Model MCQ Paper for Gr8 Principles of accounts

PART-A Under line the correct answer from the following 1

Which best describes the assets of a business? A cash and items that should turn into cash in the near future B cash invested by the owner of the business C items bought for long term use by the business D items owing to or owned by the business

2

What is true of a computerised accounting system? A The computer will automatically correct inaccurate input. B The data can be used for a number of different uses. C The design of the system cannot be modified. D The possibility of financial fraud is eliminated.

3

Which is recorded in the purchases ledger? A cash paid to a creditor B cash purchases C cheque received from a debtor D purchase of fixed assets

4

A business maintains a full set of books of prime entry. Which book is written up from credit notes received? A purchases journal B purchases returns journal C sales journal D sales returns journal

5

Khan bought goods for $220, less 20 % trade discount, on credit from Aziz. Khan later returned half of these goods. Aziz entered the returns in his sales returns journal. How will Aziz post this transaction to Khan’s ledger account? A credit $88 B debit $88 C credit $110 D debit $110

6

A business keeps a three column cash book. How is the total of the discount column on the debit side posted? A credit discount allowed account B credit discount received account C debit discount allowed account D debit discount received account

7

What is a trial balance? A a list of balances remaining on the books of a business on a certain date B a statement of the assets, liabilities and capital of a business on a certain date C a statement showing the profit made by a business for a financial period D a summary of the trading transactions of a business for a financial period John’s financial year ends on 31 March. Wages paid during the year ended 31 March 2009. Amounted to $94000.

8

MS 2nd Term Test 2009/Principles of Accounts P-I

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Which journal entry shows the transfer to the profit and loss account for the year ended 31 March 2009? Dr $ A

B

C

D

Income statement

Cr $

91 000

wages

91 000

wages

91 000

Income statement

91 000

Income statement

94 000

wages

94 000

wages

94 000

Income statement

94 000

9

Which does not appear in a purchases ledger control account? A bad debts B discount received C goods returned to creditors D interest charged by suppliers

10

10 The value of Wayne’s net assets on 31 December 2008 is less than their value on 1 January 2008. Which term describes the difference in Wayne’s net assets? A gross loss B gross profit C net loss D net profit 11

$ fixed assets

12

12 000

current assets

6 000

current liabilities

4 000

What is her capital employed? A $2000 B $10 000

A trader provides the following information.

C

$14 000

D $22 000

The closing inventory of a business had a selling price of $30 000 and a cost price of $20 000. inventory costing $4000 was then found to be unsaleable. At what amount will the closing inventory be shown in the business’s balance sheet? A $14 000 B $16 000 C $24 000 D $26 000

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13

$ opening inventory

10 000

purchases for year

32 500

closing inventory

9 500

What was the gross profit for the year? A $33 000 B $44 000 C

$48 000

D

Helmuth provided the following information.

$49 500

14

Which will be most suitable for a computer application? A maintaining highly confidential records B maintaining the payroll for a large company C recording credit sales for a small retailer D recording stock withdrawn by partners

15

What is the accounting equation? A assets less liabilities equals capital B assets plus liabilities equals capital C capital less liabilities equals assets D capital plus assets equals liabilities

16

Which document is issued by a supplier when a customer returns goods? A credit note B debit note C invoice D statement

17

25 items are sold at $10 each with trade discount at 20 % and cash discount is 2 % if accounts are settled within 7 days. How much would be recorded in the sales journal? A $196 B $200 C $245 D $250

18

New shop fittings are bought on credit for $4000. Where is this transaction entered first? A cash book B general journal C purchases journal D purchases ledger

19

Which ledger entries record the purchase of a machine bought on credit? A debit creditors, credit machinery B debit creditors, credit purchases C debit machinery, credit creditors

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D

debit purchases, credit creditors

20

$ sales

90 000

purchases

60 000

closing stock

10 000

carriage inwards

5 000

carriage outwards

8 000

Wages and Salaries

5 000

At the end of his first year a trader provides the following information.

What is the profit for the year? A $22 000

B

$32 000

C

$35 000

D

$40 000

21

Which will appear in income statement? A bank account B bank charges C bank loan D bank overdraft

22

Which is a service business? A garage selling petrol and diesel B motor insurance agency C second-hand car trader D shop dealing in motor parts

23

The following information is taken from the accounts of a sole trader. $ opening capital

50 000

closing capital

65 000

drawings

5 000

capital introduced

7 500

What is the trader’s net profit? A $10 000 B $12 500 24

C

$15 000

D

$17 500

Meyer Ltd was established on 1 January 2001. On 1 January 2006 the company’s profit and loss account showed a credit balance of $55 000. What does this represent? A net loss for the previous year B net profit for the previous year

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C D

total profits brought forward from previous years undistributed profits brought forward from previous years

25

Which statement shows the financial position of a business? A balance sheet B manufacturing account C profit and loss account D trading account

26

What is called the system of recording transactions based on dual concept? A auditing B double account system C double entry system D single entry system

27

What is the alternative name of returns outward? A carriage inwards B carriage outwards C purchases returns D sales Returns

28

A business keeps a three column cash book. How is the total of the discount column on the debit side posted? A credit discount allowed account B credit discount received account C debit discount allowed account D debit discount received account

29

Why should a sole trader record all the financial information about her business? A because she is required to do so by law B because she needs to pay her creditors on time C so that she can prepare final accounts D so that she knows how much her debtors owe her

30

Which book of prime entry is also a ledger account? A cash book B journal C purchases journal D sales journal 1

D

6

C

11 C

16

A

21

B

26

B

2

B

7

A

12 B

17

B

22

B

27

C

3

A

8

C

13 A

18

D

23

B

28

C

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4

B

9

A

14 B

19

C

24

B

29

C

5

A

10

C

15 A

20

A

25

A

30

A

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