Questions and Answers of Cambridge IGCSE And O Level Accounting Coursebook

At the end of his financial year Kahili wrote off a debt owed by a credit customer. What was the effect of this? Trade Profit for the year Capital Balance at bank Receivables A decreased decreased
a. Complete the following table to state where the items would appear in a purchases ledger control account. For each item name the book of prime entry from which the information would be obtained.b.
A trader provided the following information about his current ratio:Year 11.45 : 1Year 21.75 : 1Year 32.00 : 1What would explain the change in this ratio?A. Decrease in cash at bankB. Decrease in
A trader’s cash book had a credit balance of $480. On the same date, his bank statement showed a credit balance of $389. The difference in the balances was caused by bank charges, $25, which
Rizwan is a trader. His financial year ends on 31 January. He provided the following information on 1 February 20–4:
Goods returned by Zeena, $100, were debited to her account as $1,000. What entries are required to correct this error? Account to be debited Account to be credited A suspense 900 Zeena 900 B suspense
Samira provided the following information at the end of her first year of trading:The account of a customer to whom Samira sold goods on credit, $700, should be written off as an irrecoverable
Gary is both a customer and a supplier to Leroy. On 28 June Leroy’s account in Gary’s purchases ledger had a credit balance of $275, and his account in Gary’s sales ledger had a debit balance
Vijay runs a wholesale furniture business. All goods are sold on credit terms. He provided the following information at the end of his third year of trading:
A sports club provided the following information at the end of its first financial year:
Why may John, a credit supplier, be interested in the financial statements of Paul, a new customer?A. To calculate Paul’s current assets B. To calculate Paul’s trade payables
In addition to purchasing raw materials a manufacturer also purchased a quantity of finished goods. The cost of carriage inwards on the raw materials was incorrectly recorded as carriage inwards on
Rita is a trader. She provided the following information on 31 July 20–2:
Omar maintains a three column cash book. On 1 March 20–4 he had a cash balance of $150 and a bank overdraft of $3,940.Omar’s transactions for March 20–4 included the following:March 8 Withdrew
Darren started a business on 1 February 20–8. He transferred $120,000 from his private bank account to a business bank account. He obtained a long-term loan from his family of $50,000 which was
Uzma’s trial balance drawn up at the end of her financial year did not balance, but she proceeded to prepare draft financial statements. The statement of financial position she prepared is
Violetta is a trader. She maintains a full set of accounting records and prepares monthly control accounts.a. State two advantages to Violetta of preparing a monthly sales ledger control account.b.
Veena’s financial year ends on 30 November. All sales are made on credit terms and the selling price is calculated by marking-up the cost price by 20%.He does not maintain a full set of double
Jamal is a trader. He does not maintain a full set of accounting records. All money received is banked and all payments are made by credit transfer.Jamal provided the following information:
The CK Club was formed some years ago. The club has 200 members and the annual subscription is $120. The financial year ends on 31 December.The treasurer of the CK Club provided the following
Hamid and Waheed are in partnership. Their financial year ends on 31 August. The partnership agreement provides for the following:Interest on capital at 4% per annumInterest on drawings at 3% per
Beth and Zara are in partnership. They provide office services to local businesses. Their financial year ends on 31 August. They share profits and losses in the ratio of 3:2 respectively.The
Pierre is a furniture manufacturer. His financial year ends on 31 March. He provided the following information:Additional information:1. At 31 March 20–6 wages of factory operatives accrued
The financial year of LS Limited ends on 30 June. The income statement for the year ended 30 June 20–3 showed a profit for the year of $7,300.a. Complete the following partially prepared statement
DC Limited was formed some years ago. The financial year ends on 30 April. The following information is available:
Marcus is a trader selling and buying on both cash and credit terms. He provided the following information on 28 February 20–9:
The financial year of YZ Limited ends on 30 November. The capital consists of ordinary shares of $1 each. No additional shares were issued during the year ended 30 November 20–7. The company has no
‘Profit is regarded as being earned when the legal title of the goods or services passes from the seller to the buyer.’ Which accounting principle does this statement describe?A. Going concernB.
Wendy maintains a provision for doubtful debts. Which statements are correct?1. It is an application of the matching principle.2. It is an application of the prudence principle.3. It is an estimate
Which accounting objective requires that the information in financial statements is free from bias and free from significant errors?A. ComparabilityB. RelevanceC. ReliabilityD. Understandability
Abi maintains a provision for doubtful debts at 2% of trade receivables. On 1 January 20–5. the provision for doubtful debts was $426. The trade receivables on 31 December 20–4 amounted to
A trader paid operating expenses during his financial year. There was the amount accrued at the start of the year and a prepayment at the end of the year.What is the formula for calculating the
K Dhoni is a business consultant.The following trial balance is provided at 30 September 20–1:The following additional information is supplied:1. At 30 September 20–1 – rent received in advance
Why should non-current assets be depreciated?A. To apply the money measurement principleB. To charge the cost of using them against incomeC. To ensure money will be available to replace themD. To
Harry is a trader selling goods on credit. His financial year ends on 31 December. The balances on his books on 1 January 20–3 included the following:
Dogma’s credit customer, Sophie, paid her account on 20 May by cheque. On 28 May Dogma was notified that the bank had dishonoured this cheque.What entries would Dogma make on 28 May? Account to be
Lakshmi runs a secretarial agency. The following trial balance was prepared on 31 January 20–1:Additional information:1. At 31 January 20–1:• Commission receivable outstanding amounted to
Anais owns a general store. She makes payments of both capital and revenue items and has both capital and revenue receipts.a. Complete the following table by placing a tick (✓) to indicate how each
Nazeer is a trader. He provided the following information about his inventory at 30 November 20–8:Nazeer had to pay carriage inwards on inventory code number BD20 at the rate of $5 per 100 units
Karima’s financial year ends on 31 December.She maintains one combined account for rates and insurance.On 1 January 20–4 she owed $560 for 4 months’ rates and had paid 6 months’ insurance,
Tanvir is a trader. His financial year ends on 31 December.Tanvir purchases all of his office stationery from Tabitha. He provided the following information for the year ended 31 December 20–8:a.
Chibuzo’s financial year ends on 31 December. He depreciates his motor vehicles at 20% per annum on the cost of motor vehicles held at the end of each financial year.Chibuzo provided the following
Nadia’s financial year ends on 31 August. She depreciates her office fixtures by 25% per annum on cost. Depreciation is calculated from the date of purchase. No depreciation is charged in the year
Charlotte maintains a provision for doubtful debts at 2 1/2% of her trade receivables at the end of each financial year.a. Explain the meaning of each of the following terms:i. Irrecoverable debtii.
Sharif is a trader. He maintains a full set of accountings records. His financial year ends on 30 April.The balances on his ledger accounts on 30 April 20–7 included the following:
Pradeep is a trader. He provided the following information:
The treasurer of the YY Club provided the following information:Prepare a receipts and payments account for the year ended 30 April 20–8 showing the amount paid for running expenses during the
A sports club was formed on 1 January 20–4. During the year ended 31 December 20–4 the club purchased sports equipment by cheque.In which of the financial statement would this be included?
Priti is a trader. Her financial year ends on 31 March. Her trial balance on 31 March 20–4 was as follows:Additional information:1. At 31 March 20–4:Inventory was valued at $41,050.Commission
Which statement is correct about a bank reconciliation statement?A. It contains bank charges and standing orders.B. It is part of the double entry book-keeping records.C. It is prepared by the
A bank reconciliation statement was prepared starting with the balance at bank shown on the bank statement. Which item would be deducted?A. Bank error resulting in the account being incorrectly
The bank column of a trader’s cash book showed a debit balance of $952. This did not agree with the balance on the bank statement on the same date. The following differences were found:
The cash book (bank columns) of Ella for the month of May 20–7 were as follows:Ella’s bank statement for May 20–7 showed the following:The following errors were discovered:1. Ella had overcast
Yatish is a trader. He compared his cash book with his bank statement on 30 June. The cash book showed an overdrawn balance of $2,356.The following differences between the cash book and the bank
Shayni’s financial year ends on 31 May. She maintains a provision for doubtful debts at 4% of the trade receivables at the end of each financial year. On 1 June 20–2 Shayni’s provision was
Shaheel’s financial year ends on 31 March. On 1 April 20–7 he purchased furniture costing $4,400 for use in the office. He decided to depreciate the furniture using the reducing balance method at
Jenny owns a retail store. Her financial year ends on 31 July. On 31 July 20–1:Jenny purchased stationery, $112, on credit from AB SuppliesJenny took goods, costing $130, for personal useJenny
Lindelwa discovered that goods sold on credit to Zack, $260, had been incorrectly credited to Zachary’s account.Which journal entry corrects this error? Debit Credit A 520 Suspense Zachary 260 Zack
At the end of his financial year on 31 July 20–4, Silas opened a suspense account with a credit balance of $70.a. Suggest one reason why this account was required.After preparing draft financial
Alberto is a clothing wholesaler. His draft profit for the year ended 30 September 20–3 was $24,920. He then discovered the following errors:1. One page of the sales journal had been overcast by
What is the purpose of preparing a sales ledger control account?A. To calculate the total credit sales for the periodB. To calculate the total sales for the periodC. To check the arithmetical
What may appear on the debit side of a purchases ledger control account?A. Credit purchasesB. Discount allowedC. Payments to credit suppliersD. Returns by credit customers
Shilpa’s sales ledger control account had an opening credit balance. What does this mean?A. Total amount owing by credit customersB. Goods returned by credit customersC. Interest charged on credit
Hamir is a trader who maintains full set of accounting records. He divides his ledger into three sections – nominal (general), sales and purchases.a. State one advantage of dividing the ledger into
Eva is a trader who maintains a full set of accounting records and prepares control accounts at the end of each month. She provided the following information:a. Select the relevant figures and
Halina’s capital on 1 January 20–7 was $25,900. On 31 December 20–7 her capital was $27,600. During the year she had invested a further $5,000 and had withdrawn goods costing $900 for personal
Leroy is a trader. He does not maintain a full set of accounting records, but was able to provide the following information on 1 June 20–8:
Sally’s financial year ends on 31 October. On 1 November 20–4 her trade receivables owed $5,840. During the year ended 31 October 20–5 she received $66,640 from trade receivables, after
Mohan is a sole trader who does not maintain a full set of accounting records. He was able to provide the following information:Fixtures should be depreciated by 10% per annum on the cost of fixtures
Aisha applies a mark-up of 25% to obtain the selling price of her goods. She provided the following information:
A club provided the following information:
The WS Music Club was formed on 1 June 20–8. The following information was provided for the year ended 31 May 20–9:Additional information:1. The club has 240 members. The annual subscription is
In addition to providing sports facilities for members, the HJ Club also has a shop selling sports clothing to members and guests. All purchases are made on credit terms and all sales are made for
On 1 January 20–4 the accumulated fund of a club amounted to $14,240. The only item of income during the year was subscriptions of $9,500. The expenses for the year included running costs of $9,360
Cindy is a sole trader. She is considering forming a partnership with Lora. What is a disadvantage of being a partner?A. Additional capital is available B. Additional skills are
Which items may appear as deductions from the profit for the year in the appropriation account of a partnership? Drawings Interest on capital Interest on loan Partner's salary A B D
Hao and Quan are partners. Hao’s capital is $100,000 and Quan’s is $50,000. The partnership agreement provides for interest on capital at 3% per annum and an annual salary for Quan of $6,000.
Diksha and Padmaja are in partnership. Their financial year ends on 31 July.Their partnership agreement provides for:• Interest on capital at 4% per annum• An annual salary of $4,000 for
Beth and Kate are in partnership. Their financial year ends on 31 December. On 1 January 20–5 their capitals were: Beth $90,000 and Kate $70,000. The uncompleted current accounts for the year ended
Manu and Zahur are in partnership. The total capital of the business is $600,000, which was contributed by Manu and Zahur in the ratio of 2:1. Profits and losses are shared in the same ratio.
How is cost of production calculated?A. Prime cost + factory overheads + increase in work in progressB. Prime cost + factory overheads – increase in work in progressC. Prime cost – factory
What may be included in prime cost?1. Salary of factory manager2. Salary of supervisor of production workers3. Wages of machine maintenance workers4. Wages of production workersA. 1, 2 and 3 B.
A manufacturer provided the following information:
The financial year of Leeford Manufacturers Ltd ends on 30 September. They supplied the following information:a. Select the relevant figures and prepare the manufacturing account of Leeford
a. Explain the difference between:i. Direct costs and indirect costsii. Prime cost and cost of production.b. Explain the meaning of the term ‘work in progress’.c. Explain why a manufacturer may
Farouk started a manufacturing business on 1 April 20–5. He provided the following information:Additional information:1. The rent and rates and the general expenses are to be apportioned 2/3 to the
Which statement about debentures is correct?A. Debentures carry a fixed rate of dividend.B. Debentures carry a fixed rate of interest.C. Debentures are part of the equity of a limited company.D.
XZ Limited was formed on 1 August 20–1. Which items may appear in the statement of changes in equity for the year ended 31 July 20–2? Debenture Transfer to Ordinary share dividend paid Ordinary
a. Explain the difference between the following:i. Called-up share capital and paid-up share capitalii. Preference shares and ordinary sharesiii. Ordinary share dividend paid relating to the current
Which items are included in the equity section of the statement of financial position of a limited company?1. Bank overdraft2. Debentures3. General reserve4. Ordinary sharesA. 1 and
Tiwari & Company Ltd have issued 100,000 5% redeemable preference shares of $1 each and 600,000 ordinary shares of $0.50 each. All the shares are fully paid.Tiwari and Company Ltd provided the
AK Limited provided the following information:On 30 April 20–5 the directors decided to:• Transfer 17,500 to general reserve• Proposed an final ordinary share dividend of 3%.Additional
On 4 February Ann purchased goods, list price $5,200, on credit from Maria. The terms of trade were: 20% trade discount on orders over $5,000. 2 1/2% cash discount if account paid by the
Ava maintains a full set of books of prime entry.a. State one advantage of maintaining purchases and sales journals.b. Complete the following table to name the business documents which Ava will use
Thembi is a trader. She maintains a full set of accounting records and posts the totals of the sales, purchases and returns journals to the ledger each month.On 1 March 20–1 the balances in her
Certain items are missing from the following business document:a. Insert the missing words or figures in i to iv on the document.b. Name the person who issued the credit note.c. Suggest one reason
Kate sells goods on credit to Kylie. Kate does not allow cash discount. On 1 May Kylie Kate $350.The following documents were exchanged in May:
Zodwa sold goods on credit to Elspeth.Which document did Elspeth issue when she returned these goods?A. Credit note B. Debit note C. Invoice D. Statement
There are some figures missing from the following document which Dinesh received:a. Name this document.b. Suggest one reason for the issue of the document.c. State the amount owing by Dinesh on 31
Bill is a credit customer of Rick. The following documents were exchanged in June. Complete the following table to name the person who issued each document and the entries (if any) made in the books

Showing 1 - 100 of 183