Accounting Year 11 Chapter 11-12

Test(B)
Name _______________________________ Date _____________
Class_____________________ 80 minutes

Read these instructions first [___/ 50]

Write in dark blue or black pen in the spaces provided on the Question Paper.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Answer all questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
The businesses described in this question paper are entirely fictitious.

1. Multiple Choice Questions [10]

1) Peter bought a non-current asset for $5000 and depreciated it at 10% per
annum on the straight-line basis. At the end of year 2 he sold it for $4100.
What was the profit or loss on disposal?

2) Wendy maintains a provision for doubtful debts. Which statement are correct?
1. It is an application of the matching principle.
2. It is an application of the prudence principle.
3. It is an estimate of what may be lost because of irrecoverable debts.
4. It is money set aside to cover losses because of irrecoverable debts.
A. 1,2 and 3
B 1 and 4
C 2 and 3
D 2,3 and 4
 Accounting Year 11 Chapter 11-12
Test(B)
3) At the end of the financial year, Karim decided to increase his provision for
doubtful debts. How will this affect his income statement and the statement of
financial position?

4) P Limited maintains a provision for doubtful debts account. On 1 April 2022,

this account had a balance of $6200.
The provision should have been increased to $7400 on 31 March 2023, but this
adjustment was not made.
What was the effect of this error on the retained earnings in the statement of
financial position on 31 March 2023?
A overstated $7400
B overstated $1200
C understated $7400
D understated $1200

5) During her first financial year, a trader paid $1500 for insurance and $3600 for
rent.
At the end of the financial year, she transferred insurance of $1800 and rent of
$3200 to the income statement.
What do the balances remaining on the accounts at the end of the financial year
represent?

2
 Accounting Year 11 Chapter 11-12
Test(B)

6) After the preparation of her income statement, Emma discovered the following
errors.
A debt, $1500, should have been written off as irrecoverable.
No adjustment had been made for rent prepaid by Emma of $2800.
The draft profit for the year was $35 000. What was the corrected profit for the
year?
A $33 700
B $30 700
C $39 300
D $36 300

7) On 1 February 2017 Katya’s fixtures and fittings had a net book value of
$12950. She purchased fixtures, $2250, during the year.
Depreciation for the year ended 31 January 2018 was $4900.
What was the net book value of fixtures and fittings on 31 January 2018?
A $15600
B $10300
C $7150
D $5800

8) Annual rental income due from Kumar, a tenant, is $3600. At the start of the
year, Kumar had prepaid rent of $900. At the end of the year, he owed two
months’ rent. How much rent was received from Kumar during the year?
A $2100
3
 Accounting Year 11 Chapter 11-12
Test(B)
B $3300
C $3900
D $5100

9) A business bought two assets, X and Y, on 1 January 2022, for $2000 each. It
depreciates asset X by 10% per annum using the straight-line method, and asset Y
by 10% per annum using the reducing balance method. Which statements are
correct?

9) On 1 August, the sales ledger control account had a debit balance of $1800.
During August, a debt of $200 was written off as irrecoverable and $10 000 was
received from credit customers.
On 31 August, the credit customers owed $3000.
What was the total of credit sales in August?
A $7200
B $11 200
C $11 400
D $11 600

2. Chibuzo’s financial year ends on 31 December. He depreciates his motor

vehicles at 20% per annum on the cost of motor vehicles held at the end of each
financial year.
Chibuzo provided the following information:
1 January 20–7 Purchased motor vehicle A for $16 000 and motor vehicle B for $18 000

4
 Accounting Year 11 Chapter 11-12
Test(B)
1 July 20–9 Motor vehicle A was sold for $8 600. On the same date motor vehicle C
was purchased for $21 000
a Calculate the profit or loss on disposal of motor vehicle A. [4]
……………………………………………………………………………………
……………………………………………………………………………………
…...…………………………………………………………………………………
…...…………………………………………………………………………………
b Calculate the depreciation charge for motor vehicles for the year ended 31
December 20–9. [3]
………………………………………………………2……………………………
……………………………………………………………………………………
……………………………………………………………………………….……
……………………………………………………………………………………
Chibuzo provided the following additional information for the year ended
31 December 20–9:
$
Revenue 109 200
Wages 10 300
Rent and rates 2 100
Purchases 81 140
Inventory 1 January 20–9 5 410
Administration and selling expenses 2 230
Commission receivable 2 050
Provision for doubtful debts 1 January 20–9 540

Additional information:
1 On 31 December 20–9
Inventory 5 550
Wages accrued 120
Rates prepaid 300
Commission receivable outstanding 420
Provision for doubtful debts to be reduced to 450
2.Office equipment was valued at $4 320 on 1 January 20–9. Office equipment, $1 200, was

5
 Accounting Year 11 Chapter 11-12
Test(B)
purchased during the year. No office equipment was disposed of during the year. On 31
December 20–9 the office equipment was valued at $5 250
c Prepare the income statement for the year ended 31 December 20–9. [13]
Chibuzo
Income Statement for the year ended 31 December 2019
$ $ $
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………….……………………
……………………………………………………………………………….……
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
…………………………………………………………………………………….
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
6
 Accounting Year 11 Chapter 11-12
Test(B)
3. Zamir is in business providing legal services. Zamir provided the following
balances from his books of account at 31 December 2020.
$
Fee income 152850
Rent and rates 28000
Salaries 55500
Stationery and advertising 6550
Electricity 9000
Bank charges 4100
Office equipment – cost 60000
Office equipment – provision for depreciation 22500
Proceeds of disposal of office equipment 1500
Bank overdraft 7900
Trade receivables 15600
Capital 57000
Drawings 65000
Additional information
1. The annual rent is $16000. On 31 December 2020 rent was paid to cover the
period from1 January to 31 March 2021.There was no accrual or prepayment
of rent at 1 January 2020.
2. Rates of $6000 were paid during the year to 31 December 2020. This payment
covered the period 1 January 2020 to 31 October 2020 only. From 1 November
2020 annual rates were $7560.
3. Depreciation is to be charged on office equipment at 15% per annum using the
straight-line method. No depreciation is charged in the year of disposal.
4. In February 2020 office equipment was sold for $1500. This equipment had
been purchased for $1800 on 1 January 2018. The sales proceeds have been
debited to the bank account and credited to the proceeds of disposal of office
equipment account. No other entries have been made in respect of the disposal.
5. One of Zamir’s clients has become bankrupt. The client owed $1885. Zamir
does not expect to recover this amount.
REQUIRED
7
 Accounting Year 11 Chapter 11-12
Test(B)
a. Prepare Zamir’s income statement for the year ended 31 December 2020
[13]
Zamir
Income Statement for the year ended 31 December 2020
$ $
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………...
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………

8
 Accounting Year 11 Chapter 11-12
Test(B)
(b) Prepare the assets section of Zamir’s statement of financial position at 31
December 2020. [5]
Zamir
Statement of Financial Position (assets section) at 31 December 2020
$ $ $
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
c) Suggest two possible reasons why Zamir required a bank overdraft. [2]
1.................................................................................................................................
...................................................................................................................................
...................................................................................................................................

2.................................................................................................................................
...................................................................................................................................
...................................................................................................................................