as a credit balance in a trial balance?

A. Balance at bank
B. Balance in cash
C. Discount allowed
D. Discount received

58. X keeps full sets of books of account.

Where will the purchase account appear?
A. General journal
B. General ledger
C. Purchase journal
D. Purchase ledger

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59. Which source document is used to make an entry in the purchase return Journal?
A. Credit note issued by the business
B. Credit note issued by the supplier
C. Invoice issued by the business
D. Invoice issued by the supplier

60. Which is entered in the purchase journal?

A. Invoice from supplier
B. Invoice to customers
C. Payments from customers
D. Payments to suppliers

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