PILOT TEST 2024

PRINCIPLES OF ACCOUNTING
Unit Code: BSA2001-E*

I. Multiple Choice Question:

1. Which of the following is correct?
Assets ($) Liabilities ($) Capital ($)

A. 875,000 125,000 750,000

B. 820,000 280,000 1,100,000
C. 955,000 115,000 820,000
D. 542,000 654,000 112,000
2. The account used to record credit sales is ….….….….….
A. Accounts Payable
B. accounts receivable
C. amount receivable
D. discount receivable

3. If the assets of a company increase by $100,000 during the year and its liabilities
increase by $35,000 during the same year, then the change in equity of the company during
the year must have been:
a. An increase of $135,000. c. A decrease of $65,000.
b. A decrease of $135,000. d. An increase of $65,000.
4. Brunswick borrows $50,000 cash from Third National Bank. How does this
transaction affect the accounting equation for Brunswick?
a. Assets increase by $50,000; liabilities increase by $50,000; no effect on equity.
b. Assets increase by $50,000; no effect on liabilities; equity increases by $50,000.
c. Assets increase by $50,000; liabilities decrease by $50,000; no effect on equity.
d. No effect on assets; liabilities increase by $50,000; equity increases by $50,000.
5. Geek Squad performs services for a customer and bills the customer for $500. How
would Geek Squad record this transaction?
a. Accounts receivable increase by $500; revenues increase by $500.
b. Cash increases by $500; revenues increase by $500.
c. Accounts receivable increase by $500; revenues decrease by $500.
d. Accounts payable increase by $500; revenues increase by $500.
6. Net income will result during a time period when:
a. assets exceed liabilities. c. expenses exceed revenues.
b. assets exceed revenues. d. revenues exceed expenses.

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7. Adjustments for unearned revenues:
a. decrease liabilities and increase revenues.
b. increase liabilities and increase reverevep.
c. increase assets and increase revenues.
d. decrease revenues and decrease assets.

8. Which of the following accounts are affected when the company receives payment in
cash from a debtor?
A. Capital and cash
B. Capital and accounts receivable
C. Accounts receivable and cash
D. Accounts payable and cash

9. Edmund Limited has non-current assets of $101,356, current assets of $52,618, current
liabilities of $42,615 and non-current liabilities of $42,000. What is the amount of capital?
A. $49,353
B. $69,359
C. $153,359 D. $238,589
10. The withdrawal of cash by the owner will
a. decrease net income. c. not affect total assets.
b. increase liabilities. d. decrease owner’s equity.
11. When a service has been performed, but no cash has been received, which of the
following statements is true?
a. The entry would include a debit to Accounts Receivable.
b. The entry would include a debit to Accounts Payable.
c. The entry would include a credit to Unearned Revenue.
d. No entry is required until the cash is received.
12. An $800 debit item is accidentally posted as a credit. The trial balance column totals
will therefore differ by
a. $0 c. $800
b. $400 d. $1,600
13. Which of the following is a business event that is not considered a recordable
transaction?
a. A company receives a product previously ordered.
b. A company pays an employee for work performed.
c. A custome.r inquiry about the availability of a service
d. A customer purchases a service.
14. Which of the following is not a Book of Prime Entry?
a. Sales Journal c. Purchases Journal

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 b. Cashbook d. Sales Ledger

15. Which of the following transactions will increase the total assets of the company by
$15,000?
A. Purchased a car on credit $15,000
B. Purchased equipment in cash $15,000 C. Received payment from
Paul $15,000
D. Paid bank loan of $15,000
16. Which of the following transactions will both increase assets and decrease assets?
A. Purchased goods on credit
B. Paid wages for employees
C. Purchased inventory by cheque
D. Repaid bank loan
17. A sole trader purchases a van for business use, paying by cheque. What is the double
entry?
A. Credit van and debit bank
B. Debit van and credit cash
C. Debit purchases and credit bank
D. Debit van and credit bank
18. What transaction is represented by the following entry?
Dr Bank
Cr Trade Receivables
A. The purchase of goods on credit from a supplier
B. Receipt of a cheque from a credit customerr
C. The sale of goods on credit to a customer
D. Payment by cheque to a credit supplier
19. A sole trader had trade receivables of £2,700 at 1 May and during May made cash sales
of £7,200, credit sales of £16,500 and received £15,300 from his credit customers. The
balance on his trade receivables account at the end of May was:
a. £1,500 c. £8,700
b. £3,900 d. £11,100
20. On 1 January, the assets and liabilities of a business are: Assets: Fixtures $10,000;
Inventory $8,000; Cash at the bank $3,000; Liabilities: Accounts payable $3,000. During
January, the whole of the $8,000 inventory is sold for $11,000 cash. This results to
A. Profit of $3,000 and Capital of $21,000
B. Profit of $11,000 and Capital of $21,000
C. Profit of $3,000 and Capital of $29,000
D. Profit of $11,000 and Capital of $29,000

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II. Short question
Given that Company ABC's fiscal year ends on December 31st, and the utility bill for the month
of December is expected to be received on January 5 th. Assuming that the estimated utility
expense for December is $2,000. Should the company record the utility expense in its financial
statements for the year ending December 31st? Provide explanation.

III. Exercises
Andrew Joel is a market trader. The company’s trial balance as at 01 June 20X4, appears below:
$ $

Sales
80,300
Purchases 50,200
Expenses
Salaries expense 4,500
Rent and business rates 2,500
Insurance expense 3,900
Motor expenses 21,860
Fixtures 6,390
Motor van 30,000
Cash in hand 5,100
Cash at bank 19,500
Loans 5,500
Drawings 2,400
Capital 62,000
Profit 2,500
Account Receivable 23,450
Account Payable 19,500
169,800 169,800

During the month of June, the company completed the following transactions:
1 Transfers 750 of his savings into a business bank account
2 Borrows $3,000 from LLoydwest Bank, repayable in three years’ time
3 Buys goods on credit $200 from S.Holmes
4 Buys goods for resale, paying cash $55
5 Goods returned by us to S.Holmes, $18
6 Sale goods $630, customer paying by cheque $400
7 Sale goods on time, $108 to D.Moore
8 Goods returned to us by D.Moore $20

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 9 Pays staff wages bay cash at bank for January, $510
10 Purchases goods from C.Swiff $500, less 10% trade discount, pays by cash
11 Insurance is still unexpired of $2,500
Inventory on 31 January 20X9 is 7,500

Required:
a. Record all the transactions?
b. Prepare a Trial Balance as at the end of the month?
c. Prepare Income Statement for the month?
d. Prepare a Balance Sheet at the end of the period?