Questions and Answers of Accounting A Level And AS Level

Patience has mislaid her final accounts for the year ended 31 December 2004 but has found the report, which her accountant has prepared, based on those accounts. She has decided to reconstruct the
What is the effect on the current ratio and quick ratio of a business if it uses cash to buy stock? A AB B C D Current ratio decrease decrease no change no change Quick ratio 12 for sure you a
The quick ratio (acid test) of a business has fallen. What is the reason for the fall? A. A decrease in creditors B. A decrease in stock C. An increase in cash D. An increase in
The following information is extracted from the final accounts of a business.What is the period taken to pay the creditors? A. 31 days B. 32days C. 34 days D. 35 days Opening
The closing stock of a business was $30 000 and the cost of goods sold was $600 000. Stock turnover is based on the average value of the opening and closing stocks. If the stock turnover was 15
The following is an extract from the Profit and Loss Account of a company.What is the company's earnings per share? A. $0.32 B. $0.40 C. $0.42 D. $0.45 Operating profit Debenture
A company has an authorised share capital of 750 000 ordinary shares of $1 of which it has issued 500 000 shares. The following is an extract from its Profit and Loss Account.The current market price
Information extracted from the Balance Sheets of company P and company Q is as follows.Which of the following would experience the greatest degree of risk in times of declining profits? A.
Explain the difference between stocks and shares.
Explain why the fixed assets of a company should be funded by long-term finance.
Explain the difference between debentures and convertible loan stock.
Which of the following is a method of 'window dressing financial statements? A. Omitting an asset acquired on hire purchase B. Overstating Goodwill C. Transferring a large amount to
Explain why long-term finance should exceed the amount of a company's long-term assets.
Which of the following may be used to smooth earnings per share from one year to another? A. Asset revaluation reserve B. Capital redemption reserve C. General Reserve D.
State five limitations that may be relevant to the appraisal of company financial reports.
A company proposes to purchase an expensive machine which will pay for itself in five years. General interest rates are low and the company wishes to avoid a change in the control. From which source
Explain what is meant by 'window dressing' and why directors may wish to use it.
What means are available to enable directors to foresee future needs for additional funds?
Hamil Ltd purchased the business of Abdul, a sole trader, on 30 June 2004. The Balance Sheets of both businesses at that date were as follows.It was agreed that Abdul's assets should be valued as
The following is information about the assets and liabilities of a business.Goodwill is valued at $50 000. What should be paid for the net assets of the business?A. $116 000 B. $119
Open the necessary ledger accounts and post the following transactions to them. May 1 Martine started business as a florist by paying $3000 into a business Bank account. 2 Charline lent the business
Joel occupies part of Natasha's business premises. Which entries in Natasha's books record the rent Joel pays her? A B Debit account Bank Bank с Rent Payable D Rent Receivable Credit account Rent
Open the necessary ledger accounts and post the following transactions to them. June 1 Farook commenced business by paying $15 000 into his business Bank account. Amna lent the business $5000. Farook
Yasmina purchased some office equipment for use in her business. The equipment was faulty and she returned it to the supplier who refunded the cost to Yasmina. Which entries in Yasmina's books record
Complete the entries for the following table with information taken from the accounts of a trader. 1. Local taxes paid by cheque 2. Bank pays interest to trader 3. Sundry expenses paid by cheque 4.
A trader withdraws money from his business Bank account for personal expenses. Which entries record this in his books? A B Debit account Bank Bank с Capital D Drawings Credit
A trader returns goods to the supplier and receives a refund. Which entries record the refund in the trader's books? Debit account Bank Bank A B C Purchases D Purchases Returns #EP IN SHE DE Credit
Post the following transactions in the books of Geraud. June 1 Purchased goods from Khor which cost $3000 less trade discount of 10%. 5 Sold goods to Lai for $600. 10 Returned goods which had cost
Davina bought goods on credit from Sharon for $600 less trade discount of $120. Which entries record this transaction in Davina's books? Account to be debited A Purchases $480 B Purchases
Fleming had the following transactions.Required Post the transactions listed above in Fleming's books in good form. July 1 Purchased goods from Adams for $5000 less trade discount 15%. Adams
Kristal bought goods on credit from Prisca. The goods had a list price of $1000 but Prisca allowed Kristal trade discount of 10% and cash discount of 4%. How much did Kristal have to pay
Streak had the following transactions in March.Required Post the transactions listed above in Streak's books in good form. Mar 1 Sold goods to Blignaut for $2500 less trade discount of 10%,
Shirley bought goods from Corrine. The goods had a list price of $800. Corrine allowed Shirley trade discount of 20% and cash discount of 5%. In Corrine's books, which entries record the cheque she
Murgatroyd had the following transactions, all on credit, in March.Required Enter the transactions for March in Murgatroyd's books of prime entry and post them in good form to the proper
Adeel's transactions for the month of April were as follows.Required (a) Enter all the transactions for April into the books of prime entry. (b) Post the books of prime entry to the ledger
Tania purchased goods for $1000 less 25% trade discount. She was allowed cash discount of 10%. Which amount should she enter in her purchases journal? A. $650 B. $675 C. $750 D.
Enter the following transactions in Joshua's three-column cash book. March 1 Received takings from cash sales, $1100. 2 Paid electricity in cash, $130. 3 Received takings from cash sales, $900. 4
Lara purchased goods costing $1800 less trade discount of 30%. He was allowed cash discount of 5%. How much should Lara have to pay for the goods? A. $1080 B. $1197 C. $1260D. $1800
Prepare journal entries with suitable narratives to record the following: 1. Received from Mumtaz invoice no. 506 dated 3 March for $10 000. This was in respect of the purchase of a machine on
Cora sent an invoice to Maria for $2000 less 20% trade discount. Cora has omitted to enter the invoice in her sales journal. What effect will this have on her accounts? Debit Maria's
Prepare journal entries in proper form to correct the following. 1. Credit note no. 964, for $120, received from A & Co., a supplier, has been posted to A. Cotter's account in error. 2.
Cheung has received a cheque for $1540 from Raju in full settlement of a debt of $1700. How should this be recorded in Cheung's books of account? Debit A Bank B Bank C Bank Discounts Allowed D
Copy and complete this table, ticking the boxes which correctly describe the given accounts in the books of a bakery. Account Capital Sales Returns Delivery Vans Purchases Rent
Prepare a trial balance from the following balances that have been extracted from the books of Achilles, a grocer, at 31 December. Account 7 SE Premises Motor Vans Office Furniture is no Computer and
The following balances at 31 December 2003 have been extracted from Hassan's books.Required Prepare a trial balance at 31 December 2003 from the balances extracted from Hassan's books and
Which of the following accounts normally has a credit balance? A. Discounts Allowed B. Discounts Received C. Purchases D. Sales Returns
State which type of error each of the following represents. (a) Payment of rent has been debited to the Bank account and credited to the Rent Payable account. (b) The purchase of a computer
After which error will a trial balance still balance? A. An invoice for $400 in the sales journal not posted to the customer's account in the sales ledger. B. A purchase of goods from Ratna
An inexperienced bookkeeper has extracted a trial balance at 31 December 2003 from Andrea's books. It contains some errors and does not balance.Required Re-write the trial balance and correct
A business has paid rent of $800. The payment has been entered in the books as follows.Which type of error is this? A. CommissionB. Compensating C. Complete reversal D Principle
Discounts allowed of $160 for one month have been posted to the credit of the Discounts Received account. What effect has this had on the trial balance? A. $160 too much credit B. $160 too
Corrine began trading on 1 January 2003. The following trial balance as at 31 December 2003 has been extracted from her books.Corrine had unsold stock of $10 000 at 31 December
The following trial balance has been extracted from Hadlee's books at 31 December 2003.Stock at 31 December 2003 cost $9000. Required Prepare Hadlee's Trading and Profit and Loss Account
Which of the following does not appear in a Profit and Loss Account? A. Carriage inwards B. Carriage outwards C. Discounts allowed D. Discounts received
The trial balance extracted from Tikolo's books at 31 March 2004 is as follows.During the year, Tikolo had taken goods costing $2000 for his own use. This had not been recorded in the books. Stock at
The following balances have been extracted from Khor's books at 31 December 2003.Required Prepare Khor's Trading Account for the year ended 31 December 2003. Sales Sales Returns Purchases
The following information has been extracted from the trial balance of a business:Closing stock was $3000 more than opening stock. One third of the wages was charged to cost of sales in the
The following trial balance has been extracted from the books of Perkins, a sole trader, at 31 March 2004.Stock at 31 March 2004 was $10 000. Required Prepare Perkin's Trading and Profit
The Carriage inwards of a business amounted to $6000, and the Carriage outwards was $7000. The Carriage outwards was charged in the Trading Account in error, and the Carriage inwards was
Sara's trial balance at 31 March 2004 was as follows.Required Prepare Sara's Trading and Profit and Loss Account for the year ended 31 March 2004. Account $ loc binoin Cash on
Carriage inwards in a trial balance is $2300. It has been entered in the Trading Account as $3200. In addition, motor expenses of $600 been posted to the Motor Vans account. What effect has this
Discounts received amount to $10 500 and discounts allowed to 13 000. The discounts received have been debited, and the discounts allowed have been credited in the Profit and Loss Account. What has
Prepare a Balance Sheet at 31 December 2003 for Corrine from the trial balance given in exercise 1.Data from Exercises 1.Corrine began trading on 1 January 2003. The following trial balance as at 31
The purchase of an office computer has been debited to Office Expenses instead of to Office Equipment. What effect will this have on the Balance Sheet? Fixed assets A no effect B no effect C
Devram extracted a trial balance at 31 December 2003 from his books after he had prepared his Trading Account for the year ended on that date. It was as follows.Further information 1. At 31
A trader commenced business on 1 February 2003. He paid rent on his premises as follows.Which amount for rent should be shown in the Profit and Loss Account for the year ended 31 January
A business has an accounting year that ends on 30 September. Its insurance premiums are paid in advance on 1 July each year. Premiums have been paid in the past three years as follows. Year I
The accounts of a business have been prepared, but no adjustments have been made for accrued expenses at the end of the year. What effect will these omissions have on the accounts? Net profit A
A motor vehicle cost $18 000. It is expected to have a useful life of seven years and to be sold for $4000 at the end of that time. Required (a) Prepare the Provision for Depreciation of
Why is depreciation on fixed assets charged in the accounts of a business? A. To ensure that assets are replaced when they are worn out B. To make sure that cash is available to replace
The following trial balance was extracted from the books of Piccolo at 31 May 2004.Further information 1. Stock at 31 May 2004: $42 000. 2. Freehold land and buildings at cost is made up as
A machine costing $40 000 and with an expected useful life of five years is to be depreciated by the reducing- balance method. The annual rate of depreciation is 30%. Required (a) Prepare
A business purchased a crane for $40 000 on 1 January 2001. The crane was depreciated at the rate of 30% per annum using the reducing-balance method. The crane was sold on 31 December 2003 for $7750.
Wilhelmina is a trader whose financial year ends on 31 March. Her trial balance at 31 March 2004 was as follows.Further information 1. Stock at 31 March 2004 cost $16.000. 2. The loan was
The following balances have been extracted from Joel's books at 31 December 2003. Machinery at Cost $18 000; Provision for Depreciation of Machinery $9600. Joel's transactions in 2004 included
The following information relates to the fixed assets of a business.Depreciation is calculated on the reducing balance basis at the rate of 30%. What was the net book value of the assets that were
The following information is extracted from the books of a business.Further information for the year ended 31 December 2003 is as follows.How much was received from the sales of fixed assets? A.
Saul maintains a provision for doubtful debts in his books. It is made up of a specific provision for doubtful debts and a general provision equal to 5% of the remainder. The following information is
David's trial balance at 31 March 2004 was as follows.Further information 1. Stock at 31 March 2004: $5000. 2. Sales include goods sent on sale or return to a customer who has not yet
Kapil has decided to maintain a Provision for Doubtful Debts. Which of the following concepts should he apply in his accounts? 1. Going concern 2. Matching 3. Prudence 4.
The following balances have been extracted from a trial balance at 30 June 2004.After the preparation of the trial balance a bank statement was received and revealed that the following had not been
The balance on a bank statement at 31 January 2004 was $1220 Credit. The following items had been entered in the cash book in January but did not appear on the bank statements: (i) Amount paid
A cash book balance at 31 October 2003 was $1600. When the bank statement was received the following were discovered: (i) A cheque for $425 sent to a customer had been entered in the cash book
The bank balance in a cash book at 31 July 2004 was $310 (debit). The following items did not appear in the bank statement at that date: (i) Cheques totalling $1340 which had been paid into the
Y's bank statement showed a credit balance of $2170 at 31 May 2004. An examination of the statement showed the following: (i) A direct debit for $300 had been debited twice in the bank
At 31 March 2004 a cash book showed a balance of $80 at bank. On the same date the bank statement balance. was $650 (credit). When the cash book was compared with the bank statement the following
The following balances were extracted from the trial balance of a business at 31 December 2003.When the bank statement for December was received it was discovered that the following items had not
A bank statement at 31 January 2004 showed a balance of $1000 Dr. The following did not appear on the statement: (i) Cheques not presented for payment, $230 (ii) A cheque for $400 banked on
A bank statement showed an overdraft of $360 at 31 July 2004. The following discoveries were made: (i) Cheques totalling $2100 banked in July had not been credited in the bank
The following information has been obtained from the books of Byit Ltd.Required Prepare the Purchase Ledger Control account for the month of March 2004. At 1 March 2004 Purchase ledger balances
The debit balance on a Sales Ledger Control Account at 30 September 2003 is $104 000. The following errors have been discovered.What is the total of the balances in the sales ledger? A. $100
The following information was taken from Peter's books.Required Prepare the Sales Ledger Control account and the Purchase Ledger Control account for the month of March 2004. 2004 March 1 Sales
Information extracted from the books of Soldit Ltd is as follows.Required Prepare the Sales Ledger Control account for the month of May 2004. At 1 May 2004 Sales ledger balances brought forward
The credit balance on a Purchase Ledger Control account at 31 October is $28 000. The following errors have been found.What is the total of the credit balances in the purchase ledger? A. $26
The following information was extracted from the books of Colombo for the year ended 30 April 2004.Required (a) Prepare the Purchase Ledger Control account for the year ended 30 April 2004. The
The following information is available about a business.Which percentage was used to calculate the Provision for Doubtful Debts at 31 March 2004? A. 6.8 B. 7 C. 9.3 D. 9.5
Saul is a trader and his trial balance at 31 May 2004 was as follows.Further information 1. Stock at 31 May 2004 cost $58 000. 2. Depreciation is to be calculated as follows: freehold
At 31 December 2002 a business had a Provision for Doubtful Debts of $1200. At 31 December 2003 the provision was adjusted to $900. How did this affect the final accounts? A B C D Net profit decrease
Before any end-of-year adjustments had been made, the trial balance of a business at 31 May 2004 included the following.At 31 May 2004 it was found that debtors included a bad debt of $650. It was
At 30 April 2004 the balance in X's cash book was $1740. At the same date the balance on his bank statement was $2240. Comparison of the cash book and bank statement showed the following: (i) A

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