ACCOUNTING

Pre-Q
TERM 1 EXAMINATION 2020
TIME: 1 HOUR
TOTAL MARKS: 75 MARKS

Name _________________________ Form________

Teacher________________________

CONTENT MARKS YOUR MARK

Question 1 Multiple-Choice 15
Question 2 Theory 11
Question 3 Double Entry and Capital and Revenue 16
Expenditure
Question 4 Cashbook 10
Question 5A Balance Day Adjustments 10
Question 5B Statements 15
Total 77

INSTRUCTIONS:

Answer all questions in the spaces provided on this paper.

DO NOT use pencil, red or green pen, or correction fluid.

1
Question 1 Multiple-Choice

For each question there are four possible answers, A, B, C and D. Choose the one
you consider to be correct and write it into the answer grid on page 5 of this
answer booklet.

1 Which business documents are used to write up the sales returns journal?

A credit notes issued to customers

B credit notes received from suppliers
C invoices issued to customers
D invoices received from suppliers

2 What is a cash discount?

A an allowance given to a customer for paying in cash

B an allowance given to a customer for prompt payment
C a deduction from the list price of goods bought by a customer
D a deduction from the list price of goods for bulk buying by a customer

3 Why does a business draw up a Trial Balance?

A To check the arithmetic accuracy of the books

B To balance off the ledger accounts
C To calculate the profit or loss
D To summarise the sales and purchases ledger

4 Which group contains an intangible asset

A bank, trades payables, fixtures

B bank loan, trade receivables, motor vehicles
C bank overdraft, cash, goodwill
D mortgage, premises, inventory

5 T O’Connor owns a bakery shop.

Which of the following are capital expenditure?

1 Motor vehicle
2 Petrol for the motor vehicle
3 Shop fixtures
4 Wages of the bakers

A 1 and 3
B 1 2, and 3
C 2 and 4
D 2, 3 and 4

2
6 Which would appear in an income statement?

A bank overdraft
B capital introduced
C motor vehicle expenses
D trade receivables

7 You are given the following information about a business.

1 May 2022 30 April 2023

$ $
total assets 50 000 60 000
total liabilities 15 000 22 000

The owner’s drawings for the year ended 30 April 2023 were $12 000.

What was the net profit for the year?

A $3 000 B $9 000 C $10 000 D $15 000

8 What is meant by the money measurement principle?

A accounts are kept on a double entry basis

B accounts contain only items which have a monetary value
C Non-current assets are shown at cots less depreciation
D profits are calculated by deducting cash paid form cash received

9 Which is an error of omission?

A Equipment account has been missed out of the trial balance.

B No entry has been made for the purchase of equipment by cheque.
C Purchase of equipment has been entered only in the cash book.
D Purchase of equipment has been entered in the stationery account.

10 Where are the balances of cartage inwards and cartage outwards shown in the
Trail Balance?

DEBIT column CREDIT Column

A Cartage inwards Cartage outwards

B Cartage outwards Cartage inwards

C Cartage inwards -
Cartage outwards
D - Cartage inwards
Cartage outwards

3
11 The following information is provided.

$
Revenue 220 000
Purchases 130 000
Opening inventory 10 000
Closing inventory 12 000

What was the Cost of Goods Sold / Cost of Sales?

A $ 90 000
B $ 92 000
C $ 128 000
D $ 132 000

12 What is a compensating error?

A credit sales debited to the sales account and credited to the customers
account
B purchases of fixtures on credit debited to the repairs to fixtures account
C Borich’s account credited with a cheque received from Brown, another
customer
D sales account and sales returns account undercast by the same amount

13 At January 1 2020, a trader owed wages of $1000. During the year ended 31
December 2020 wages of $4000 were paid. At 31 December wages of $1200
were owed.

How much should have bene entered into the Income Statement for wages for the
years ended 31 December 2020.

A $3800
B $4000
C $4200
D $6200

4
14 The following information was extracted from the financial statements of Tom.

 
$
Bank overdraft 3 000
Inventory 7 000
Trade payables 12 000
Trade receivables 18 000

How much extra capital would Tom have to invest to make the value of his working
capital to $24 000.

A $8 000 C $14 000

B $11 000 D $20 000

15 Which sentence below about financial statements, is correct?

A They provide an accurate profit for the year, if the double entry system is
followed
B They provide financial information about a business’s past performance
based on historical cost
C They provide financial information about a business’s performance in the
market
D They provide information about the future profitability of the business

[TOTAL: 15]

Answer Grid – Multiple choice

1 9

2 10

3 11

4 12

5 13

6 14

7 15

5
THIS PAGE HAS BEEN DELIBERATELY LEFT BLANK

6
Question 2 Theory
(a) Fully explain the following accounting terms.

Asset:

Owner’s Equity:

(2)

(b) Define the Business Entity Concept and give an example of its application.

(2)
(c) James manufacturers sports equiment. He has a credit customer, Richards.
The following table is for the documents exchanged between James and Richards.
They have exchanged an invoice, a credit note, a debit note and a statement of
account.

Document Reason for issue Name of person

issuing document
Invoice

Debit note

Credit note

Statement
of account
(4)

(d) Name the accounting principle applied in each of the following situations.
Principle
A trader withdraws goods for his own use and
records this in the drawings account
An accountant does not include staff morale as
an asset in the statement of financial position
The business uses the double entry system of
book-keeping to record transactions.
(3)
[TOTAL: 11]

7
Question 3 Transactions, Double Entry and Capital and Revenue Expenditure

1. Explain the difference between capital and revenue expenditure:

(2)

2. Complete the table below, indicating with a ‘X’ how each item would be classified.

Capital Expenditure Revenue Expenditure

Payment of an annual
insurance premium
Cost of new shop
fittings
Purchases of goods for
resale
Purchases of plant and
equipment
Delivery charge for new
shop fittings
Legal fees on purchase
of property
(3)

3. Complete the table by stating the double entry needed to record each of the
following transactions which took place in March 2019. The first one has been
completed for you
Transaction Account(s) $ Account(s) $
Debited Credited
Nabil transferred his private Motor $1800 Capital $18000
vehicle. $18000, to the vehicle 0
business.
Purchased stationery on credit,
$44 from Tahir.
Paid office cash, $490 into the
business bank account.
Settled Vijay’s account of
$200, by bank transfer after
deducting 2% cash discount.
(3)

8
4. In each of the following scenarios state:

I. Which account balance will be need to be changed in the Income Statement

II. Whether the change will increase or decrease the balance
III. Whether it will cause the Gross profit to increase, decrease or no change
IV. Whether it will cause the (Net) Profit for the period to increase, decrease or no
change

1.Account 11. 111. 1V.

affected Increase or Change to Change to
in the decrease gross profit the (Net)
Income Profit
Statemen
t
Sales were
understated in error
A customer returns
goods to the business
The owner takes
goods for his personal
use
Suppliers give the
business a discount
for prompt payment
Payment is made to
an employee
Payment is made for
the transport of goods
to the business
Goods are bought on
credit
A discount is given to
credit customers for
prompt payment of
their account
(8)
[TOTAL: 16]

9
Question 4 Cashbook

Mr Deep is a trader who keeps a full set of accounting records including a three-column
cash book.
His transactions for December 2026 include the following:

Dec 4 Paid $387 rent by cheque.

11 Received a cheque from Jones to settle his account for $300 less 2%
cash discount

15 Paid a cheque, $702, to Rama, having already deducted a cash discount

of 2.5%

27 Made cash sales, $6795

29 Withdrew cash, $5000, for personal use

31 Paid all the cash into the bank except $200

Complete Mr Deep’s cash book on the next page

Balance the cash book and bring down the balances on 1 January 2027.

[TOTAL: 10]

10
Mr Deep’s CASH BOOK
Discount Discount
Date Details Cash Bank Date Details Cash Bank
allowed received
 2026          2026        
Dec 1 Balance b/d $150 Dec 1 Balance b/d 2590

                   

                   

                   

                   

                   

                   

11
 Question 5A Balance Day Adjustments

The following Trial Balance for Doolan’s Photography has been prepared as at 31 March
2031.

Original Adjust New Original Adjust New

Balance ment Balance Balance ment Balance
+/- +/-
Shop Equipment 40000 Capital ?
Office expenses 6000 Bank 2000
Electricity 2000 Sales 400000
Insurance 6000 Interest received 10000
Term Deposit (due 2035) 10000 Term Loan (due 2034) 20000
Interest expense 10800 Rent received 10000
Trade receivables 6000 Trade payables 4000
Wages 30000
Rent 40000
Inventory- 1 April 2030 30000
Drawings 30000
Rates 4000
Purchases 200000
Car 50000

464800 464800

The following adjustments are required on balance day:

 Inventory 31 March 2031 $18,000.

 Rates includes $600 paid in advance for next year.
 Interest has been earned but not received of $800
 Wages are owing of $1200.
 Rent has been received in advance $1000.
 The annual insurance was paid on Dec 1st 2030.

REQUIRED:

1. Adjust the Trial Balance above to account for the Balance Day Adjustments.

[TOTAL: 10]

12
 Question 5B Statements

Using the information from Question 5A prepare the Income Statement and the Statement of
Financial Position (Extract) for Doolan’s Photography has been prepared as at 31 March
2031.

Income Statement for Doolan’s Photography for the year ended 31 March 2031

$ $ $

13
Doolan’s Photography Statement of Financial Position (EXTRACT) as at March 31 2031.

Current Assets

Less: Current Liabilities

[TOTAL: 15]

END OF EXAMINATION

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