Section A:
Answer all Questions.
Use the Multiple Choice Answer Sheet provided.
From the accounting equation, owners equity is :
A
B
C
D
Assets - Liabilities (Revenue Expenses)
Assets + Liabilities + (Revenue Expenses)
Revenue + Expenses - Drawings
Revenue + Expenses + Drawings
The balance date refers to the final date of :
A
B
C
D
lodging a tax return
payment to creditors
registration of the business
the accounting period
The entries to record Bought motor vehicle on credit are :
A
B
C
D
debit Purchases and credit Motor Vehicle
debit Motor Vehicle and credit Accounts Payable
debit Motor Vehicle and credit Cash at Bank
debit Purchases and credit Cash at Bank
A Sales Invoice does not contain the following information :
A
B
C
D
delivery instructions
customers order number
name of customer
reasons for goods returned
A telephone expense of $120 was wrongly debited to the Maintenance
Expense account. The correction entry for this error should be :
A
B
C
D
dr Telephone Expense and cr Cash at Bank
dr Telephone Expense and cr Maintenance Expense
dr Maintenance Expense and cr Cash at Bank
dr Maintenance Expense and cr Telephone Expense
Sample Final 1 Answers
Sold motor vehicle for cash. What is the effect of this transaction on the
accounting equation ?
A
B
C
D
no change in total assets
change in liabilities
increase in assets but decrease in liabilities
increase in liabilities but decrease in assets
The Profit and Loss Statement is a :
A
B
C
D
general ledger
general journal
voucher
report
Which of the following is not found in the balance sheet ?
A
B
C
D
drawings
overdrafts
bad debts
vehicle
P. Traders records show Opening inventory at $20,000, Purchases
$105,000, Purchases Returns $2,000, Freight Costs $3,000 and the Closing
inventory at $28,000. What is the Cost of Goods Sold ?
A
B
C
D
$98,000
$79,000
$56,000
$85,000
10
The Discount Allowed Account is debited because :
A
B
C
D
revenues decrease
liabilities increase
expenses increase
assets decrease
Sample Final 1 Answers
11
According to the double entry rule, the receipt of cash from a debtor will be
recorded as :
debit Cash at Bank as assets increase and credit Accounts Receivable
as assets decrease
debit Accounts Payable as liabilities increase and credit Cash at Bank as
assets increase
debit Accounts Payable as liabilities decrease and credit Cash at bank as
assets decrease
debit Cash at Bank as assets increase and credit Purchases as expenses
decrease
B
C
D
12
Purchased goods for cash is recorded in the :
A
B
C
D
cash receipts journal
cash payments journal
sales returns journal
purchases journal
13
Debts owing by P. Johnson are written off as bad debts and debited to :
A
B
C
D
Accounts receivable
Purchases account
Accounts payable
Bad debts account
14
Which of the following is not an equivalent of inventory ?
A
B
C
D
stock
goods
merchandise
drawings
15
Clinton, a debtor of Kozwinski Trading, has paid $109 for an outstanding
account of $100. The Statement of Account sent to Clinton at the end of the
month will show :
A
B
C
D
a credit balance of $9
a debit balance of $9
an opening balance of $109
a closing balance of $109
Sample Final 1 Answers
Use the information below to answer Questions 16 and 17.
Cheque Butt of Garden Supplies Pty Ltd.
Garden Supplies Pty. Ltd.
To: Mason Trading
For: Invoice 00116
(Discount $10)
Balance b/f
Deposits
Balance
This Cheque
Balance c/f
Cheque No. 216
Date: 7 April 20XX
$270
16
For Garden Supplies Pty. Ltd., the statement that best describes the
transaction which has taken place is :
sales of trading goods by cash of $270 allowing a discount of $10 in the
price for bulk buying
payment of $270 received from a debtor and allowed $10 discount for
prompt payment
payment of $270 for account outstanding and received $10 discount
for prompt payment
purchase of trading goods on credit of $270 receiving a discount of $10 in
the price for bulk buying
B
C
D
17
When Mason Trading receives cheque no. 216 from Garden Supplies Pty.
Ltd., which of the following entries must be made in the books of Mason
Trading ?
dr Cash at Bank $270, cr Accounts Receivable $270 and dr Discounts
Allowed $10, cr Accounts Receivable $10
dr Purchases $270, cr Cash at Bank $270 and dr Accounts Payable $10, cr
Discounts Received $10
B
C
D
dr Cash at Bank $280, cr Sales $280 and dr Discounts Allowed $10, cr
Accounts Receivable $10
dr Accounts Receivable $280, cr Cash at Bank $270 and dr Discounts
Allowed $10, cr Accounts Receivable $10
Sample Final 1 Answers
18
The accounting convention that ensures the equality of the accounting
equation is the :
A
B
C
D
continuity convention
historical cost convention
monetary convention
double entry convention
19
One of the guidelines for achieving strong internal control is to draw up an
organisation plan to establish :
A
B
C
D
responsibility for every function
an account for every purchase
a cash book to record bad debts
a bank reconciliation to record cash
20
From one accounting period to the next, the accounting cycle does not
involve which of the following functions ?
A
B
recording transactions on source documents
recording of transactions into journals and
ledgers
preparing a trial balance and financial reports
preparing a chart of accounts
C
D
20 marks
Sample Final 1 Answers
Question 21
5 marks
Section B:
Answer Questions 21 and 22 in the spaces provided in this examination booklet.
Question 21
Indicate whether each of the following statements is true or false by writing T or F in
the spaces provided:
T/F
a.
Handling of cash and the approval of cash payments should be done by the
same person as a good internal control practice.
b.
Increase in sales returns is debited because revenue is decreased.
c.
The rate of return on owners equity is sometimes called the debt to
equity ratio.
d.
The Profit and Loss Statement is presented as at a given date.
e.
Given total assets are $15,425 and total liabilities are $1,425. Owners
equity is $17,000 when the proprietor makes an additional contribution
of capital of $3,000 cash.
Sample Final 1 Answers
Question 22
15 marks
Question 22
a)
Discuss the accounting period convention and the significance of the
accounting convention in profit determination?
The accounting period convention states that the indefinite life of a
business should be split into regular and shorter time spans where
the profitability and financial position of the business are evaluated.
These time spans are referred to as accounting periods and usually
comprise a twelve months period. However, some businesses may
opt for shorter periods such as three or six months. Having
accounting periods of equal length means that business decisions
can be made more effectively by comparing accounting information
from one period to the next. We account for these time periods in
order to give profit figures to the interested parties. The accounting
period allows expenses for the period to be matched aginst the
revenue for the same period so that profit or the period could be
calculated.
5 marks
b)
Discuss at least five essential features of a good accounting report.
a.
b.
c.
d.
e.
timeliness - information must be current
clear headings - clear presentation / classifications / highlighted
items / present for users need / simplicity - easily understood
information
accuracy - precise information
compliance with law and standards
consistency- same format
5 marks
c) What is a trial balance? Discuss at least four limitations of the trial
balance.
The trial balance is done to check the accuracy of the ledger to
ensure that double entry rules have been followed. Although debit
and credit balances are equal, there may be errors not disclosed by
the trial balance such as incorrect amounts may have been posted
to both accounts affected, a transaction completely excluded from
the journal, a transaction may have been entered twice, two errors
made may have cancelled each other out in the same account or in
different accounts, ledger entries may have been reversed.
5 marks
Sample Final 1 Answers
Question 23
10 marks
Section C:
Question 23 Answer:
Analysis Chart of Kennedy Trading
Date
Accounts
A, L,
OE,
R, E
Increase/
Decrease
Increase
Dr
12,000
increase
Cr
12,000
increase
Dr
400
decrease
Cr
400
OE
decrease
Dr
150
Cash at Bank
decrease
Cr
150
17 Cash at Bank
increase
Dr
300
Accounts Receivable J. Mason
decrease
Cr
300
27 Accounts Payable Photographic
decrease
Dr
12,000
decrease
Cr
12,000
20XX Purchases
Debit/
Credit
Amount
$
June
3 Accounts Payable Photographic
Supplies
5 Wages
Cash at Bank
14 Drawings
Supplies
Cash at Bank
Sample Final 1 Answers
Question 24
20 marks
Question 24 (a) Answer:
Accounts Receivable Control Account
20XX
Oct. 1 Balance b/d
Sales
$
1400
$
Oct 31 Sales Returns
8640
320
Discount Allowed
360
Cash Receipts
5000
Bad debts written off
480
Contra
100
Balance c/d
3780
10040
Nov. 1 Balance b/d
10040
3780
13 marks
Question 24 (b) Answer:
For each of the items listed, write the appropriate source or journal from which the
figure would be obtained.
a.
Total debtors at 1
October 20XX
$1400
Balance from the same account
brought down from last month.
b.
Sales
$8640
Sales Journal total for the month
c.
Cash received from
debtors
$5000
Cash Receipts Journal
d.
Sales Returns
$320
Sales Returns or Returns Inwards
Journal for the month.
e.
Discount allowed to
debtors
$360
Cash Receipts Journal Discount
Allowed column (debit side) total for
the month.
f.
Bad debts written off
$480
General Journal. Total of debts written
off in the personal accounts in the
debtors ledger.
g.
Offset by contra from
accounts payable
$100
General Journal. Contra entry. Transfer
between accounts.
7 marks
Sample Final 1 Answers
Question 25
30 marks
Question 25 Answer:
General Journal of K. Moss
Date
20XX
1 Aug
Particulars
Bank
Stock
Motor vehicle
Accounts receivable
Accounts payable
Loan - C. Nash
Capital
Assets and liabilities at commencement of
business
Debit
$
25000
6000
5000
600
Office furniture
Sundry creditor or Acct. payable Funny Furniture Warehouse
Purchased furniture on credit
(inv. no. 206)
1200
Sundry debtor or Acct. receivable
- A. Jones
Motor vehicle
Sold used vehicle on credit to employee
5000
12
Bad debts
Accounts receivable - T. Tab
T. Tab declared bankrupt owing $300
- paid 50 in $1
Credit
$
1530
1500
33570
1200
5000
150
150
9 marks
10
Sample Final 1 Answers
Cash Receipts Journal of K. Moss
Date
Particulars
Receipt
no.
Dr
Bank
Sales
74
200
11
Commissions
received
75
50
12
T. Tab
76
150
16
Sales
77
80
80
27
Sales
78
1310
1310
31
Total:
20XX
Aug
Dr
Disc.
allowed
Cr
Accts.
receivable
Cr
Sales
Cr
Sundry
200
50
150
1790
150
1590
50
6 marks
Cash Payments Journal of K. Moss
Date
Particulars
Chq.
no.
69201
600
600
Office
equipment
Wages
69202
500
500
15
Purchases
69203
22
Drawings
69204
25
25
Advertising
69205
60
Stationery
69206
20
Rates
69207
90
170
1295
2265
20XX
Aug
4
31
Total:
Dr
Purchases
Dr
Sundry
970
970
Dr
Accts.
payable
Cr
Disc.
Received
Cr
Bank
970
25
8 marks
11
Sample Final 1 Answers
Date
Invoice no
20XX
10 Aug
20
21
265
266
267
Sales Journal of K. Moss
Particulars (Debtors)
S. Spencer
Sims Pty. Ltd.
P. Michael
Amount
$
200
2000
550
2750
3 marks
Date
20XX
3 Aug
24
Date
20XX
17 Aug
Date
20XX
19 Aug
Invoice no
693A
901
Credit
note no.
15
Purchases Journal of K. Moss
Particulars (Creditors)
Amount
$
ABC Retailers
J. Downey
900
655
1555
2 marks
Sales Returns Journal of K. Moss
Particulars
Amount
(debtors)
$
S. Spencer
25
25
1 mark
Purchases Returns Journal of K. Moss
Credit note
Particulars
Amount
no.
(creditors)
$
A12
ABC Retailers
100
100
1 mark
12
Sample Final 1 Answers
