Practice paper

Class IX ‘O’ Levels

Accounting
Paper 1

1) Which of the following statement is incorrect? (30 marks)

a) Assets – capital = Liabilities
b) Liabilities + capital = Assets
c) Liabilities + Assets = Capital
d) Assets – liabilities = Capital

2) What is net profit?

A) Gross profit plus discount allowed less expenses
B) Gross profit less expenses
C) Sales less cost of goods sold
D) Sales less expenses

3) What is current liability?

a) Advertising
b) Fixtures and fittings
c) Account payable
d) Stock

4)Which of the following is not an asset?

a) Buildings
b) Cash balance
c) Accounts receivables
d) Loan from k Haris

4) Which will appear in the credit column of trial balance?

a) Cash at bank
b) cash in hand
c) Discount allowed
e) discounts received

5) Which would be recorded by the credit entry in a account?

a) a decrease in capital
b) a decrease in liability
c) an increase in assets
d) an increase in capital
6) Which of the following is incorrect?
Assets Liability Capital
a) $7850 $1250 $6600
b) $8200 $2800 $5400
c) $9550 $1150 $8200
d) $6540 $1120 $5420

7) Which of the following best describes the meaning of Purchases?

a) Items bought
b) Goods bought on credit
c) Goods bought for resale
d) Non- current asset bought

8) Which of the following is correct?

a) Profit does not alter capital
b) Profit reduces capital
c) Capital can only come from the profit
d) Profit increases capital

9) Is it important that the trial balance totals should agree?

a) No,there are sometimes good reasons why they differ
b) Yes,always
c) No, beacause it is not the statement of financial position
d) Yes,expect where the trial balance is extracted at the year end

10) Which group only contain non-current asset?

a) Land, machinery, ,Account payable
b) Land, machinery, vehicles
c) Cash, land, machinery
d) Inventory, land, machinery

11) Which statement is correct?

a) An asset is always a credit entry
b) An expense is always a credit entry
c) An expense is always a debit entry
d) A liability is always a debit entry

12) Which is a non- current asset ?

a) Bank balance
b) Account receivable
c) Motor vehicle
d) Cash

13) Which of the following best describe the trial balance ?

 a) It shows the financial position of a business
b) It is a special account
c) It shows all the entries in the books
d) It is a list of balances on the books

14) Which is a service business?

a) A business which sells computer
b) A business which trains computer operator
c) A stationery supplier
d) A television supplier

15) The balance of the bank is $1200 credit. How is the shown in the balance sheet ?
a) As a current asset
b) As a current liability
c) As a long term liability
d) As owner’s drawing

16) For which purpose does a sole trader not use the following information provided in
his financial statements?
a) To assist with decision making
b) To compare performance with previous years
c) To determine the amount of bank overdraft
d) To plan for the future

17) Which task would not be carried out by an accountant ?

a) Comparing one year’s result from the previous years
b) Interpreting the accounting records
c) Preparing financial statements
d) Recording the financial transactions

18) Jane made a payment to a supplier for goods bought on credit. Jane does not have
a bank overdraft. What is the effect on the accounting equation.?
a) Decrease capital and decrease asset
b) Decrease liability and decrease asset
c) Increase asset and decrease liability
d) Increase liability and decrease capital

19) Which account could have a credit balance

a) Cash
b) Carriage inwards
c) Carriage outwards
d) Bank overdraft
20) How should the owner of the business use his annual financial statements?
a) To calculate the cash drawings for the year
b) To determine the amount due to trade payables
c) To measure the change in the bank balance
d) To monitor the progress of the business

21) Business make use of both book keeping and accounting procedures. What is the
purpose of the book keeping?
a) To interpret the double entry records
b) To prepare the financial statements at the regular interval
c) To record all the transaction of the business
d) To summarize the financial position of the business

22) Which best describes the asset of the business?

a) Cash and items that should be turned into the cash in the near future
b) Cash invested by the owner of the business
c) Items bought for long term use of the business
d) Items owing to or owned by the business

23) What is a trail balance ?

a) A list of balances on the business’s book on a certain date
b) A list of the asset, liabilities and capital of the business on a certain date
c) A summary of all the business’s transaction for the year
d) A summary of the financial position of the business at the year end

24) What is credited in the cash book ?

a) Bank charges
b) Cheques received
c) Discount received
d) Trade discount

25) What affects gross profit?

a) Carriage outwards
b) Wages
c) Carriage inwards
d) Cash at bank

26) A trader provided the following inforataion.

Cost of sales 70000

Expenses 8000
Net profit 14000
What is the revenue?
a) 48000
b) 62000ha
c) 84000
d) 92000

27) Which item is not included in the statement of financial position (balance sheet)
a) Cash at bank
b) Revenue
c) Net profit
d) Drawings

28) A trader’s income statement showed a gross profit and net loss for the year.
What caused the loss for the year?
a) Cost of sales exceeding revenue
b) Expenses exceeding gross profit
c) Gross profit exceeding expenses
d) Revenue exceeding cost of sales

29) The capital of a business is higher at the end of year 2 than it was at the end of year
1. No additional capital has been introduced during year 2. What does this mean?
a) The business has made a loss
b) The business has made a profit
c) The business has sold some non current asset.
d) The business has taken a long term loan.

30) Which businessman is operating a trading business?

a) Accountant
b) Computer software developer
c) Hairdresser
d) Second hand car dealer