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1) Kevin operates his petty cash with an imprest of $120. At the end of one particular
week he had vouchers in the petty cash tin of $17.45, $32.16 and $21.94.
In order to restore the petty cash balance what transaction should Kevin make?
Dr Bank $48.45 Cr Petty cash $48.45

Dr Bank $71.55 Cr Petty cash $71.55

Dr Petty cash $71.55 Cr Bank $71.55

Dr Petty cash $48.45 Cr Bank $48.45

2) The following statements relate to the trade payables control account:

(1) It is used to record transactions with credit customers

(2) Amounts posted to it are not part of the double entry system of accounting
Which of the above statements are correct?
Statement 1 only

Neither statement

Both statements

Statement 2 only

3) Simon was owed $496.70 from Trevor. He subsequently found out that
Trevor had gone bankrupt and could not pay. He therefore wanted to write off
Trevor's debt.
What would be the correct double entry to write off Trevor's debt?
Dr Irrecoverable debts $496.70 Cr Receivables $496.70

Dr Receivables $496.70 Cr Sales $496.70

Dr Receivables $496.70 Cr Irrecoverable debts $496.70

Dr Sales $496.70 Cr Receivables $496.70

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4) The trade receivables control account has a balance of $4,214. The total on
the list of individual customer balances is $4,890.
Which of the following would explain the difference?
A customer owing $676 has been omitted from the list of customer balances

The sales day book is understated by $676

A contra with the payables ledger for $676 has been accounted for in the list of customer
balances but not accounted for in the control account
An irrecoverable debt of $676 has been written off a customer's individual account but has
not yet been written off the control account
5) Dorien owns a shop and rents out the flat above the shop.
What is the correct double entry to account for the rent she receives?
Dr Sales Cr Cash

Dr Cash Cr Rental income

Dr Rental income Cr Cash

Dr Cash Cr Sales

6) Brian issues a document to a customer indicating that the amount owed is

being reduced for sales returns.
What is this document?
Debit note

Credit note

Delivery note

Advice note
7) Desmond is performing a control account reconciliation between the trade
payables control account and the list of suppliers' balances. He finds that a
purchase day book total has been understated by $3,000.
Where will the error need to be corrected to ensure the two balances
reconcile?
List of suppliers' balances only

Both the control account and the list of suppliers' balance

Control account only

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Neither the control account nor the list of suppliers' balances

8) The balance on the trade payables control account should be equal to

which other figure in the accounting system?
The total of the balances on the individual suppliers' accounts

The balance on the trade receivables control account reconciled for items in transit

The balance on the trade receivables control account

The total of the balances on the individual customers' accounts

9) Which of the following accounts would show a credit balance?

Account 1: Total Dr $400 Total Cr $200
Account 2: Total Dr $200 Total Cr $100
Account 3: Total Dr $300 Total Cr $300
Account 4: Total Dr $200 Total Cr $300
Account 4 only

Accounts 3 and 4

Accounts 1 and 2

Accounts 2 and 3
10) Which of the following should be reported in the statement of profit
or loss?
Receivables

Revenue

Non-current assets

Payables
11) Warren is a window cleaner. He cleaned Millie's windows and she paid
him $10 in cash.
What kind of transaction is this?
Purchase of a service by Millie

Purchase of goods by Warren

Sale of a service by Millie

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Sale of goods by Warren

12) Which of the following would be classified as revenue expenditure?
(1) Rental income
(2) Purchase of machine
(3) Purchase of goods for resale
(4) Employees' wages
1 and 3

3 and 4

2 and 4

1 and 2
13) In error Tarik posted goods he purchased for his own use into the
business purchases account.
Which of the following journals will correct this error?
Dr Purchases Cr Drawings

Dr Sales Cr Drawings

Dr Drawings Cr Purchases

Dr Drawings Cr Sales

14) Arthur sold goods to Meabh for $5,400. He subsequently realised he has
overcharged Meabh by $200.
Which of the following documents would Arthur issue to correct this
overcharge?
Debit note

Credit note

Invoice

Remittance advice
15) When the trial balance was prepared the following two ledger accounts
were omitted and a suspense account had to be created to make it balance:

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Discounts allowed 5,780

Discounts received 4,920
What was the balance on the suspense account?
$860 Cr

$860 Dr

$10,700 Dr

$10,700 Cr
16) What is the correct double entry to write off an irrecoverable
receivables balance?
Dr Trade payables Cr Irrecoverable debt expense

Dr Trade receivables Cr Irrecoverable debt expense

Dr Irrecoverable debt expense Cr Trade receivables

Dr Irrecoverable debt expense Cr Trade payables

17) Fatima has made an error in posting a sales return from the sales returns
day book to the general ledger.
Which book of prime entry should be used to record the correction of
the error?
Sales return day book

Journal

General ledger

Sales day book

18) The following extract of account codes is taken from a business's
accounting manual:

Current assets (account numbers 20000 to 25999)

Bank 20000
Cash 21000
Petty cash 22000
Trade receivables 23000

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Other receivables 24000

Inventory 25000

Current liabilities (account numbers 40000 to 44999)

Trade payables 40000
Other payables 42000
Bank overdraft 44000
Which of the following would be an appropriate account code for
Parkers, a credit customer?
25545

23274

44564

40402
19) Cash sales of $15,800 have been correctly entered in the cash account
but entered as $18,500 in the sales account.
What is the double entry to correct this transaction?
Dr Sales $2,700 Cr Cash $2,700

Dr Suspense account $2,700 Cr Sales $2,700

Dr Sales $2,700 Cr Suspense account $2,700

Dr Cash $2,700 Cr Sales $2,700

20) Which of the following entries correctly records a purchase of

materials on credit?
Dr Materials Cr Cash book payments

Dr Purchase day book Cr Materials

Dr Materials Cr Purchase day book

Dr Cash book payments Cr Materials

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21) At the start of the year Bharvinder had an interest free loan of $20,000.
During the year he repaid $10,000.
Which parts of the accounting equation will change as a result of the
loan repayment?
Liabilities and profit

Assets and liabilities

Capital and liabilities

Capital and assets

22) Alvin received a supplier statement from Darcy showing Alvin owed Darcy
$21,980. Alvin's records showed he only owed Darcy $20,140.
Which of the following could be responsible for the discrepancy?
Darcy has performed a contra against a balance she owes to Alvin

Alvin has made a payment not yet received by Darcy

Darcy has already recorded a settlement discount relating to an invoice Alvin has not yet
paid
Darcy has issued a credit note to Alvin which he has not yet received
23) In Khalid's cash payments book for the month of May the trade payables
column totalled $7,400.
What does this amount represent?
The amount owed to Khalid's suppliers at the end of May

The amount paid to Khalid's suppliers during May

The discounts received from Khalid's suppliers in May

The amount invoiced by Khalid's suppliers in May

24) Which of the following would appear on a supplier's statement?
(1) Invoices issued during the period
(2) Trade discounts given during the period
(3) Credit notes issued during the period
(4) Payments made during the period
1, 3 and 4 only

1, 2, 3 and 4

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2 and 3 only

1 and 4 only
25) Which of the following correctly represents the accounting
equation?
Capital $49,000 Assets $22,000 Liabilities $27,000

Capital $22,000 Assets $27,000 Liabilities $49,000

Capital $49,000 Assets $27,000 Liabilities $22,000

Capital $27,000 Assets $49,000 Liabilities $22,000

26) The total of the discounts column in the cash received book is $140.
How should this be posted in the ledger?
Cr Discounts received $140

Cr Discounts allowed $140

Dr Discounts received $140

Dr Discounts allowed $140

27) The trade receivables control account shows a balance of $42,500 but the
list of customer balances shows a total of $45,200.
Which of the following could explain the difference?
A credit note of $2,700 has been correctly treated in the customer's individual account but
not entered into the control account
The trade receivables column of the cash receipts book is overstated by $2,700

The sales day book is overcast by $2,700

A customer balance of $2,700 has been omitted from the list of balances
28) Esther received $4,418 from a customer to whom she had sold goods on
credit for $3,760 plus sales tax of $658.
What is the double entry for this receipt in the accounts of Esther?
Dr Accounts receivable $4,418 Cr Cash $4,418

Dr Cash $3,760 Cr Sales $3,760

Dr Sales $3,760 Cr Cash $3,760

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Dr Cash $4,418 Cr Accounts receivable $4,418

29) Which of the following are valid reasons for preparing an aged
receivables analysis?
(1) It is part of the double entry system
(2) To identify receivables which need to be followed up to ensure payment
(3) To help calculate allowances for irrecoverable debts
(4) To ensure the trial balance balances
2 and 3

1 and 4

1 and 3

2 and 4
30) The following is an extract from a ledger account:

Cash
$ $
9 Oct Cash 1,270 26 Oct Cash 587
19 Oct Cash 1,959
30 Oct Cash 1,035
What is the closing balance on this account?
Credit balance of $3,677

Debit balance of $3,677

Credit balance of $4,264

Debit balance of $4,264

31) Joanna makes regular payments to a specific charity. The cash goes
straight from her account and the charity cannot amend the amount paid.
What method of payment is Joanna using?
Standing order

Petty cash payment

BACS payment

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Direct debit
32) When performing a bank reconciliation which of the following would
require adjustments to the cash book balance?
(1) Unpresented cheques
(2) Bank charges not yet accounted for
(3) Outstanding lodgements
(4) Standing order payments not accounted for
2 and 3

1 and 4

1 and 3

2 and 4
33) Which of the following checks should the petty cashier make prior to
paying out petty cash?
(1) That the claim is supported by appropriate documentation
(2) That the claim has been authorised by an appropriate signature
(3) The credit rating of the business receiving the payment
(4) That the amount is within the petty cash limit
1 and 2 only

3 and 4

2 and 3

1, 2 and 4
34) The bank statement of Hugo showed a debit balance of $12,800. The
bank reconciliation showed there were outstanding lodgements of $3,400 and
unpresented cheques of $4,700.
What is the correct amount of cash that should be recorded in Hugo's
accounts?
$11,500 Dr

$14,100 Cr

$14,100 Dr

$11,500 Cr

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35) Manfred runs his own business and operates an imprest system of petty
cash maintaining a float of $200. At the end of November there is cash of
$37.20 and vouchers of $162.80.
How much will Manfred need to pay into petty cash to maintain the
float?
$37.20

$162.80

$125.60

$200
36) The following is extracted from the trial balance at the year end:

$
Capital 9,000
Sales 32,000
Purchases 26,000
Trade receivables 23,000
Inventory 14,000
Trade payables 12,000
Bank overdraft ?
What is the figure for the bank overdraft?
$10,000

$28,000

$22,000

$12,000
37) Eddy has purchased a van paying by cheque. Eddy uses account codes
in his ledgers. His account codes include:

Bank 2150
Motor Vehicles 4270
Purchases 3820

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Which of the following is the correct double entry to record the

transaction to the correct accounts?
Dr 4270 Cr 2150

Dr 2150 Cr 4270

Dr 3820 Cr 2150

Dr 2150 Cr 3820

38) A transaction has been recorded in the ledger of Samir as follows:

$ $
Equipment
19 Oct Bank 16,800

Bank
19 Oct Equipment 16,800
What was the transaction?
Banking of the proceeds from the sale of equipment

Receipt of a bank loan to purchase equipment

Purchase of equipment on credit

Purchase of equipment paid for by cheque

39) The following information for wages and salaries has been taken from the
accounts of Roman:

$
Wages and salaries (gross) 65,708
Income tax 15,770
Employer's pension contributions 5,257
Employee's pension contributions 3,942

There are no statutory or non-statutory deductions other than the above.

What is the Roman's total wages and salaries expense?
$74,907

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$90,677

$65,708

$70,965
40) Jan is employed at an annual salary of $18,720. She is contracted to work
30 hours per week. If overtime has to be worked the first seven hours of
overtime in any week are not paid for. Any overtime in excess of seven hours
in a week is paid for at double time.

During one week Jan worked 12 hours of overtime.

What will be Jan's overtime pay for the week?
$480

$120

$288

$60
41) Jasminder had correctly recorded a wages and salaries expense of
$32,000 in her accounts. She only has two employees who each earn a gross
salary of $14,000 per annum.
Which of the following could explain the difference between the gross
salaries and total wages and salaries in the accounts?
Pension contributions paid by Jasminder on behalf of her employees

Employee pension contributions

Employee income tax payments

Jasminder's drawings
42) Velma sent an invoice to Marion for goods purchased. Velma
subsequently issued a debit note to Marion.
Which of the following would explain the issue of the debit note?
Packing and posting costs payable by the customer were omitted from the invoice

Marion has refused some of the goods as they were faulty

The invoice should have been sent to a customer called Maureen not Marion

The invoice was incorrectly totalled and overstated by $500

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43) Bob bought $2,000 of goods from Harvey on 1 November 20X7. He

agreed to pay Harvey on 31 January 20X8.
What kind of transaction is this from Harvey's point of view?
Credit purchase

Credit sale

Cash purchase

Cash sale
44) Which of the following items would appear on opposite sides of the
trial balance?
Motor vehicles and inventory

Sales and capital

Trade payables and expenses

Trade receivables and purchases

45) Alfredo runs his own business maintaining receivables and payables
control accounts as part of his accounting system.
When preparing the trial balance which one of the following errors
would require the creation of a suspense account?
$250 of motor vehicle repairs is posted to the motor vehicles account

The purchase day book is overstated by $420

A bank overdraft of $880 is recorded as a positive cash balance

Alfredo's drawings of $320 have been recorded as wages and salaries

46) Jenny has trade receivables of $92,320 at the start of November. During
November she had the following transactions:

$
Cash sales 15,200
Cash receipts from customers 46,420
Credit sales 38,170
Irrecoverable debts written off 2,600
What is the balance on Jenny's trade receivables at the end of
November?

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$96,760

$81,470

$97,970

$66,270
47) Xena buys goods from Alex for $20,800 on credit. She subsequently
returns goods worth $3,100 and pays him $9,200.
In Xena's ledger what is the balance with Alex as a result of these
transactions?
$26,900 Dr

$8,500 Dr

$8,500 Cr

$26,900 Cr
48) Rodger is registered for sales tax which is charged at 17.5%. A customer
is invoiced for goods with a list price of $240,000. The customer is given a
trade discount of 25% and a settlement discount of 5% is given if the invoice
is paid within 21 days.
How much sales tax should be included on the invoice?
$31,500

$29,925

$39,900

$42,000
49) What is the purpose of a journal?
To record all individual transactions entered into the sales day book

To record unusual movements between accounts

To record the purpose of all transactions made in the accounts

To record when all transactions were made between accounts

50) Which of the following are valid reasons for having a formal
document retention policy?

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(1) To help minimise costs associated with maintaining business records

(2) To ensure that all business records are kept for the maximum time possible
(3) To help locate business records
(4) To ensure the trial balance balances
2 and 3

2 and 4

1 and 4

1 and 3

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