Foundations in Accountancy

FA1 – Recording Financial Transactions

Multiple Choice Questions

1) Dion performed a purchase ledger control account reconciliation and found the following errors:
1) The purchase day book was overstated by $720
2) A credit note for $380 was omitted from the day books altogether
Which of the following shows the necessary adjustments to ensure that the balances reconcile at the correct
amount?
A) Dr Purchase Ledger Control A/c $1,100 , Subtract $380 from the list of supplier balances
B) Dr Purchase Ledger Control A/c $1,100 , Add $380 to the list of supplier balances
C) Cr Purchase Ledger Control A/c $1,100 , Subtract $380 from the list of supplier balances
D) Cr Purchase Ledger Control A/c $1,100 , Add $380 to the list of supplier balances

2) Harry purchases goods on credit with a list price of $100. The supplier gives him a trade discount of 15% and offers a
cash discount of 10% for payment within 30 days. What is the amount that he will debit to his purchases account?
A) $115.00
B) $85.00
C) $76.50
D) $75.00

3) The following statements relate to the Aged Receivable Analysis:

1) It provides information about debt collection efficiency to management
2) It identifies when payments are due to be made to suppliers

Which of the above statements are correct?

A) 1 only
B) 2 only
C) Both statements
D) Neither statements

4) John sent a document along with the goods he supplied to James

What is this document known as?
A) Debit Note
B) Statement of Account
C) Remittance Advice
D) Delivery Note

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 5) Which of the following are books of prime entry?
1) General Ledger
2) Purchases Day Book
3) Sales Returns Day Book
4) Journal

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

6) What is the role of the accountant in a business?

A) To calculate the tax payables by a business.
B) To record, summarise and present information from documentation generated by business transactions.
C) To calculate the tax payable by a business.
D) To ensure the business is trading profitably.

7) A business buys a motor vehicle for $1,000 cash and pays motor vehicle insurance of $250 cash. Which of the
following shows the correct double entry for this transaction?
A) Debit Motor Vehicle $1,250, credit cash $1,250
B) Debit Cash $1,250, credit Motor Vehicle $1,250
C) Debit Cash $1,250, credit Motor Vehicle $1,000, credit Insurance $250
D) Debit Motor Vehicle $1,000, Debit Insurance $250, Credit Cash $1,250

8) The following balances have been taken from the trial balance of ABC Ltd.
Rent - $1,800 Capital - $15,000 Purchases - $10,000 Sales - $12,000 Wages - $5,000
Misc Expenses - $1,000 Cash - $9,200
What is the trial balance total on the debit side?
A) $26,000
B) $29,000
C) $42,000
D) $27,000

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 9) When a trial balance was prepared, two ledger accounts were omitted:
Sales $6,150
Purchases $7,500
To make the trial balance balance, a suspense account was opened. What was the balance on the suspense
account?
A) Debit $1,350
B) Credit $1,350
C) Debit $13,650
D) Credit $13,650

10) An invoice from a supplier for raw materials has been posted to the plant and machinery account in the general
ledger. What type of error has occurred?
A) Compensating Error
B) Error of omission
C) Error of Principle
D) Error of transposition

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