TYPE B

1) Pending the location of errors, the difference disclosed in the trial balance is normally posted to
(a) an adjustment account (b) a control account (c) as suspense account (d) a trading account

2) The term 'bad debt' means (a) debt written on bad receipts (b) debt owed by a bad person (c)
debt that cannot be collected (d) overcharge on a debtor's account

3) Prime cost consist of (a) factor cost and cost of materials (b) overhead cost and direct costs (c)
direct expenses, direct labour, direct materials (d) cost of sale, factory cost and coat of materials

4) Depreciation is (a) a charge for the wear and tear of a fixed asset (b) the cost of replacing a fixed
asset (c) the loss incurred on the sale of a fixed asset (d) the increase in the value of a fixed asset

5) Discount allowed is charged to (a) trading account (b) balance sheet (c) profit and loss account
(d) current account

6) Which of the following is personal ledger? (a) discount allowed account (b) interest received
account (c) asset account (d) debtors account

7) The authorized share capital of a limited liability company is the number of shares (a) offered for
sale (b) called up (c) approved in the memorandum of association (d) subscribed

8) In a control account, what does the term "subsidiary ledger" refer to?
a. The main ledger of the business
b. A ledger that summarizes balances from control accounts
c. A ledger that contains detailed transaction records
d. A ledger that tracks revenue from sales

9) What is meant by the term "reconciliation" in the context of control accounts?

a. The process of recording transactions in control accounts
b. The process of comparing balances in control accounts to subsidiary ledgers
c. The process of summarizing balances from subsidiary ledgers
d. The process of calculating net profit

10) Define a sales ledger control account in accounting.

a. An account used to record sales revenue
b. An account used to track purchases
c. An account used to summarize balances from the sales ledger
d. An account used to calculate net profit

11) What is the primary purpose of a purchases ledger control account?

a. To monitor cash flows
b. To summarize balances from the purchases ledger
c. To record transactions related to fixed assets
d. To calculate revenue from sales
12) Calculate the closing balance of a purchases ledger control account: Opening balance = $5,000,
Purchases = $15,000, Cash paid = $10,000, Discounts received = $800, Returns outwards = $500.
a. $9,300
b. $9,200
c. $9,000
d. $8,900

13) What is the purpose of reconciling control accounts with subsidiary ledgers?
a. To identify errors and discrepancies
b. To complicate the financial reporting process
c. To minimize the need for financial analysis
d. To increase the risk of fraud

14) Explain the term "control account balance" in the context of accounting.
a. The total of all transactions recorded in a control account
b. The difference between opening and closing balances in a control account
c. The balance used to control subsidiary ledger balances
d. The balance of cash and cash equivalents in a control account

15) Why is it important to reconcile control accounts with subsidiary ledgers regularly?
a. To increase the risk of errors and fraud
b. To simplify the financial reporting process
c. To identify errors and discrepancies promptly
d. To minimize the need for internal controls

16) What is the meaning of "cash book" in single entry accounting?

a. A record of all cash transactions maintained by the business
b. A ledger account showing cash and cash equivalents
c. A statement of affairs prepared to assess financial position
d. A summary of revenue and expenses for the accounting period

17) What does "closing balance" signify in single entry accounting?

a. The total amount of cash on hand at the end of an accounting period
b. The final balance of a ledger account at the end of an accounting period
c. The balance of capital account at the beginning of an accounting period
d. The balance of revenue earned during the year

18) What is the purpose of the "capital account" in single entry accounting?
a. To track investments made by shareholders
b. To record revenue from sales transactions
c. To summarize expenses incurred by the business
d. To show the owner's equity in the business

19) Carriage outwards is accounting term for amount spent on (a) goods purchased (b) goods sold
(c) excess stock (d) goods returned to stock

20) Which of the following is not a liability? (a) accrued wages (b) creditors (c) prepayments (d)
insurance due but unpaid
21) Goodwill can be valued in partnership when (a) large losses are made (b) a partner retires (c) a
new branch is opened (d) partners make profit

22) The partnership deed normally specifies (a) how profits or losses are to be shared (b) the capital
to be contributed annually (c) how salaries are paid to employees (d) the profit that should be
earned annually

23) Which of the following shows the stock at the start of an accounting period? (a) appropriation
account (b) current assets in the balance sheet (c) current liabilities in the balance sheet (d)
trading account

24) The balance in the purchases ledger control account is (a) total purchases (b) total sales (c) the
total of the debtors (d) the total of the creditors

25) An agreement made by partners to regulate and govern their business activities are known as
(a) partnership act (b) partnership deed (c) partnership code (d) memorandum

26) A partnership on admitting a new partner, revalued the business' land and building from
#30,000 to #70,000. The difference of #40,000 should be (a) credited to land and buy account
(b) debited to asset revaluation account (c) credited to asset revaluation account (d) credited to
profit and loss appropriation account

27) What role does the statement of affairs play in assessing a business's financial performance?
a. It provides insights into revenue and expenses over a period
b. It summarizes changes in assets and liabilities
c. It reconciles bank statements
d. It calculates net profit

28) What is the purpose of preparing a trading, profit, or loss account from incomplete records?
a. To determine the net profit of a business
b. To reconcile bank statements
c. To analyze changes in inventory levels
d. To summarize cash flows

29) What information does a statement of affairs typically include?

a. Revenue and expenses
b. Opening and closing balances of assets and liabilities
c. Cash flows
d. Sales and purchases

30) How does a statement of affairs contribute to financial analysis?

a. By providing insights into a business's profitability
b. By summarizing cash flows
c. By reconciling bank statements
d. By analyzing changes in assets and liabilities

31) What is the primary purpose of preparing a statement of affairs?

 a. To determine the net profit of a business
b. To summarize assets, liabilities, and capital at a specific point in time
c. To track changes in inventory levels
d. To calculate depreciation expenses

32) What is a potential consequence of relying on incomplete records for decision-making?

a. Enhanced financial performance
b. Inaccurate assessment of profitability
c. Efficient resource allocation
d. Improved risk management

33) Why is it important for businesses to maintain complete and accurate financial records?
a. To increase administrative costs
b. To comply with legal requirements
c. To complicate the financial reporting process
d. To minimize the need for internal controls

34) Explain the purpose of posting entries to control accounts.

a. To increase the risk of errors and fraud
b. To summarize transactions from subsidiary ledgers
c. To simplify the reconciliation process
d. To exclude non-essential expenses

35) Calculate the closing balance of a sales ledger control account: Opening balance = $15,000, Sales
= $30,000, Cash received = $20,000, Discounts allowed = $1,500, Bad debts written off = $1,000.
a. $35,500
b. $35,000
c. $36,000
d. $36,500

36) Calculate the closing balance of a purchases ledger control account: Opening balance = $10,000,
Purchases = $25,000, Cash paid = $18,000, Discounts received = $2,000, Returns outwards =
$1,200.
a. $17,800
b. $17,200
c. $17,500
d. $17,000

37) Explain the term "contra entry" in the context of control accounts.
a. An entry that contradicts the principles of accounting
b. An entry that corrects errors in subsidiary ledgers
c. An entry that reverses the effect of another entry
d. An entry that records transactions related to fixed assets

38) How are transactions recorded in a purchases ledger control account?

a. As debits only
b. As credits only
c. As debits and credits
 d. As revenue transactions

39) What is meant by "work in progress" in a manufacturing account?

a. Goods that are partially completed but not yet finished
b. Finished goods ready for sale
c. Raw materials awaiting use in production
d. Goods returned by customers
40) Why is it important for manufacturing businesses to distinguish between direct and indirect
costs?
a. To accurately determine product costs
b. To comply with tax regulations
c. To reduce production delays
d. To maximize shareholder wealth

SECTION B: THEORY
Answer TWO questions
1. a) What is partnership?
b) State two rules which shall apply in a partnership business in the absence of any express
agreement
c) Distinguish between subscription in advance and subscription in arrears

2 a) What is goodwill?
b) State four instances in which goodwill is valued and recorded in the books of partnership
c) What is realization account?

3. a) State three uses of control account

b) List five items that are credited in the sales ledger control account
c) List five items that are recorded on the debited to purchases ledger control account

Attempt this (Compulsory)

4. The following is the summarized cash book of Anu Usman for the year ended 31st March, 2013
Dr Cash Book Cr
# #
Opening balance 2,343 Cash paid to creditors 11,056
Cash from debtors 18,235 Salaries 1,080
Additional capital 6,000 Postage and Stationery 240
General expenses 1,234
Drawings 2,500
Rent and rates 570
Balance c/d 9,898
26,578 26,578

Additional Information: 1st April, 2012 31st March, 2012

Stock 560 340
Debtors 1,202 988
Creditors 980 1,051
 Accrued salaries 320 75
Prepaid rent 44 67
Motor van 1,000 1,000
You are required to prepare: (i) Statement of affairs as at 1st April, 2012
(ii) Debtors and Creditors control account (iii) Trading, profit and loss account
(iv) Balance Sheet as at 31st March, 2013