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accounting a level and as level
Accounting A Level And AS Level 1st Edition Harold Randall - Solutions
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 accounts from the information contained in the report. The accountant's report contained 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 decrease increase decrease increase
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 bank overdraft
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 stock Purchases (all on credit) Closing stock Creditors at end of year 6 000 220 000 28 000 21 096
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 times, what was the opening stock? A. $10 000 B. $40 000 C. $50 000 D. $80 000
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 interest Profit after interest Preference dividend Ordinary dividend Retained profit The company's
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 of the shares is $3.60. What is the price earnings ratio? A. 5.29 B. 7.5 C.
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. Debenture holders in company P B. Debenture holders in company Q C. Ordinary shareholders in
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 General Reserve D. Writing off debts before they become bad
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. Preference share dividend
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 of finance should it obtain the necessary funds? A. A rights issue B. An issue of
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 follows.Hamil Ltd did not acquire Abdul's bank account. The consideration for the sale was $120 000 and
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. $119 000 C. $166 000 D. $169 000 Tangible fixed assets Current assets Current liabilities Book
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 $1000. Martine then had the following transactions. 3 Paid rent, $100. 4 Purchased shop fittings,
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 Payable Rent Receivable Bank Bank
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 then had the following business transactions: 2 Purchased premises and paid $8000. 30
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 the return of the equipment? Debit account Bank Bank A B C Purchases Returns D Office
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. Postage and stationery paid by cheque 5. Telephone bill paid by cheque 6. Carriage inwards* paid by
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 account Capital Drawings Bank Bank
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 account Purchases dp Purchases Returns Bank Bank
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 Geraud $200 to Khor. 15 Purchased goods from Lim which cost $2800 before trade discount of 10%. 20
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 $480 C D Discounts Allowed $120 Purchases $600 Purchases $600 Account to be credited Sharon $480 Sharon
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 allowed Fleming 4% cash discount. of 4 Purchased goods from Bond for $2500 less trade discount of
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 Prisca? A. $860 B. $864 C. $900 D. $960
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%, and allowed. I allowed him cash discount of 4%. Station of less trade discou 4 Sold goods to Ebrahim for
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 received from Shirley? A Account to be debited Bank $608 Discounts Allowed $32 B Bank $608 Discounts
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 accounts. March 1 Purchased goods from Tikolo for $10 000 less trade discount of 20%. Tikolo allowed him 5%
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 accounts. April 1 Bought goods from Bilal for $3000 less 20% trade discount. Bilal allowed Adeel 5%
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. $1000
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 Banked cash, $1700. 5 Paid sundry expenses in cash, $25. 6 Drew $800 from bank for the office cash
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 credit. 2. Invoice no. 495 dated 6 March for $675 for goods sold to Wayne. The invoice has been
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 account Credit A B understated $1600 C D understated $2000 understated $1600 understated $2000 Sales
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. Invoice no. 104, for $400, received from Hussain, a supplier, has not been entered in the purchases
Cheung has received a cheque for $1540 from Raju in full settlement of a debt of $1700. How should this be recorded in Cheung's books of account? Debit A Bank B Bank C Bank Discounts Allowed D Bank Zinid noftr$hine Credit 1540 Raju 1700 Raju 1540 Raju 160 2000 Raju Discounts
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 Payable Debtors Stock-in-trade Discounts Allowed Drawings Bank Rent Receivable Creditors Computer Wages Discounts
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 ibugs, sili bas Sales Sales Returns $ th of Japan In 50 000 Purchases Purchases Returns Motor
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 calculate the balance on his Capital account. Sales Sales Returns Purchases Purchases
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 has been debited to the Office Expenses account. (c) A supplier's invoice has been omitted
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 for $1000 credited to Ravin's account in the purchases ledger.C. Payment of $60 to Josan entered
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 the errors so that it balances. Premises Plant and Machinery Office Equipment Wages Rent
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 Account debited Bank $800 Account credited Rent $800
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 little debit C. $160 too little debit and $160 too much credit D. $320 too much credit
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 2003. Required Prepare Corrine's Trading and Profit and Loss Account for the year ended 31 December 2003 in good
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 for the year ended 31 December 2003. Plant and Machinery Office Furniture Stock at 1 January
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 31 March 2004 cost $20 000. Required Prepare Tikolo's Trading and Profit and Loss Account
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 and Purchases Returns Stock at 1 January 2003 1 600 21 000 Stock at 31 December 2003 was $7500. S 48
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 Trading Account. What was the gross profit? A. $30 000 B. $33 000 C. $36 000 D. $37
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 and Loss Account for the year ended 31 March 2004. Account Premises Plant and Machinery Sales Sales
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 debited in the Profit and Loss Account. What has been the effect of these errors? Gross profit A
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 kont Sales Stock Purchases Wages Rent Electricity Carriage Inwards Carriage Outwards Sundry Expenses Plant and
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 had on the Trading and Profit and Loss Account? 2002 62 Gross profit A understated by $900 B
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 been the effect of these errors on net profit? A. Understated by $2500 B Overstated by
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 December 2003 has been extracted from her books.Corrine had unsold stock of $10 000 at 31 December
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 understated D understated Profit understated understated no effect understated Capital no
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 December 2003, rent had been prepaid in the sum of $300. 2. The following amounts were owing 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 2004? A. $6900 B. $7600 C. $7800 D. $9000 Date 1 Feb 2003 1 Apr 2003 1 Jul 2003 1 Oct 2003 1
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 $1800 Year 2 $2000 Year 3 $2400 How much will be debited in the Profit and Loss Account
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 overstated Current assets Current liabilities no effect understated B understated no
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 Motor Vehicles account for each year. (b) Prepare a Balance Sheet extract to show the fixed asset
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 assets when they are worn out C. To show what assets are worth in the Balance Sheet D. To
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 follows: land $20 000; buildings $80 000. 3. Freehold buildings are depreciated at 4% per
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 the Provision for Depreciation of Machinery account for years 1 to 5. (b) Prepare a Balance
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. What was the profit or loss on disposal? A. $3750 loss B. $3750 profit C. $5970
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 received in 2001 and is repayable in 2006. Interest on the loan is at the rate of 10% per
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.Joel depreciates his machinery using the straight-line method and the rate of 10% per
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 disposed of in the year ended 31 March 2003? A. $11 400 B. $16 800 C. $18 400 D.
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. $2000 B. $3000 C. $4000 D. $5000 Fixed assets (at cost) Less accumulated
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 extracted from Saul's books.Required (a) Calculate the total provision for doubtful debts for
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 indicated acceptance of the goods. The goods cost $3000 and the customer has been invoiced for
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. RealisationA. 1 and 3 B. 1 and 4 C. 2 and 3 D. 2 and 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 entered in the cash book.Required Prepare an amended trial balance extract at 30 June 2004 to
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 into the bank $300 (ii) Cheques sent to customers $1045. Required Calculate the cash
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 as $452 (ii) A cheque for $375 sent to a customer had not been presented for payment (iii)
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 bank on 31 July 2004 (ii) Cheques sent to customers in July, totalling
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 statement (ii) A cheque for $1015 sent to a customer had not been presented for payment (iii) A
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 were found: (i) A cheque sent to a supplier for $1000 had not been presented for payment (ii) A
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 been entered in the cash book.Required Prepare the adjusted trial balance to include the items
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 31 January 2004 (iii) Bank charges of $200 had not been entered in the cash book. What
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 statement. (ii) Cheques drawn for $875 in the cash book in July had not been entered on 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 brought forward (credit) (debit) fetara In the month to 31 March 2004 Total of invoices received
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. $100 990 B. $101 590 C. $102 070 D. $103 330 Total of sales journal overstated Discounts
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 Ledger Control account balance med bad 22152 tron Purchase Ledger Control account balance 31 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 (debit) (credit) In the month to 31 May 2004 Total of invoices sent to customers Goods returned by
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. $26 450 B. $26 750. C. $27 050 D. $28 950 Amount transferred from Calif's account in the
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 total of the balances extracted from Colombo's purchase ledger amounts to $101 490, which does not
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 Provision for Doubtful Debts at 1 April 2003 Debtors at 31 March 2004 Bad debt included in debtors at 31
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 property at 4% per annum, straight line; plant and machinery at 15% per annum; motor vehicles at 30% per
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 by $300 decrease by $300 increase by $300 increase by $300 Net debtors decrease by $300 increase by
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 decided to adjust the Provision for Doubtful Debts to 4% of debtors. A debt of $420, which had been
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 dividend, $200, credited to X in the bank statement had not been entered in the cash book (ii)
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