Unit-1,2,3 (Basic Accounting)

Section A (Multiple Choice)

1. A trader prepares financial statements each year. What do these assist the trader to
do? (1 Mark) 

A. calculate the amount owing to credit suppliers

B. calculate the cash drawings
C. check the bank statement balance
D. make decisions about the future

2. What does the owner’s equity consist of? (1 Mark)

A. the amount of money in the business bank account

B. the amount owed by the business to the owner
C. the total of the assets owned by the business
D. the total of the current assets less the current liabilities

3. Which are examples of book-keeping?

1. entering details of a cheque received from a customer in a cash book

2. entering details of goods purchased on credit in a purchases journal

3. producing an income statement to calculate the profit for the year

4. recording details of credit sales in the account of a credit customer

Which of the following is correct? (1 Mark)

A. 1, 2 and 3

B. 1, 2 and 4

C. 1 and 2 only

D. 3 and 4

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 Unit-1,2,3 (Basic Accounting)

4. A trader bought new fixtures. He paid half of the purchase price in cash and agreed
to pay the balance in two months’ time. How does this purchase affect the
accounting equation? (1 Mark)

Assets Owner’s equity Liabilities

A Decrease Decrease No effect

B Decrease No effect Increase

C Increase Decrease Increase

D Increase No effect Increase

5. Dilip is a manufacturer. He purchased a machine on credit from Sachin. How did

Dilip record this? (1 Mark)

account to be debited account to be credited

A Machinery Sachin

B Purchases Sachin

C Sachin Machinery

D Sachin Purchases

1.

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 Unit-1,2,3 (Basic Accounting)

Section B (Calculation and Theory)

6. State two advantages of operating a business as a sole trader. (2 Marks)

Edexcel 2019 June (Unit 1)

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7. Evaluate how the introduction of accounting software will improve the accuracy of a
business’s accounts. (5 Marks)
Edexcel 2019 June (Unit 2)

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8. State what is meant by an asset. (1 Mark)

CIE 2016 Oct-Nov (Unit 1)

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9. State what is meant by a liability. (1 Mark)

CIE 2016 Oct-Nov (Unit 1)

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10. Suggest one item Mary would include in her non-current assets. (1 Mark)
CIE 2016 Oct-Nov P1 (Unit 1)

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11. Complete the following table to show four groups of stakeholders and the interests
they would have in the financial statements of a business. (8 Marks)
Edexcel 2017 Sample material (Unit 1)

Stakeholders Interest

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 Unit-1,2,3 (Basic Accounting)

12. In the following table, recalculate the figure for total assets, capital and total liabilities
after each transaction has occurred. (The effect of the first transaction has already
been worked out for you.) (6 Marks)
CIE Unit 2 Textbook Material

Total Capita Total

assets l Liabilities

        A    =  C +    L

$ $ $

Starting figures 40,000 30,000 10,000

1 Owner withdrew cheque $4,000 for private use 36,000 26,000 10,000

2 Purchased new vehicle for $16,000 on credit      

3 Repaid $2,000 of a loan from the bank. The funds      

were taken from the business's bank account

4 Paid Payables $5,000 by cheque      

13. Kisha owns a restaurant. The following information is available about her business’s
assets and liabilities on 31 January 2012.
CIE Unit 1 Textbook Material

Restaurant premises 570,000

Bank loan (repayable 2015) 120,000
Furniture and fittings 45,000
Cash in hand 6,000
Equipment 51,000
Inventory (food, etc.) 24,000
Trade payables 18,000
Trade receivables 3,000
Loan from friend (repayable March 9,000
2012) 12,000
Cash at bank

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 Unit-1,2,3 (Basic Accounting)

A. Calculate the total value of assets. (1 Mark)

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B. Calculate the total value of liabilities. (1 Mark)

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C. Use the accounting equation to calculate the business’s capital. (1 Mark)

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D. Prepare a classified balance sheet at 31 January 2012. (4 Marks)

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 Unit-1,2,3 (Basic Accounting)

14. On 1 November 2017 the balance in Mary’s cash book (bank columns) was $838
overdrawn. Mary banks all cash sales at the end of each week. Mary had the
following transactions during November.

1   Sold goods, $220, for cash

2   Returned goods costing $440, bought on credit from Jane

3   Purchased a motor vehicle on credit, $12 400, including road tax of $300,

from Speedy Motors

4   Received a cheque from Tan, a credit customer, in settlement of an invoice

for $400 after deduction of 2% cash discount

5   Took goods for own use, $120

Complete the following table to show how each transaction was recorded by
Mary. The first one has been completed as an example. (10 Marks)
CIE 2018 May/June (Unit 3)

Account(s) debited $ Account(s) credited $

1 Cash 220 Sales 220

15. Complete the following table indicating with a tick (✓) whether each item is an asset,
liability, income or expense. (4 Marks)
CIE 2017 May June (Unit 2)

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 Unit-1,2,3 (Basic Accounting)

asset liability income expenses

Bank loan

Insurance

Equipment

Depreciation charge

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