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CSEC POA June 2007 P1

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1. Which of the following is a prime cost in Item 6 refers to the following extract from a
manufacturing accounts? trading account: ' • ·

(A) Depreciation $
(B) Direct wages Opening stock 200
(C) General expenses Sales 900
(D) Production overhead Purchases 500
Closing stock 300
2. Which ofthe followingwouldNOTappearin
a Cash Book? 6. What is the gross profit?

(A) Goods sold on credit$ I 00 (A) $100

(B) Payment for goods$ I 00 (B) $300
'(C) Goods bought for cash$ I 00 (C) $500
. (D) Sold goods for cash$! 00 (D) $800

3. You c.an determine the true bank balance ofa 7. Atthe beginning ofthe year, the capital ofa
business when the Cash Book balance differs business was $28 000. At the end ofthe year
from the balance on the bank statement by the capital was$33 000. During the year the
preparing a ownerwithdrew$2 000 forpersonaluse. What
is his net profit fortheyear?
(A) Statement ofAffairs
(B) Revised Bank Statement (A) $ 5 000
(C) BankReconciliation Statement (B) $ 7000
(D) StatmentofReceiptsandExpenses (C) $30000
(D) $61000

4. Control accounts are kept to assist

management in 8. Which ofthe following accounts shows how
profits and losses are shared among partners?
(A) locating errors
(B) increasing profits (A) CurrentAccount
(C) limiting drawings (B) AppropriationAccount
(D) limiting expenditure (C) Profit and Loss Account
(D) IncomeandExpenditureAccount
5. No record was made of$503 for goods sold
to L. Stoke. This is 9. Cost of raw materials used plus other direct
costs will result in
(A) a compensating error
(B). an error of original entry (A) raw materials available for use
(C) an error ofprinciple (B) total production overhead
(D) an error of omission (C) production cost
/ (D) prime cost

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10. A business which owns goods valued at 14. P. Amos is employed by a construction
$500, also has a van valuedat$ l ,OOO; it owes company at arateof$7 per hour. During the
$50 for goods. Ifitsells out at these prices the week of April 6, 2001, he worked his basic
new owner's closing capital will be week of40 hours. The income tax due on his
pay is $20, and he is also liable to pay social
(A) $1050 securitycontributionsof5% ofbis gross pay.
(B) $1450 His net pay is
(C) . $1500
(D) $1550 (A) $246
(B) $260
(C) $266
11. The working capital ofA. Y oungand Sons is (D) $280
$15500,andCurrentAssetsis$16500. What
is the TOTAL current liabilities?
Iteml5referstothefollowinglistofbalances.
(A) $ 1 000
(B) $15500
(C) $16500 $
(D) $32000 Motorvehicle 2 000
Creditors 3 000
Debtors 2000
12. To which account should depreciation of Capital 11000
office machines be transferred? Building 10000

(A) Trading
(B) Appropriation 15. What is the TOTAL value of the assets?
(C) Manufacturing
(D) ProfitandLoss (A) $12000
(B) $13000
(C)" $14000
13. S. Thomas purchased a machine for $3 250 (D) $15000
from Grell and Co. Ltd,paying$1250incash
and the balance in 10 days. Which is the
CORRECT procedure for recording this 16. TbeMAINreasonwhyasoleproprietormay
transaction? considerjoiningwithONEorMOREother
persons to form a partnership is that
(A) Debitmachineryalc$3 250
Credit cash ale $2 000 (A) he can work less ifmany people are
(B) Debit purchases ale $3 250 involved in the business
CreditGre11Co.Ltd$3250 (B) the business would attract more
(C) Debitmachinery$3250 customers
Creditcashalc$1250 (C) the business would get additional
Credit Grell & Co. Ltd $2 000 capital and management skills
(D) Debit Grell & Co. Ltd ale $2 000 (D) the business would be recognised by
Debit cash ale $1 250 the government
Credit purchases ale $3 250 l:

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17. The assets of a business total $3 200 and 21. · · A proprietor wins a motor van valued
the liabilities total $820. What is its capital? $10 000 and decides to u~ 'it in the business.
Which ofthe following is the correct entry?
(A) $2038
(B) $2380 (A) Debit Motor Vehicles Account,
(C) $4000 Credit Drawings Account
(D) $4020
(B) Debit Capital Account,
Credit Motor Vehicles Account
18. A machine costs $6 200. It will be kept for
FIVE years and then sold at a scrap value of (C) Debit Motor Vehicles Account,
$200. The depreciation for EACHyearusing Credit Capital Account
the straight line method will be
(D) DebitBankAccount,
(A) $1 000 Credit Capital Account
(B) $1200
(C) $I 240
(D) $1280 22. Brown lends Williams$5 OOOatan interest of
10% per annum. To which ofthe following
accounts would the interest be credited in
19. Under which of the following conditions Brown'sledger?
would a Trial Balance still balance?
(A) Loan
I. A transaction was completely left out (B) Williams'
II. Both a debit and credit entry were (C) lnterestpayable
overstated by the same amount (D) Interest receivable
Ill. A debit entry was left out
IV. Both a debit and credit entry were
understated by the same amount 23. . Raw materials stock, work in progress stock,
and finished goods stock, are items MOST
(A) I, II and Ill only likely seen togetheron the balance sheetofa
(B) I, II and IV only
(C) I, III and IV only (A) garage
(D) II, III and IV only (B) shoe factory
(C) supermarket
(D) bus company
20. Joyce and Keller are in partnership having
capital of$ l 4 000 and $18 000 respectively.
Beforeadmittinganewpartner, Wong, with 24. A discount which a businessman offers for
$I 0 000, into the business, they agreed that prompt payment for goods purchased will be
the partnership be valued at $42 000. The entered in his triple-column cash book under
goo.dwill is therefore the

(A) $ 1 000 (A) Discount Received column

(B) $ 2 000 (B) DiscountAllowedcolumn
(C) $ 8 000 (C) Cash column
(D) $10000 (D) Bank column

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25. Which of the following statements indicate
the CORRECT entry in ledger accounts?
I. All assets on the debit side
II. All liabilities on the credit side
III. All expenses on the credit side
IV .. All gains on the debit side
28. Jylr Abel and Mr Blue purchased goods on
credit to the value of$5 0 and $75 respectively
from Mr Kane. Another customer paid cash
forgoodsamountingto$550. MrKanetook
goods for himself amounting to $500. Which
ofthe following figures represents the balance
in Mr Kane's Sales Account?

(A} I and II only (A) $ 125

(B) I and IV only (B) $425
(C) II and III only (C) $ 675
(D) III and IV only (D) $925

26. In a co-operative society, the daily affairs are Item 29 refers to the following table.
administered by

(A)
.a majority ofshareholders W's Capital
X's Capital
$ 300
$ 200
(B} all members meeting together Y's Capital $100
(C) the chairmanofthe board only Z'sCapital $ 300
(D) personselectedorappointedtodoso
29. W,X, Y andZarepartnerssharingprofitsand
27. A photo-copyingmachinevaluedat$5 OOOis losses in proportion to. their capital. The
depreciated at I 0% using the straight line capital of each is shown in the table above.
method. What is its book value after TWO
years? What is Z's share of a profit of $7 200?

(A) $4000 (A) $ 800

(B) $4050 (B) $1200
(C) $4500 (C) $1 800
(D) $4980 (D) $2400

Items 30 -31 refer to the table below which shows a Trader's operation atthe end ofthe trading period.

$ $

Sales 83868 Stock at start 9 850

Sales Return 1570 Stock at close 11075
Discounts Allowed 911 Purchases 52640
Purchases Returns 762

30. The cost of goods sold is ,. 31. The gross profit is

(A) $49742 (A) $31645

(B) $50653 (B) $33215
(C) ' $51415 (C) $34023
- (D) $53103 (D) $80025
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Items 32 - 33 refer.to the following information. '

' '

Dr Cr Balance
$ $ $

Dec. 1 Bal.b/f ro
5 Cheque 'Xl

14 UnitTrust: Standing Order 100

20 P. Palmer: Credit Transfer 30

29 Bank Charges 85

32. The balance as per Bank Statement on 33. What does the Bank Statement balance
Dec. 29was a represent?

(A) ·credit balance of$5 (A) An overdraft

(B) debitbalanceof$5 (B) A direct debit
(C) debitbalanceof$65 (C) A credit transfer
(D) credit balance of$125 (D) A dishonoured cheque

34. Mr Smith does not keep proper records. 36. If a new partner pays $3000 for a 6"I share
He began business with $10 000 in the
business bank ale. He uses his vehicle and ofprofits, thentheTOTALgoodwillvalueis
building. worth $6 000 and $15 000
respectively, as part of his business. (A) $ 500
Customers owe him $4 000. He withdrew (B) $ 3000
$1 500 for personal use and owed creditors (C) $ 9000
$2000. (D) $18000

What is the closing capital of the business?

37. Which of the following BEST describes a
(A) $25500 trial balance?
(B) $28500
(C) $31500 I. A list ofbalances ofaccounts
(D) $41500 II. A financial statement
III. An account
IV. A check on the accuracy of the
35. A trader bought goods worth $800 less I 0% double entry system
trade discount. How much did he pay for the
goods? .' · (A) land II only
(B) I and IV only
(A} $700 (C) I, II and III only
(B) $720 (D) I, III and IV only •
(C) $760
(D) $880
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Item 38 refers to the following Appropriation Account.

Appropriation Account

$ $

Taxation.reserve 10000 By balance 894.50

Preliminary expenses 250 Net profit 26106.50
Transfer to general reserve 4000
Preference share dividend 1200
Ordinary share dividend 6000

38. Whatconclusionscould be drawn from the above Appropriation Account?

I. The company is not doing very well.

II. The company has recently come into existence.
III. :rhe company is engaged in profitable enterprise.
N. More dividends can be paid to the ordinary share holders.

(A) I and IV only

(B) III and IV only
(C) I, II and IV only
(D) II, III and IV only

Item 39 refers to the following information.

Mohammed Patel,
Statement of Affairs
As at December 31, 2006
$ $ $
Fixed assets 2 500 Capital at beginning 3 000

Current assets 3 000 +Net profit ?

-Drawings (30ffi

Capital at end ?

Liabilities I 500

5 500 5 500

39. What is Mohammed Patel's net profit for the year?

(A) $1300
(B) $1 500
(C) $1 600
(Dli,i."· $1 800
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' Item 40 refers to the following information.

SALESLEDGERCONTROLACCOUNT
2006 $ 2006 $ ..

April 0 I Balance b/d 3 550 April30 Bank 1 700

Discounts Allowed JOO
April 30 Sales for the ? Returns Inwards 300
month BadDebts 400
Balance c/d 3 100
5 600 5 600

40. From the Sales Ledger Control Account above, the value ofsales forthemonthofApril is

(A) $2050
(B) $3100
(C). $3550
(D) $5600

41. A company is allowed by law to sell I 00 000 43. The excess ofthe income over the expenditure
shares at $1.00 each. Half of these shares ofanon-profit-makingorganizationiscalled
were bought by the public.
(A) grossprofit
What is the authorized capital? (B) net profit
(C) accumulated fund
(A) $ 40000 (D) surplus
(B) $ 50000
(C) $ 80000
(D) $100000
44. · The MAIN parts ofthe accounting cycle are

I. collecting source documents

Item 4 2 refers to the following information. II. entering transactions in the books of
original entry
$ m. posting to ledgers and extracting trial
Beginning capital 30000 balance
Ending capital 40000 N. preparing trading and profit and loss
Drawing during period 4000 accounts and drawing up the
Additional investment
balance sheet
during period 3 000
Theorderinwhichalltranscationsarerecorded
42. What is the amount ofnet income or loss for inadoubleentrysetofbooksineachaccounting
the period? period is
.' .
(A) $ 7000 (A) I, II, III and IV
(B) $ 9000 (B) I, III, IV and II
(C) $11000 (C) III, II, I and IV
(D) $17000 (D) IV, II, III and I •
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012390100"2007
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45. Payne and Quar\essdecided to admit Rose as 49. On January 2,2005,J. Brown, a debtor, was
a new partner. The total capital after the declared bankrupt. He owed Elmer Browne
admission ofRosewill be $30 000, ofwhich Ltd$ 800 for goods purchased. What effect
Rose is to contribute $10 000 foran interest in would this have on the balance sheet of
the capital. If Rose brought in cash and a Elmer Browne Ltd?
motor van valued at $3 000, his admission
would be recorded in the journal as (A) Closing stock is reduced by $800
(B) Closing stock is increased by $800
Dr. Cr. (C) Debtors is increased by $800
$ $ (D) Debtors is decreased by $800
(A) Cash 10000
Rose'scapital 7 000 50. Whatwould be the effect on a firm's Balance
·sheetofthepurchaseofequipmentoncredit?
(B) Rose'scapital 7000
Cash· 7 000 (A) Assetlncreased; Liabi 1ity Decreased
(B) Assetlncreased; Liability Increased
(C) Cash 7000 (C) Asset Decreased; Liability Increased
,Motor van 3 000 (D) Asset Decreased; Liability
Rose'scapital IO 000 Decreased
(D) Rose'scapital 10000
Motorvan 3 000 51. A trader paid his client$ 500 by cheque. What
Cash 7 000 will be the correct credit entry?

(A) Debit Bank Ale,

46. The Cash Book isBESTused for recording Credit Cash Ale
(A) cash receipts and cash payments (B) CreditBankA/conly
(B) goods returned for cash
(C)
(C) Credit Bank,
goods purchased for cash
Debit Cash Ale
(D) goods sold for cash
(D) CreditCashA/conly
47. A business operates its petty cash on the
imprest system. At the beginning of the 52. K. Khan, a debtor of A and B Enterprises,
month, the petty cashier was given$ 200 settleshisdebtof$ l 20 less2\I, % discount, by
out of which she spent $152. How much cheque. The double entry in the books of A
will she be reimbursed? and B Enterprises should be
$
(A) $ 48 (A) Dr. K.Khan 117
(B) $152 Dr. Discount received 3
(C) $200 Cr.Bank 120
(D) $352
(B) DrK. Khan 117
48. Dr. Discount allowed 3
Which ofthe following is NOT an accounting
transaction? Cr.Bank 120
(C) Dr.Bank 117
(A)Payment oftaxes ." Dr. Discount allowed 3
(B)Day to day accumulation ofinterest Cr. K. Khan 120
(C)Physical wear and tear on machinery
and equipment (D) Dr.Bank 117
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(D) "-Corresponding with customers and Cr. Discount received 3

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• creditors Cr.K.Khan

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Item 53 - 55 refer to the following information.

40-Plus Golf Club

(I)
for the month ended December 31, 2001

$ $
Rent I 000 Profit from bar 1500

Electricity 500 . (II) 3 500

Trips to Miami 5 500 + Subs. due (end) 500

4000

(III) (IV)
7000 7000
= =

53. Which ofthe following BEST describes (I) 54. Which ofthefollowingBEST describes (III)
and (II) shown in the table? above?

(A) (!) Profit & Loss Ale (A) Net Loss

(II) Rent Received (B) Deficit
(C) Net Profit
(B) (I) Trading Ne (D) Swplus
(II) SubscriptionReceived

(C) (I) Profit & Loss Ale 55, WhatistheCORRECTfigurefor(IV)above?

(II) Subscription Received
(A) $1500
(D) (I) Income & Expenditure (B) $2500
(II) Subscription Received (C) $5500
(D) $7000

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56. Goodwill can be defined as the difference 59. On January 15, Johnson, a wholesaler sold
between the purchase price of the busines goods valued at $200to Slim, a retailer, and
andthe made the following entries in hi~ books:

(A) valueofits net assets Slim's Account

(B) value ofits liabilities
(C) net value ofits fixed assets Jan 15 Sales 150 I
(D) value ofits working capital

Sales Account
Item 57 refers to the following information.
I Janl5 Sliml50

V.Jones $

Net Pay 1200 The entries show

Income Tax 300
National Insurance 50 (A) goods sold $200, less cash discount
$50
(B) goods sold $200, less goods returned
$50
57. What is Mrs Jones' gross pay? (C) goods sold $200, less overcharged
$50
(A) $ 850 (D) goods sold $200 less, trade discount
(B) $ 950 $50
(C) $1450
(D) $1550
Item 60 refers to the following information.

58. Apart from the Cash Account, which ofthe

following accounts are used to record Costofrawmaterial consumed $ 7 800
subscriptionsreceivedfromapplicantsforshares Maufacturingwages $21000
in a company? Rent (Factory) $ I 000
Indirect wages (Factory) $ 9000
I. Share Capital Account Legal fees $ 2000
II. Subscriptions Received Account Machinery depreciation $ 600
III. ApplicationandAllotmentAccount General expenses $ 400
IV. Profit and Loss Account

(A) I and III only 60. Using the expenses given in the above table,
_(B) I and IV only what is the factory overhead cost of goods
- (Ct II and III only manufactured?
(D) I, II, III and IV
(A) $ 9000
(B) $ 9600
(C) $10000
(D) $10600

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