1 - Matt & Co carries two products, X and Y.

The store provided the following information about the

inventory at year end 20x9.
Produ
Cost, $ Selling Price, $
ct
X 1,800 2,540
Y 950 1,200

What was the total value of inventory to be included in the year-end financial statements?
A $6,490 B $3,740 C $2,750 D $2,660

2 - In which order are documents used when goods are purchased on credit?
A Cheque --> Invoice --> Purchase order
B Cheque --> Purchase order --> Invoice
C Purchase order --> Invoice --> Cheque
D Invoice --> Purchase order --> Cheque

3 - What is the role of a book-keeper?

A To advise on business plans
B To maintain records of business transactions
C To prepare financial statements
D To analyse business ratios

4 - Kent paid rent, $3,300, in advance for three months up to 31 March 2018 and recorded the total
amount as Rental Expense. He then adjusted the year-end financial statements for period ended 31
January 2018 for Prepaid Rent. Which effect did the adjustment have on the Total Operating Expenses for
the year?
A Decrease by $1,100, Statement of Financial Position
B Decrease by $1,100, Income Statement
C Increase by $2,200, Statement of Financial Position
D Increase by $2,200, Income Statement

5 - Muthu is a credit customer of Tee Trading & Co. Muthu’s account in Tee Trading & Co’s books shows a
credit balance. What could be the reason for the credit balance?
A A cheque from Muthu was dishonoured.
B Interest was charged by Tee Trading & Co.
C Muthu has overpaid his account.
D Tee Trading & Co offered a trade discount.

6 - Charge Ltd made a short-term loan to Larry Trading in 20x7. Charge Ltd’s statement (financial position)
showed this loan as a current liability. What was the effect of this error?
A Current liabilities understated. C Current assets understated.
B Non-current liabilities overstated. D Non-current assets understated.
7 - The Cash Book contains entries for which of the following accounts?
Bank Cash Petty Cash
A √ √
B √ √
C √ √
D √ √ √

8 - Which account usually carries a credit balance in a trial balance?

A Carriage inwards C Discount received
B Drawings D Inventory

9 - A credit sale, $300, to Maxima Ltd is attributed to Max Co. How can the error be corrected?

Accounts Debit, $ Credit, $

A Maxima Ltd 300 ---
Max Co --- 300
B Max Co 300 ---
Maxima Ltd --- 300
C Max Co --- ---
Maxima Ltd 300 ---
D Maxima Ltd --- ---
Max Co --- 300

10 - Carl, a trader, took goods from the business for his own use during the trading period of 20x6. These
goods cost $250, and $12 carriage had been paid for them to be delivered to the business. How would this
be recorded in Carl’s accounts?
A Debit Carl’s capital account $250
B Credit Carl’s capital account $262
C Debit Carl’s drawings account $262
D Credit Carl’s drawings account $250

11 - On 1 May 20x8, Alibaba Co’s customers (Trade Receivables) owed $4,300. On 30 April 20x9, the
amount owed decreased to $4,100. During the year, $45,500 was received from credit sale customers. The
total returned goods amounted to $1,500. What was the figure for credit sales for the financial year (1 May
20x8 to 30 April 20x9)?
A $45,300 C $46,800
B $45,500 D $47,000

12 - Kit Seong and Lucas are partners in a partnership. During the financial year of 20x9, Kit Seong made a
loan to the partnership. How should the transaction be recorded in a double-entry system?
Account debited Account credited
A Bank Kit Seong - Capital
B Petty Cash Kit Seong - Capital
C Bank Kit Seong - Loan
 D Kit Seong - Capital Bank
13 - Which of the following in the Statement of Financial Position shows the owner(s) the trading business
is doing well?
A Drawings < Loans C Capital < Liabilities
B Gross profit > Cash D Current assets > Current Liabilities

14 - The following information is extracted from Khairi’s year-end financial statement:

$ '000
Current assets 67.4
Non-current assets 48.7
Current liabilities 29.1
Non-current liabilities 8.0
Calculate the Capital Employed for Khairi’s business.
A $116,000 B $79,000 C $48,700 D $37,100

15 - During the financial year ended 30 June, 20x2, an invoice received from Cate was credited to Kate’s
account. Show the journal entries that correct the error of commission.
Debit Credit
A Cate Kate
B Kate Cate
C Purchases Cate
D Kate Purchases

16 - What does the term “limited liability” mean in relation to the type of business entity?
A A company can only have no more than 20 shareholders.
B A company can only do business in one sector of the economy.
C Business owners do not lose their personal belongings if the business fails.
D Shareholders are limited in the ownership of business shares.

17 - Karena receives cheques from her customers and deposits the cheques into her business account.
How does this affect Karena’s current assets?
Bank Debtors Inventory
A Increase Unchanged Increase
B Decrease Increase Unchanged
C Increase Decrease Unchanged
D Unchanged Decrease Increase

18 - What is a Statement of Financial Position?

A A list of all the accounts of a business.
B A summary showing the debit and credit balances of all the accounts.
C A summary of assets, liabilities and capital of a business at a certain date.
D A control account showing the trading activities of a business.
19 - A business applies the money measurement concept, that is, to record the monetary value of business
transactions. Which of the following will be recorded in the accounting system?
A The value of property owned
B The effect of new trade laws
C The benefits of employee development
D The value of the managerial skill of its managers

20 - Which of the following documents issued by a supplier reduces the amount owed by a customer?
A Debit note
B Credit note
C Statement of Account
D Invoice

21 - An invoice for goods costing $2,000 has been wrongly entered as a credit note. The balance in the
Purchases account is $19500. What is the balance after the correction?
A $2,000
B $17,500
C $21,500
D Unchanged

22 - Courts Trading, a business selling office furniture purchased a computer desk on credit during the year
20x1. At the end of the trading period, the desk was not sold and the shop decided to transfer it to office
use. Which of the following book of prime entry is likely to contain the adjustment?
A Purchases journal C Sales returns journal
B Purchases returns journal D Cash book

23 - On 5 August, 20x9, Globe, the supplier, received faulty goods returned by a customer, Irwin’s. Which
of the following is likely the journal entry for this event in Globe’s accounting system?

Journal Entry
A Purchases returns Aug 5 Globe CN405 pl65 $350
B Purchases returns Aug 5 Irwin's I6545 sl33 $350
C Sales returns Aug 5 Globe CN405 pl45 $350
D Sales returns Aug 5 Irwin's CN405 sl87 $350

24 - Which ledger account entries are made to record the purchase on credit of a motor vehicle?
Debit Credit
A Account Payable Motor Vehicles
B Motor Vehicles Cash
C Motor Vehicles Creditors
D Motor Expenses Account Payable

25 - Credit notes from suppliers are listed in which book of prime entry of a business?
A Purchases journal C Sales journal
B Purchases returns journal D Sales returns journal
26 - The totals of a trial balance are: Debit $56,900; Credit $49,800
The following errors have been discovered:
( i) Rent received, $4,550, has been entered as a debit balance.
( ii) Cash received from Greener in settlement of a debt of $3,000 has been credited to Grande.
Find the corrected trial balance totals.
A $56,900 B $52,350 C $49,350 D $45,250

27 - On 1 January 20x1, Mr Johnson bought a computer for use in his business. He sold the computer on 31
December 20x3. How should the transaction on 31 December 20x3 be classified?
A Capital expenditure
B Disposal of assets
C Purchases
D Sales

28 - The installation of fixtures and fittings costing $8,800 has been mistakenly entered into the General
Expenses account. How does this error affect the year-end financial statements?
Income Statement Statement of Financial Position
A Profit overstated Assets overstated
B Profit overstated Assets understated
C Profit understated Assets overstated
D Profit understated Assets understated

29 - At the end of the financial year, Petscare Co has prepaid its insurance by $150. What are the actions
needed to correct the accounts?
Income Statement Statement of Financial Position
Increase Decrease
Increase assets Decrease assets
expenses expenses
A √ √
B √ √
C √ √
D √ √

30 - The table below shows the financial information of a trading company at a given date. What is the
balance of $7,050 at this date?
$
Fixed assets at valuation 89,000 A Trade payables and Fixture
Stocks at cost 9,000 B Bank loans and Trade receivables
C Creditors and Loans
Debtors 7,800
D Short-term securities and Earnings
Cash at bank 3,250
Capital 102,000
??? 7,050
31 - Which of the following is an intangible asset?

A Debtors C Prepayment
B Goodwill D Inventory

32 - Sim Trading sells goods on credit to its customers and gives a trade discount of 25% for bulk order
above $2,000. A discount of 2% is given for early payment. The latest batch of goods sold to Line Co has a
list price value of $3,000. What is the initial amount that should be entered into Sim Trading’s sales
journal?
A $1,500 B $2,000 C $2,250 D $2,940

33 - On 1 April 20x7, Chan Co owed Tan & Tan $690. During April 20x7 the following transactions took
place:
Tan & Tan sold goods, $550, on credit to Chan Co
Chan Co returned goods, $80, to Tan & Tan
Chan Co paid Tan & Tan $750 by cheque
What is the balance brought down on Chan Co’s account in Tan & Tan’s ledger on 1 May 20x7?
A $410 debit B $490 debit C $750 credit D $1,240 credit

34 - In a trial balance prepared at year end 20x5, the debit column totalled $12,310 and the credit column
totalled $12,260. The following errors were discovered and corrected.
No entry had been made for cash sales, $200.
The discount received, $50, had been omitted.
What should be the totals of the adjusted trial balance?
A $12,310 B $12,260 C $12,510 D $12,560

35 - A trader does not keep complete accounting records but is able to provide the following information
at the end of her first year of trading:
Cheques received from credit customers $5,689
Cash received from customers $2,125
Outstanding amount owed by customers at year-end $553
Discounts allowed $250
What is the amount for Total Sales for the year?
A $4,886 B $5,136 C $7,011 D $7,564

36 - A trader’s balances at the end of the trading period include the following:

Trade payables $500

Inventory $1100
Bank overdraft $400
Machinery $750
Trade receivables $350
Capital $1,300
What is the total of the assets?
A $1,800 B $2,200 C $2,250 D $2,600
37 - Which of the following from an Income Statement shows a profit?
A Discount allowed is less than 2% of the total sales.
B Depreciation amount exceeds office supplies.
C The cost of goods sold is more than sales.
D Revenues in excess of expenses

38 - Sew Enterprise buys goods on credit from Maidin Trading. When the goods are faulty, Sew Enterprise
returns them to Maidin Trading. Which document is used by Sew Enterprise to notify Maidin Trading about
the faulty goods to be returned?
A Debit note B Credit note C Sales invoice D Request Form

39 - Why must a sole trader record all the business transactions and maintain the accompanying business
documentation about the business?
A The sole trader is required to do so by law
B The need to pay the creditors on time
C The preparation of the year-end financial reports
D The calculation of the amount owed to the business by trade receivables accounts

40 - Which of the following transactions should not be recorded in the credit column of a cash book:
A Cash taken by proprietor for personal use, $5,000
B Expense paid for petrol of the motor car, $200
C Receipt of $350 from goods sold to Orient Store
D Claim by admin department for the purchase of stationery, $150