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AUCKLAND GRAMMAR SCHOOL

ACCOUNTING
Form 5 - Pre-Q
Term 1 Examination, 2022

NAME: FORM: TEACHER:

60
TIME: 1 HOUR TOTAL MARKS:

EXAMINATION INFORMATION:
Question 1: 12 marks – multiple choice
Question 2: 6 marks – short answer theory
Question 3: 8 marks - ledgers
Question 4: 10 marks – cash book
Question 5: 24 marks – financial statements
Total: 60 marks

INSTRUCTIONS:
Answer all questions in the spaces provided in this answer booklet

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Question 1

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 A business returns goods to D Fonseca, one of its credit suppliers.

Which is the book of prime entry and double entry to record this transaction?

Book of prime entry Debit Credit

A General Journal Purchase returns D Fonseca
B General Journal D Fonseca Purchase returns
C Purchase returns journal Purchase returns D Fonseca
D Purchase returns journal D Fonseca Purchase returns

2 Samy made a short-term loan to Lal. Samy’s statement of financial position

showed this loan as a current liability.

What was the effect of this error?

A current assets understated
B current liabilities understated
C Non-current liabilities understated
D owner’s capital overstated

3 Which business document shows all the transactions that have taken place with a
customer during a month?

A credit note
B debit note
C invoice
D statement

4 Financial statements must provide information in time for financial decisions to be

made.

Which accounting objective is being described?

A comparability
B relevance
C reliability
D understandability

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5 Which account could appear in either the debit column or the credit column of a
trial balance?

A bad debts
B bank
C drawings
D sales

6 The total of the sales returns journal is posted to the sales returns account.

Where will the double entry appear?

A bank account
B trade payables accounts
C trade receivables accounts
D sales account

7 A sole trader compares his results with those of a similar business.

Which shows how well expenses are being controlled?

A bank balance
B cost of sales
C gross profit
D (net) profit for the period

8 Which documents received by a business are used to write up the purchase

returns journal?

A credit notes
B debit notes
C statements
D invoices

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9 Which error would not be revealed by a trial balance?

A Completely omitting a transaction

B Incorrectly balancing an account
C Making only one entry for a transaction
D Recording a transaction twice on the same side

10 Which of the following is likely to be classified as a current liability?

A Inventory
B Trade receivables
C Bank overdraft
D Other receivables

11 Mr Newtons trial balance for 31 Dec 2021 includes the following balances.

$
Sales 3 200
Inventory 1st Jan 2021 200
Purchases 1 800
Expenses 800

Mr Newtons inventory at 31 Dec 2021 was $300

What is Mr Newtons (net) profit for the year?

A $400
B $500
C $700
D $1 500

12 Cornwall Traders paid rent to J Crooks in cash.

How is this recorded?

Account to be Account to be
debited credited
A Cash Rent

B J Crooks Rent

C Rent Cash

D Rent J Crooks

[TOTAL: 12]

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Answer Grid – Multiple choice

1 7

2 8

3 9

4 10

5 11

6 12

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Question 2
(a) Mr. Pope has started a new business selling art. He financed the business using
$10,000 from his personal savings, a bank loan of $5,000 and $5,000 of equipment.

Identify two users of accounting information interested in Mr. Pope’s

business. Explain why they would be interested.

User 1:…………………………………………………..…………………………..

………………………………………………………………………………………………….

………………………………………………………………………………………………….

………………………………………………………………………………………………….

………………………………………………………………………………………………….

User 2:…………………………………………………..…………………………..

………………………………………………………………………………………………….

………………………………………………………………………………………………….

………………………………………………………………………………………………….

………………………………………………………………………………………………[4]

(b) (i) State the amount that will be recorded in Mr. Popes’ Capital Account

$…………………………………………………..………………………………….... [1]

(ii) State one reason why Mr. Pope should keep accurate accounting records

………………………………………………………………………………………………….

………………………………………………………………………………………………
[1]

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[TOTAL: 6]
Question 3
JB Sports is a sports wholesale business. At 1 May 2021, T Horrocks owed JB Sports
$745. During May 2021, the following transactions took place:

7 May JB Sports sold goods on credit to T Horrocks for $275

16 May T Horrocks returned goods valued at $84 to JB Sports

24 May T Horrocks sent a cheque, after deducting a cash discount of $18, to

JB Sports to clear the balance owing at 1 May.

Required

(a) Complete the account of T Horrocks in the books of JB Sports for the month of May
2021. Balance the account and bring the balance down.

T Horrocks (Trade receivable)

Date Details $ Date Details $

[5]

(b) J Clayton runs a clothes shop. One of his recent business transactions was that
‘goods were bought on credit from K Brown’

Required

Complete the table by entering the details in the spaces provided that relate to the
transaction above. [3]
Source Document Account to be debited Account to be credited

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[TOTAL: 8]
Question 4

The balances in S Hunters three column cash book at 1 March 2022 were as follows:

Cash $200

Bank overdraft $1,898

The following transactions took place during march:

Mar 2 Bank transfer made to Lindum Supplies in settlement of an invoice for

$260

6 Cheque from Court Ltd paid into the bank $1 236

11 Paid rent by cheque $550

13 Bank transfer received of $896 from C Sweeney. Discount of $10 had

been taken by the customer.

14 Cash sales $639

27 Paid wages of part-time employee in cash, $155

28 Wrote S Burns (a supplier) a cheque for $190 after already having

deducted a 5% cash discount.

Required: Enter the above transactions in the cash book on the next page and balance
the cash book as at 31 March 2022.

[TOTAL: 10]

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S Hunter’s CASH BOOK

Discount Discount
Date Details Cash Bank Date Details Cash Bank
allowed received
2022 2022

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 Question 5: Financial Statements with Balance Day Adjustments

(a) Akolo sells carpets. The following balances have been extracted from the books of account
31 December 2021

Balance at bank 3 130

Capital at 1 Jan 2021 22 500

Carriage inwards 1 340

Discount allowed 460

Discount received 970

Drawings 10 030

General Expenses 16 450

Inventory 1 Jan 2021 27 170

Purchases 85 210

Rent & business rates 10 160

Sales returns 490

Purchase returns 1 520

Sales 124 380

Shop fittings 8, 300

Telephone expenses 1 260

Trade payables 10 130

Additional information:
(a) Inventory (Inventory) as at 31 Dec 2021 is valued at $29 210
(b) Rent unpaid at 31 Dec 2021 amounted to $250
(c) Annual business rates are $1 320. At 31 Dec 2021, three months had been paid in
advance

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Required:
(a) Prepare an Income Statement for Akolo for the year ended 31 December
2021
$ $ $

[12]
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(b) Murphy has prepared the following Statement of Financial Position for his business. It
contains errors and does not balance. He did not know the opening capital.

Murphy
Statement of Financial Position as at 31 Dec 2021

$000 $000
Non-current Assets
Property 220
Office Equipment 60 280

Current Assets
Inventory 18
Drawings 20
Bank Overdraft 6
Profit for year 22
66

Current Liabilities
Trade payables 18
Trade receivables 14
Pre-paid expenses 3
Vehicle 35
Accrued expenses 2
72

Net Current Liabilities (7)

Net Assets 273

Capital
Balance at 1 Jan 2021 ??
Mortgage on premises (repayable 2029) 150
???

Additional Information:
(a) $3 000 rent owed by Murphy, had only been debited to rent
(b) A trade receivable paid $2 000 on 31 December 2021. This had not been recorded.

Required

Prepare a corrected Statement of Financial Position as at 31 December 2021 [12]

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Statement of Financial Position of Murphy as at 31 December $000 $000

2021
Non-Current Assets

Add: Current Assets

END OF EXAMINATION
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