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1 Which statements about book-keeping and accounting are correct?
1 Accounting is performed periodically rather than daily.

2 Accounting relies on having accurate book-keeping records.
3 Book-keeping includes the preparation of financial statements.
4 Book-keeping involves the recording of financial transactions.
A 1, 2 and 4 B 1 and 3 C 2, 3 and 4 D 2 and 4 only
2 What increases owner’s capital?
A bank loan extended from five to ten years

B purchase of inventory on credit
C purchase of machinery by cheque
D transfer of vehicle to business from private use
3 William paid $500 in cash to Sonia for rent.
How did Sonia record this?
account debited account credited
A cash rent receivable

B rent receivable cash
C rent receivable William
D William rent receivable
4 Abdul buys all his machinery on credit. He provided the following information.
at 30 April 2020 at 30 April 2021

$ $
machinery at cost 30 000 42 000

amounts owing to suppliers of machinery 19 000 ?
During the year Abdul paid $25 000 to the suppliers of his machinery.
How much did he owe them on 30 April 2021?
A $6000 B $13 000 C $17 000 D $32 000
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5 Shula’s financial year ends on 31 March. On 1 April 2021 there was a credit balance of $100 on
Yasmin’s account in Shula’s purchases ledger.
What does this mean?
A Shula had paid $100 to Yasmin.

B Shula owed $100 to Yasmin.
C Yasmin had paid $100 to Shula.
D Yasmin owed $100 to Shula.
6 Hasina buys radios from Nazneen at a list price of $10 each. Hasina bought 12 radios and was
offered 20% trade discount and 4% cash discount. Two radios were faulty and were returned to
Nazneen.
What was the total of the credit note issued by Nazneen?
A $15.36 B $16.00 C $19.20 D $20.00
7 Jameel sold goods on credit.
Where did he first record the invoice he issued?
A general journal
B general ledger
C sales journal
D sales ledger
8 Which statements about a three-column cash book are correct?
1 It contains ledger accounts for bank and cash.

2 It contains ledger accounts for discounts allowed and received.
3 It records transactions before they are recorded in the ledgers.
A 1 and 2 B 1 and 3 C 2 and 3 D 3 only
9 Which statement is not true about a trial balance?
A It is a list of ledger account balances at a certain date.

B It can assist in finding arithmetical errors.
C It is part of the double entry system.
D It is useful in preparing financial statements.
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10 Which error is an error of original entry?
A sale of surplus office equipment on credit to Janet for $230 entered as $320 in both the
disposal account and Janet’s account
B sale of surplus office equipment on credit to Janet for $230 entered in the office equipment
account and Jason’s account
C sale of surplus office equipment on credit to Janet for $230 entered in the sales account and
Janet’s account
D sale of surplus office equipment on credit to Janet for $230 not entered in any accounts
11 A cheque, $85, received from Shakeel, was credited to the account of Shamz.
Which journal entry corrects this error?
debit credit
$ $
A bank 85
Shakeel 85
B Shakeel 85
Shamz 85
C Shamz 85
bank 85
D Shamz 85
Shakeel 85
12 Jamal’s bank statement at 1 May 2021 showed a bank overdraft of $1460.
At that date there were unpresented cheques of $385 and uncredited deposits of $255.
What was the cash book balance on 1 May 2021?
A $1330 credit
B $1330 debit
C $1590 credit
D $1590 debit
13 What is included in a purchases ledger control account?
A cash purchases
B debts written off as irrecoverable
C discount allowed
D goods returned to credit suppliers
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14 Javid’s sales ledger control account had a debit balance of $12 000. Interest on an overdue
account, $40, and discount allowed, $150, had been omitted.
What was the correct balance on the sales ledger control account?
A $11 810 B $11 890 C $12 110 D $12 190
15 Which statements about capital expenditure are correct?
1 It is money spent on day-to-day business operations.

2 It is money spent on purchasing non-current assets.
3 It is recorded in the statement of financial position.
4 It includes expenses relating to non-current assets.
A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4
16 Nia sold equipment with a net book value of $200. The proceeds of the sale, $250, were credited
to the sales account and debited in the cash book.
What was the effect of this error on Nia’s gross profit and profit for the year?
gross profit $ profit for the year $
A overstated 50 overstated 50
B overstated 200 understated 250
C overstated 250 overstated 200
D understated 250 understated 200
17 Why does a business provide for depreciation on non-current assets?
A to charge the cost of non-current assets against profit in the year of purchase
B to ensure that non-current assets appear at book value in the statement of financial position
C to ensure that the matching principle is applied when preparing financial statements
D to retain cash in the business for replacement of non-current assets
18 A machine with an original cost of $10 000 had been depreciated for two years at the rate of 10%
per annum using the straight-line basis. It was then sold for cash with the loss on disposal
amounting to $700.
A replacement machine was bought on the same day for $12 400 cash.
What was the net decrease in the cash balance?
A $3700 B $5100 C $11 700 D $13 100

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19 Why would a bakery business not include a value for inventory of stationery in the statement of
financial position?
A It was expected it would be used in the next few months.

B It was purchased regularly and paid for in cash.
C It was not for resale.
D It was of very low value.
20 Shilpa’s financial year ends on 30 April. On 31 March 2021 she wrote off a debt owed by Tahir as
irrecoverable.
Which entry did Shilpa make on 31 March 2021?
debit credit
A income statement Tahir

B irrecoverable debts income statement
C irrecoverable debts Tahir
D Tahir irrecoverable debts
21 How should inventory be valued?
A cost
B higher of cost and net realisable value
C lower of cost and net realisable value
D net realisable value
22 James is an accountant and operates as a sole trader.
Which items would not appear in his statement of financial position?
1 long-term loan
2 retained earnings
3 trade payables
A 1 and 2 B 1 and 3 C 2 only D 2 and 3
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23 Zaha is a consultant who receives fees from clients.
How would Zaha calculate his profit for the year?
A fees received – cost of sales
B fees received – cost of sales + expenses

C fees received + expenses
D fees received – expenses
24 What is added to owner’s capital to calculate capital employed?
A current assets
B current liabilities
C non-current assets
D non-current liabilities
25 What is an advantage of forming a partnership?
A Decisions have to be recognised by all partners.

B Each partner is responsible for actions of other partners.
C Profits have to be shared among the partners.
D Responsibilities can be shared between the partners.
26 Ann and Ben are in partnership sharing profits and losses equally.
They provided the following information for the year ended 30 April 2021.
profit for the year 20 000

interest on capital: Ann 5 000
Ben 4 000
drawings: Ann 8 000
Ben 7 000
What was Ben’s share of the residual profit?
A $5500 B $10 000 C $13 000 D $14 500

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27 Which statement about a receipts and payments account is incorrect?
A It includes amounts prepaid at the end of the year.

B It shows the surplus for the year.
C Non-monetary items are excluded.
D The balance represents cash and bank balances.
28 How does a manufacturer calculate prime cost?
A direct material + direct labour

B direct material + direct labour + direct expenses
C direct material + direct labour + direct expenses + factory overheads
D direct material + direct labour + factory overheads
29 Nula provided the following information for the year ended 31 March 2021.
drawings for the year 3 900

net assets at 1 April 2020 60 500
net assets at 31 March 2021 72 275
What was the profit or loss for the year ended 31 March 2021?
A $7875 loss
B $7875 profit
C $15 675 loss
D $15 675 profit
30 A trader provided the following information.
cost of sales 80 000

expenses 4 000
What was the profit margin?
A 16% B 20% C 21.05% D 26.67%
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$ $
revenue 3600
opening inventory 100
purchases 2600
2700
closing inventory 300 2400
gross profit 1200
It was found that the closing inventory should have been $400.
What was the correct rate of inventory turnover?
A 6 times
B 8 times
C 9.2 times
D 14.4 times
32 Sally’s business has reached the overdraft limit set by the bank of $1500 and is not able to pay its
debts when they fall due.
Sally is considering the following proposals.
1 asking the bank to increase the bank overdraft limit to $2000

2 borrowing $2000 from a relative and paying the money back in six months
3 obtaining a loan from the bank of $2000 repayable in two years
4 paying $2000 from Sally’s personal bank account into the business bank account
Which proposals will improve the working capital of the business?

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33 Company X and Company Y provided the following information.
Company X Company Y
gross margin 36.7% 42.6%

profit margin 5.4% 5.4%
Which statement is correct?
A Both companies earned the same amount of profit for the year.
B Company X had a better gross margin than Company Y.
C Company Y had a larger proportion of expenses than Company X.
D The cost of sales of Company X was lower than that of Company Y.
34 The current ratio of X is 2 : 1. The current ratio of Y is 1.3 : 1.
What does a comparison of these ratios show?
A X has fewer liabilities than Y.

B X has more liquidity than Y.
C Y has fewer current assets than X.
D Y has more inventory than X.
35 Which international accounting objectives are described by the following statements?
1 Information in financial statements must be free from material error and bias.
2 Users must be able to identify differences and similarities between information in
different financial statements.
statement 1 statement 2
A comparability understandability
B reliability comparability
C reliability understandability
D understandability reliability
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1 Why does a trader calculate the profit of his business?
A to calculate the interest payable on a loan

B to calculate the provision for doubtful debts
C to know the total expenses of the business
D to know whether drawings are at a reasonable level
2 Hassan is a trader. During the financial year he took goods from the business for his own use.
How should he record this?
debit credit
A drawings inventory
B drawings purchases
C income statement inventory
D income statement purchases
3 Where are the accounts of credit suppliers maintained?
A purchases journal
B purchases ledger
C sales journal
D sales ledger
4 Which document does a trader issue to remind a credit customer that payment is due?
A credit note
B debit note
C receipt
D statement of account
5 What is a cheque counterfoil used for?
A to pay a cheque into the bank account

B to pay for goods purchased by cheque
C to record a cheque payment in the cash book
D to record a cheque received in the cash book
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6 Farouk sells goods on credit. A cheque from Khalid, a credit customer, was dishonoured by the
bank.
How should Farouk record this?
account to be debited account to be credited
A bank Khalid
B irrecoverable debts Khalid
C Khalid bank
D Khalid irrecoverable debts
7 Tumelo sells on credit. The terms of trade are listed.
list price: $200 per unit

credit period: 60 days
trade discount 15% if 10 units or more are purchased
cash discount 3% if the debt is paid within one month
A credit customer purchased 20 units and paid the debt within 15 days.
What was the total of the invoice?
A $3298 B $3400 C $3880 D $4000
8 Jane purchased goods and paid by credit transfer.
How should this be recorded in Jane’s accounting records?
account to account to
be debited be credited
A bank purchases
B purchases bank
C purchases trade payable
D trade payable purchases
9 What is shown in a trial balance?
A capital and profit on a particular date

B financial transactions for a particular period
C ledger balances on a particular date
D receipts and payments for a particular period
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10 At the end of each year, PT Limited transfers 20% of the profit for the year to the general reserve.
Draft financial statements were prepared for the year ended 30 September 2021. It was then
discovered that the inventory at 30 September 2021 had been overstated by $1500.
Which effects did the correction of this error have on retained earnings and general reserve at
30 September 2021?
retained earnings $ general reserve $
A decrease 300 increase 300

B decrease 1200 decrease 300
C increase 300 increase 1200
D increase 1500 no effect
11 The bank columns in a trader’s cash book and the bank statement both showed positive
balances. A comparison revealed the following differences.
uncredited cheque 200

bank charges not included in cash book 10
What was the difference between the balance shown in the bank column of the cash book and
that shown on the bank statement?
A The cash book balance was $190 higher than the bank statement balance.
B The cash book balance was $190 lower than the bank statement balance.
C The cash book balance was $210 higher than the bank statement balance.
D The cash book balance was $210 lower than the bank statement balance.
12 What is a reason for preparing a sales ledger control account?
A to calculate total sales revenue

B to ensure trade receivables pay on time
C to help prepare the income statement
D to summarise the accounts of the trade receivables
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13 Two companies each purchased a motor vehicle for $10 000 at the beginning of year 1. Company
G used the straight-line method of depreciation at a rate of 15% per annum, while Company H
used the reducing balance method at a rate of 20% per annum.
What was the difference in the depreciation charge between the two companies for year 2?
A $100 greater for G

B $100 greater for H
C $500 greater for G
D $500 greater for H
14 Amit’s financial year ends on 31 December. The following account appeared in his sales ledger.
Dipak account
2020 $ 2020 $
Jan 7 sales 3200 Jun 3 bank 1700

Oct 30 cash 230
Nov 21 ? 1270
3200 3200
What does the entry on 21 November represent?
A an irrecoverable debt
B discount allowed
C the balance carried down
D the recovery of a debt previously written off
15 Sally wished to increase the balance on the provision for doubtful debts account at the end of the
financial year.
How should this increase be recorded?
debit credit
A income statement provision for doubtful debts account

B irrecoverable debts account provision for doubtful debts account
C provision for doubtful debts account income statement
D provision for doubtful debts account irrecoverable debts account

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16 The following errors were found after a statement of financial position had been prepared.
1 A loan repayable in two year’s time had been included as a current liability.
2 A provision for doubtful debts should have been created.
What is the effect of correcting these errors?
current current non-current owner’s

assets liabilities liabilities equity
A decrease decrease increase decrease

B decrease increase decrease increase
C increase decrease decrease increase
D increase increase decrease decrease
17 John maintains a full set of accounting records.
Why does he also prepare a statement of financial position?
A to calculate the profit for the year

B to check if assets equal capital plus liabilities
C to show the transactions which took place during the year
D to summarise what the business owns and what it owes
18 What are advantages of operating as a sole trader?
1 The owner can keep all the profit.

2 The owner can raise finance by issuing debentures.
3 The owner can make decisions independently.
4 The owner is protected by limited liability.
A 1 and 3 B 1 only C 2 and 3 D 2 and 4
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19 Anwar is a sole trader making annual profits of $24 000. He decides to admit Dilip as a partner.
They agree that Anwar would receive a salary, and profits and losses would be shared equally.
The forecast appropriation account for the partnership’s first year of trading is:

salary Anwar 10 000
profit available for distribution 40 000
By how much will Anwar’s total income increase?
A $1000 B $6000 C $16 000 D $26 000
20 Kasi and Ravi are in partnership. The financial statements for the year ended 31 August 2021
showed that Ravi was entitled to interest on capital and interest on loan and was charged interest
on drawings.
Which entries would be made in Ravi’s current account?
interest on capital interest on loan interest on drawings

debit credit debit credit debit credit
A
B
C
D

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21 BCD Limited provided the following information.
ordinary shares 300 000

retained earnings 200 000
debentures 170 000
How much was the equity and the capital employed?
equity capital employed

$ $
A 300 000 470 000

B 300 000 670 000
C 500 000 470 000
D 500 000 670 000
22 The issued share capital of CD Limited consists of ordinary shares.
Retained earnings were $86 000 on 1 September 2020 and $88 500 on 31 August 2021.
The company made a profit during the year of $26 000 and made a transfer to general reserve of
$5000.
What was the total ordinary share dividend paid during the year?
A $18 500 B $23 500 C $28 500 D $33 500
23 A sports club was formed on 1 August 2020. During the year ended 31 July 2021 the club
purchased equipment costing $5000, paying by cheque.
In which of the club’s financial statements did this appear?
receipts and payments income and expenditure statement of financial

account account position
A
B
C
D
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24 What is not part of the prime cost of a manufacturing business?
A raw material
B royalties
C wages of factory supervisors
D wages of production workers
25 The value of Thato’s work in progress increased during the year. This was recorded in his
financial statements.
How did this affect the cost of production and the cost of sales?
cost of
cost of sales
production
A decreased decreased
B decreased no effect
C increased increased
D increased no effect
26 What are advantages of keeping a full set of accounting records?
1 Financial statements will be free from errors.

2 It is impossible to make fraudulent entries.
3 More informed decision-making is possible.
4 The calculation of profit is more accurate.
27 Beth provided the following information.
1 January 31 December
net assets $28 000 $24 000
Her drawings during the year amounted to $3000.
What was Beth’s profit or loss for the year?
A $1000 loss
B $1000 profit
C $7000 loss
D $7000 profit

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28 Roshan’s sales for his first year of trading were $55 000. His gross profit margin was 20%. The
closing inventory was $3200.
What were the purchases for the year?
A $41 250 B $44 000 C $44 450 D $47 200
29 Which information is required to calculate the return on capital employed for a sole trader?
A gross profit, non-current liabilities, owner’s capital

B gross profit, non-current liabilities, working capital
C operating profit for the year, non-current liabilities, owner’s capital
D operating profit for the year, non-current liabilities, working capital
30 What is the best indicator of the liquidity of a business?
A current ratio
B liquid (acid test) ratio
C return on capital employed
D working capital
31 A trader provided the following information for the year ended 31 May 2021.
trade payables on 1 June 2020 12 250

trade payables on 31 May 2021 42 000
credit purchases for the year 319 375
What was the trade payables turnover (days) for the year ended 31 May 2021?
A 31 days B 34 days C 48 days D 62 days
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32 A business provided the following information about its gross margin.
Year 1 40%
Year 2 38%
Year 3 35%
What could explain the changes in the gross margin?
A Cost of sales is decreasing.

B Expenses are decreasing.
C Quantity of goods sold is decreasing.
D Selling price is decreasing.
33 What is not a limitation of inter-firm comparison?
A Accounting records do not include the skills of the workforce.

B Businesses may have different accounting policies.
C Businesses may have different sales prices.
D The available information may not relate to a typical year.
34 Why would a supplier be interested in the financial statements of a credit customer?
A to know if the customer can pay what he owes

B to know the amount owed by trade receivables
C to know the profit for the year
D to know the value of the inventory
35 What does the objective of understandability assume users of financial statements will possess?
A a reasonable knowledge of accounting

B full knowledge of accounting
C knowledge of book-keeping but not accounting
D no knowledge of book-keeping or accounting
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1 Which statement is correct?
A The accountant prepares the trial balance and the book-keeper prepares the financial
statements.
B The accountant writes up the journals and the book-keeper writes up the ledger accounts.
C The book-keeper writes up the journals and the accountant prepares the trial balance.
D The book-keeper writes up the ledger accounts and the accountant prepares the financial
statements.
2 Which formulas may be used for the accounting equation?
1 assets = owner’s equity minus liabilities

2 liabilities = assets minus owner’s equity
3 owner’s equity = assets plus liabilities
4 owner’s equity plus liabilities = assets
3 Goods purchased on credit from Zamir were returned by Ashwin.
Which entries should Zamir make to record this?
A Ashwin purchase returns

B purchase returns Zamir
C sales returns Ashwin
D Zamir sales returns
4 During her first financial year, a trader paid $1800 for insurance and $3200 for rent.
At the end of the financial year, she transferred insurance of $1500 and rent of $3600 to the
income statement.
What do the balances remaining on the accounts at the end of the financial year represent?
insurance account rent account
A accrued expense accrued expense

B accrued expense prepaid expense
C prepaid expense accrued expense
D prepaid expense prepaid expense
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5 Leah bought goods, $8000, less 15% trade discount. She later returned half of these goods as
they were faulty.
Which document did Leah issue to the supplier for the returned goods?
A credit note for $3400

B debit note for $3400
C credit note for $4000
D debit note for $4000
A to make a credit entry in the bank column of a cash book

B to make a debit entry in the bank column of a cash book
C to send a payment to a supplier
D to send proof of payment to a customer
bank.
A bank Khalid
C Khalid bank
8 Why does a supplier offer trade discount?
A to avoid irrecoverable debts

B to encourage bulk buying
C to encourage payment in cash
D to reward prompt payment

4
9 Ann maintains a petty cash book using the imprest system.
Which statement is not correct?
A A petty cash book can be maintained by a junior member of staff.
B At any time petty cash vouchers plus the petty cash balance are equal to the imprest
amount.
C The chief cashier is not asked continually for small sums of money.
D The number of entries in the cash book increases because of the large number of small cash
payments.
10 A sales invoice for $800 was incorrectly recorded in the sales journal as $1800.
How did this error affect the trial balance?
A The trial balance balanced but both totals were overstated by $1000.
B The trial balance balanced but both totals were understated by $1000.
C The trial balance did not balance because the credits were overstated by $1000.
D The trial balance did not balance because the debits were understated by $1000.
11 A standing order paid for rent has not been entered into the accounting records of a business.
A Because the payment was made automatically, no additional entries are required in the
accounting records.
B Because the payment was made automatically, only an entry in the rent account is required.
C Entries are required in the cash book and in the bank reconciliation statement.
D Entries are required in the cash book and in the nominal (general) ledger.
12 The bank statement of a business had a credit balance of $2690 on 1 October 2021. At that date
cheques totalling $850 had not yet been presented for payment.
What was the bank balance in the cash book on 1 October 2021?
A $1840 credit
B $1840 debit
C $3540 credit
D $3540 debit
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13 A trader has purchased new business premises.
What are examples of capital expenditure?
1 cost of heating and lighting the new premises

2 cost of purchasing the new premises
3 legal costs of purchasing the new premises
4 office furniture purchased for use in the new premises
A 1 and 2 only B 1, 2 and 4 C 2, 3 and 4 D 3 and 4 only

15 At the end of the financial year Mui had prepaid rent of $1500.
How should she record this?
A credit $1500 in the rent account and carry down as a credit balance
B credit $1500 in the rent account and carry down as a debit balance
C debit $1500 in the rent account and carry down as a credit balance
D debit $1500 in the rent account and carry down as a debit balance

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16 After preparing draft financial statements at the end of her first year of trading, Lucy discovered
two errors.
1 Damaged inventory had been valued at cost price, $340. It was expected to sell
for $180.
2 100 items which had been expected to sell for $12 each had been valued at their
cost price of $7 each. Carriage inwards of $1 for each item had not been included in
the cost.
What was the effect of these errors on the gross profit?
A overstated $60
B overstated $240
C understated $60
D understated $240
17 Which is an advantage and a disadvantage of operating as a sole trader?
advantage disadvantage
A gains all the profit bears all the risk

B gains all the profit controls the decision-making
C provides all the capital bears all the risk
D provides all the capital controls the decision-making
18 What is shown in the capital and liabilities section of a statement of financial position of a
business?
A how the resources are being used by the business

B the working capital of the business
C total amounts owed by and to the business
D where the resources of the business have come from

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20 A sole trader paid off the business’s overdraft using his own personal funds.
How did this affect the statement of financial position?
liabilities capital assets
A no effect increase increase

B decrease increase increase
C decrease increase no effect
D decrease no effect increase
21 Hassin found that he needed help to run his business. He decided to take a partner rather than
employ an assistant.
Why did he decide to take a partner?
1 An assistant would not interfere with how the shop was run.
2 An assistant would not share risk.
3 A partner would introduce some additional capital.
4 A partner would take a share of the profit.

salary Anwar 10 000
A $1000 B $6000 C $16 000 D $26 000

8

debentures 170 000

$ $
A 300 000 470 000

B 300 000 670 000
C 500 000 470 000
D 500 000 670 000
$5000.
A $18 500 B $23 500 C $28 500 D $33 500

A
B
C
D
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26 A sports club has 100 members and the annual subscription is $60.
During the year ended 31 August 2021:
12 members paid their outstanding subscription from the previous financial year
10 members paid their subscription in advance for the following financial year.
On 31 August 2021, subscriptions for the current financial year were still outstanding from
8 members.
What was the total amount received from members during the year ended 31 August 2021?
A $5160 B $5640 C $6600 D $6840
net assets $28 000 $24 000
A $1000 loss
B $1000 profit
C $7000 loss
D $7000 profit
A $41 250 B $44 000 C $44 450 D $47 200


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A current ratio
D working capital
Year 1 40%
Year 2 38%
Year 3 35%

32 Sam and Rob each own a trading business. The income of each business is solely from the sale
of goods. They provided the following information for the year ended 30 June 2020.
Sam Rob
return on capital employed 12% 10%

gross margin 25% 30%
profit margin 14% 12%
current ratio 2.8 : 1 1.2 : 1
A Rob will find it easy to pay his current liabilities.

B Rob’s expenses are a higher proportion of his sales.
C Sam is not employing his capital effectively.
D Sam’s goods are sold at a higher price.
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33 Why would the owner of a business want to see his financial statements at the end of the year?
1 to assess the performance and progress of the business

2 to determine the market value of the non-current assets
3 to make informed decisions for the following years
A 1 only B 1 and 3 C 2 only D 2 and 3
34 Charlie is a car dealer. Joe wanted a new car and went to Charlie’s car showroom.
On Monday Joe took a car for a test drive and decided to buy it.
On Tuesday Joe arranged to pay for the car by cheque.
On Wednesday Joe collected the car and received an invoice.
On Thursday Joe’s cheque was cleared by the bank.
On which day was Charlie able to account for the profit on the sale?
A Monday
B Tuesday
C Wednesday
D Thursday
35 Which accounting objective requires that financial information is provided in time for a decision to
be made?
A comparability
B relevance
C reliability
D understandability
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1 Why does a trader calculate the profit of his business?
A to calculate the interest payable on a loan

B to calculate the provision for doubtful debts
C to know the total expenses of the business
D to know whether drawings are at a reasonable level
2 Hassan is a trader. During the financial year he took goods from the business for his own use.
How should he record this?
debit credit
A drawings inventory
B drawings purchases
C income statement inventory
D income statement purchases
3 Where are the accounts of credit suppliers maintained?
A purchases journal
B purchases ledger
C sales journal
D sales ledger
4 Which document does a trader issue to remind a credit customer that payment is due?
A credit note
B debit note
C receipt
A to pay a cheque into the bank account

B to pay for goods purchased by cheque
C to record a cheque payment in the cash book
D to record a cheque received in the cash book
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bank.
A bank Khalid
C Khalid bank
7 Tumelo sells on credit. The terms of trade are listed.
list price: $200 per unit

credit period: 60 days
trade discount 15% if 10 units or more are purchased
cash discount 3% if the debt is paid within one month
A credit customer purchased 20 units and paid the debt within 15 days.
What was the total of the invoice?
A $3298 B $3400 C $3880 D $4000
8 Jane purchased goods and paid by credit transfer.
How should this be recorded in Jane’s accounting records?
A bank purchases
B purchases bank
C purchases trade payable
D trade payable purchases
9 What is shown in a trial balance?
A capital and profit on a particular date

B financial transactions for a particular period
C ledger balances on a particular date
D receipts and payments for a particular period

4
10 At the end of each year, PT Limited transfers 20% of the profit for the year to the general reserve.
Draft financial statements were prepared for the year ended 30 September 2021. It was then
discovered that the inventory at 30 September 2021 had been overstated by $1500.
Which effects did the correction of this error have on retained earnings and general reserve at
30 September 2021?
retained earnings $ general reserve $
A decrease 300 increase 300

B decrease 1200 decrease 300
C increase 300 increase 1200
D increase 1500 no effect
11 The bank columns in a trader’s cash book and the bank statement both showed positive
balances. A comparison revealed the following differences.
uncredited cheque 200

bank charges not included in cash book 10
What was the difference between the balance shown in the bank column of the cash book and
that shown on the bank statement?
A The cash book balance was $190 higher than the bank statement balance.
B The cash book balance was $190 lower than the bank statement balance.
C The cash book balance was $210 higher than the bank statement balance.
D The cash book balance was $210 lower than the bank statement balance.
12 What is a reason for preparing a sales ledger control account?
A to calculate total sales revenue

B to ensure trade receivables pay on time
C to help prepare the income statement
D to summarise the accounts of the trade receivables
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14 Amit’s financial year ends on 31 December. The following account appeared in his sales ledger.
Dipak account
2020 $ 2020 $
Jan 7 sales 3200 Jun 3 bank 1700

Oct 30 cash 230
Nov 21 ? 1270
3200 3200
What does the entry on 21 November represent?
A an irrecoverable debt
B discount allowed
C the balance carried down
D the recovery of a debt previously written off
15 Sally wished to increase the balance on the provision for doubtful debts account at the end of the
financial year.
How should this increase be recorded?
debit credit
A income statement provision for doubtful debts account

B irrecoverable debts account provision for doubtful debts account
C provision for doubtful debts account income statement
D provision for doubtful debts account irrecoverable debts account

6
16 The following errors were found after a statement of financial position had been prepared.
1 A loan repayable in two year’s time had been included as a current liability.
2 A provision for doubtful debts should have been created.
What is the effect of correcting these errors?
current current non-current owner’s

assets liabilities liabilities equity
A decrease decrease increase decrease

B decrease increase decrease increase
C increase decrease decrease increase
D increase increase decrease decrease

18 What are advantages of operating as a sole trader?
1 The owner can keep all the profit.

2 The owner can raise finance by issuing debentures.
3 The owner can make decisions independently.
4 The owner is protected by limited liability.
A 1 and 3 B 1 only C 2 and 3 D 2 and 4
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salary Anwar 10 000
A $1000 B $6000 C $16 000 D $26 000
20 Kasi and Ravi are in partnership. The financial statements for the year ended 31 August 2021
showed that Ravi was entitled to interest on capital and interest on loan and was charged interest
on drawings.
Which entries would be made in Ravi’s current account?
interest on capital interest on loan interest on drawings

debit credit debit credit debit credit
A
B
C
D

8

debentures 170 000

$ $
A 300 000 470 000

B 300 000 670 000
C 500 000 470 000
D 500 000 670 000
$5000.
A $18 500 B $23 500 C $28 500 D $33 500

A
B
C
D
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24 What is not part of the prime cost of a manufacturing business?
A raw material
B royalties
C wages of factory supervisors
D wages of production workers
25 The value of Thato’s work in progress increased during the year. This was recorded in his
financial statements.
How did this affect the cost of production and the cost of sales?
cost of
cost of sales
production
B decreased no effect
C increased increased
D increased no effect
26 What are advantages of keeping a full set of accounting records?
1 Financial statements will be free from errors.

2 It is impossible to make fraudulent entries.
3 More informed decision-making is possible.
4 The calculation of profit is more accurate.
net assets $28 000 $24 000
A $1000 loss
B $1000 profit
C $7000 loss
D $7000 profit

10
A $41 250 B $44 000 C $44 450 D $47 200

A current ratio
D working capital
31 A trader provided the following information for the year ended 31 May 2021.
trade payables on 1 June 2020 12 250

trade payables on 31 May 2021 42 000
credit purchases for the year 319 375
What was the trade payables turnover (days) for the year ended 31 May 2021?
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Year 1 40%
Year 2 38%
Year 3 35%

33 What is not a limitation of inter-firm comparison?
A Accounting records do not include the skills of the workforce.

B Businesses may have different accounting policies.
C Businesses may have different sales prices.
D The available information may not relate to a typical year.
34 Why would a supplier be interested in the financial statements of a credit customer?
A to know if the customer can pay what he owes

B to know the amount owed by trade receivables
C to know the profit for the year
D to know the value of the inventory
35 What does the objective of understandability assume users of financial statements will possess?
A a reasonable knowledge of accounting

B full knowledge of accounting
C knowledge of book-keeping but not accounting
D no knowledge of book-keeping or accounting
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3 William paid $500 in cash to Sonia for rent.
How did Sonia record this?
A cash rent receivable

B rent receivable cash
C rent receivable William
D William rent receivable
4 Abdul buys all his machinery on credit. He provided the following information.
at 30 April 2020 at 30 April 2021

$ $
machinery at cost 30 000 42 000

amounts owing to suppliers of machinery 19 000 ?
During the year Abdul paid $25 000 to the suppliers of his machinery.
How much did he owe them on 30 April 2021?
A $6000 B $13 000 C $17 000 D $32 000
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Nazneen.
A $15.36 B $16.00 C $19.20 D $20.00
7 Jameel sold goods on credit.
Where did he first record the invoice he issued?
A general journal
B general ledger
C sales journal
D sales ledger
8 Which statements about a three-column cash book are correct?
1 It contains ledger accounts for bank and cash.

2 It contains ledger accounts for discounts allowed and received.
3 It records transactions before they are recorded in the ledgers.
A 1 and 2 B 1 and 3 C 2 and 3 D 3 only
9 Which statement is not true about a trial balance?
A It is a list of ledger account balances at a certain date.

B It can assist in finding arithmetical errors.
C It is part of the double entry system.
D It is useful in preparing financial statements.

4
10 Which error is an error of original entry?
A sale of surplus office equipment on credit to Janet for $230 entered as $320 in both the
disposal account and Janet’s account
B sale of surplus office equipment on credit to Janet for $230 entered in the office equipment
account and Jason’s account
C sale of surplus office equipment on credit to Janet for $230 entered in the sales account and
Janet’s account
D sale of surplus office equipment on credit to Janet for $230 not entered in any accounts
11 A cheque, $85, received from Shakeel, was credited to the account of Shamz.
debit credit
$ $
A bank 85
Shakeel 85
B Shakeel 85
Shamz 85
C Shamz 85
bank 85
D Shamz 85
Shakeel 85
12 Jamal’s bank statement at 1 May 2021 showed a bank overdraft of $1460.
What was the cash book balance on 1 May 2021?
A $1330 credit
B $1330 debit
C $1590 credit
D $1590 debit
13 What is included in a purchases ledger control account?
A cash purchases
B debts written off as irrecoverable
C discount allowed
D goods returned to credit suppliers
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A $11 810 B $11 890 C $12 110 D $12 190
15 Which statements about capital expenditure are correct?
1 It is money spent on day-to-day business operations.

2 It is money spent on purchasing non-current assets.
3 It is recorded in the statement of financial position.
4 It includes expenses relating to non-current assets.
16 Nia sold equipment with a net book value of $200. The proceeds of the sale, $250, were credited
to the sales account and debited in the cash book.
What was the effect of this error on Nia’s gross profit and profit for the year?
gross profit $ profit for the year $
B overstated 200 understated 250
C overstated 250 overstated 200
18 A machine with an original cost of $10 000 had been depreciated for two years at the rate of 10%
per annum using the straight-line basis. It was then sold for cash with the loss on disposal
amounting to $700.
A replacement machine was bought on the same day for $12 400 cash.
What was the net decrease in the cash balance?
A $3700 B $5100 C $11 700 D $13 100

6
19 Why would a bakery business not include a value for inventory of stationery in the statement of
financial position?
A It was expected it would be used in the next few months.

B It was purchased regularly and paid for in cash.
C It was not for resale.
D It was of very low value.
20 Shilpa’s financial year ends on 30 April. On 31 March 2021 she wrote off a debt owed by Tahir as
irrecoverable.
Which entry did Shilpa make on 31 March 2021?
debit credit
A income statement Tahir

B irrecoverable debts income statement
C irrecoverable debts Tahir
D Tahir irrecoverable debts
A cost
22 James is an accountant and operates as a sole trader.
Which items would not appear in his statement of financial position?
1 long-term loan
2 retained earnings
3 trade payables
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23 Zaha is a consultant who receives fees from clients.
How would Zaha calculate his profit for the year?
A fees received – cost of sales
B fees received – cost of sales + expenses

C fees received + expenses
D fees received – expenses
A current assets
25 What is an advantage of forming a partnership?
A Decisions have to be recognised by all partners.

B Each partner is responsible for actions of other partners.
C Profits have to be shared among the partners.
D Responsibilities can be shared between the partners.
26 Ann and Ben are in partnership sharing profits and losses equally.
They provided the following information for the year ended 30 April 2021.

interest on capital: Ann 5 000
Ben 4 000
drawings: Ann 8 000
Ben 7 000
What was Ben’s share of the residual profit?
A $5500 B $10 000 C $13 000 D $14 500

8
27 Which statement about a receipts and payments account is incorrect?
A It includes amounts prepaid at the end of the year.

B It shows the surplus for the year.
C Non-monetary items are excluded.
D The balance represents cash and bank balances.
28 How does a manufacturer calculate prime cost?
A direct material + direct labour

B direct material + direct labour + direct expenses
C direct material + direct labour + direct expenses + factory overheads
D direct material + direct labour + factory overheads

A $7875 loss
B $7875 profit
C $15 675 loss
D $15 675 profit
cost of sales 80 000

expenses 4 000
A 16% B 20% C 21.05% D 26.67%
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$ $
revenue 3600
purchases 2600
2700
gross profit 1200
A 6 times
B 8 times
C 9.2 times
D 14.4 times
32 Sally’s business has reached the overdraft limit set by the bank of $1500 and is not able to pay its
debts when they fall due.
Sally is considering the following proposals.
1 asking the bank to increase the bank overdraft limit to $2000

2 borrowing $2000 from a relative and paying the money back in six months
3 obtaining a loan from the bank of $2000 repayable in two years
4 paying $2000 from Sally’s personal bank account into the business bank account
Which proposals will improve the working capital of the business?

10
33 Company X and Company Y provided the following information.
Company X Company Y
gross margin 36.7% 42.6%

profit margin 5.4% 5.4%
A Both companies earned the same amount of profit for the year.
B Company X had a better gross margin than Company Y.
C Company Y had a larger proportion of expenses than Company X.
D The cost of sales of Company X was lower than that of Company Y.

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3 Carl, a trader, took goods from the business for his own use. These goods had cost $100, and
$8 carriage had been paid for them to be delivered to the business.
How would this be recorded in Carl’s accounts in the books of the business?
A debit Carl’s capital account $100

B debit Carl’s capital account $108
C debit Carl’s drawings account $100
D debit Carl’s drawings account $108

Nazneen.
A $15.36 B $16.00 C $19.20 D $20.00
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6 Which items would be recorded in the general journal of a bakery?
1 correction of an error of principle relating to an oven repair

2 purchase of a delivery vehicle on credit
3 purchase of flour on credit
4 return by a customer of a faulty batch of bread
7 Alisha entered the credit notes she received in March in the correct returns journal.
How was the total of this journal recorded in the ledger at the end of the month?
A credit purchases returns account

B credit sales returns account
C debit purchases returns account
D debit sales returns account
8 Which item would not be shown on a bank statement?
A a cheque returned by the bank marked as ‘refer to drawer’

B a monthly payment made for electricity by direct debit
C bank charges
D unpresented cheques
9 Which statement about a purchases ledger control account is not correct?
A It acts as a check on the balance of the purchases account.

B It includes transactions relating to all the credit suppliers.
C It is prepared using information from the books of prime entry.
D It provides proof of the arithmetical accuracy of the purchases ledger.
A $11 810 B $11 890 C $12 110 D $12 190

4
11 What is the effect of treating an item of capital expenditure as revenue expenditure?
1 Cost of non-current assets is overstated.

2 Cost of non-current assets is understated.
3 Depreciation for the year is overstated.
4 Depreciation for the year is understated.
13 Machinery which had cost $6290 was sold for $3100. The disposal account showed a profit on
disposal of $584.
How much was the depreciation up to the date of disposal and on which side of the disposal
account was it recorded?
A $2606 on the credit side

B $2606 on the debit side
C $3774 on the credit side
D $3774 on the debit side
14 The following ledger account appeared in the books of a trader.
Rent receivable account

$ $
2020 2020
Dec 31 balance c / d 600 Jan 1 balance b / d 400
Dec 31 bank 3600
Which entry was made in the income statement for the year ended 31 December 2020 for rent
receivable?
A $3400 credit
B $3400 debit
C $3800 credit
D $3800 debit
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15 Why does a business maintain a provision for doubtful debts account?
A to apply the accounting principle of prudence

B to avoid profit for the year being understated
C to have an accurate forecast of debts which will be uncollectible
D to reduce the expense of irrecoverable debts in the future
A cost
17 What are the advantages of being a sole trader?
easy to raise entitled to has total has unlimited

finance all profit control liability
A
B
C
D
18 Which items would appear in the income statement of a service business?
profit for
gross profit surplus
the year
A
B
C
D

6
19 A business provided the following information.
long-term loan 20 000

trade receivables 12 000
trade payables 9 700
bank overdraft 2 000
prepaid insurance 400
accrued wages 1 000
rent receivable prepaid 500
What was the total of the current liabilities?
A $13 200 B $15 400 C $31 200 D $32 700
A current assets
21 On 1 April 2020 Ahmed had a provision for doubtful debts of $290. The following journal entry
was made on 31 March 2021.
debit credit
$ $
provision for doubtful debts 25

income statement 25
What was the provision for doubtful debts deducted from trade receivables in Ahmed’s statement
of financial position on 31 March 2021?
A $25 B $265 C $290 D $315
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22 X Limited started the year with an ordinary share capital of $100 000.
An ordinary share dividend of $3000 was paid during the year.
Later a further $10 000 of ordinary shares were issued.
The profit for the year was $8000.
By how much had equity increased at the end of the year?
A $7000 B $10 000 C $15 000 D $18 000
23 Which providers of funds to a limited liability company receive a fixed rate of return on their
investment?
ordinary preference debenture

shareholders shareholders holders
A
B
C
D
24 Every member of a sports club is required to pay an annual subscription of $50. The
subscriptions account showed the following.
Subscriptions account
$ $
2020 2020
Jan 1 Balance b / d 350 Dec 31 Bank 10 950
Dec 31 Income and 10 900 Balance c / d 750
expenditure account
Balance c / d 450
11 700 11 700
2021 2021
Jan 1 Balance b / d 750 Jan 1 Balance b / d 450
What was the increase in the number of members in arrears between 1 January and
31 December 2020?
A 2 members
B 6 members
C 8 members
D 17 members

8
25 Which term is used to describe the surpluses which have been earned by a club over its lifetime?
A accumulated fund
B capital
C retained earnings
D subscriptions

A $7875 loss
B $7875 profit
C $15 675 loss
D $15 675 profit
27 A trader who does not keep full accounting records was able to supply the following information.
amount owed by trade receivables at 1 April 2020 3 000

cheques received from trade receivables during the year 28 000
cash discounts given to trade receivables 1 500
amount owed by trade receivables at 31 March 2021 4 200
How much were the credit sales for the year ended 31 March 2021?
A $25 300 B $27 700 C $28 300 D $30 700
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9
revenue 120 000

inventory at the start of the year 9 600
inventory at the end of the year 10 200
A mark-up of 25% is applied.
A $89 400 B $90 600 C $95 400 D $96 600
29 George provided the following information.
non-current assets 15 000

inventory 12 000
His liquid (acid test) ratio was 1.2 : 1.
What was his bank overdraft?
A $7000 B $15 000 C $17 000 D $29 500

10
$ $
revenue 3600
purchases 2600
2700
gross profit 1200
A 6 times
B 8 times
C 9.2 times
D 14.4 times

32 Which external parties would be interested in the financial statements of a trader?
1 a bank manager considering a request by the trader for a loan

2 a trade union seeking a wage increase for the employees
3 the business manager making decisions about how to increase profits
4 the trader deciding if drawings could be increased
A 1, 3 and 4 B 1 and 2 only C 2, 3 and 4 D 2 and 3 only
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33 Sabeena runs a retail business. She plans to close her business in a few weeks’ time.
How should her fixtures and fittings be valued in the statement of financial position?
A at book value
B at expected sales value
C at original cost
D at replacement cost
34 Why should a trader match his costs for a financial year with the revenues for the same period?
A to account for all liabilities

B to account for money that has been paid in advance
C to make sure outstanding income is included
D to show the correct profit figure
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1 A business employs a book-keeper and an accountant.
Which task would the accountant perform?
A extracting balances from the ledger accounts to produce a trial balance

B making entries in the general journal to adjust a provision for doubtful debts
C preparing a monthly report that analyses the profitability of the company
D recording sales and purchase invoices in the books of prime entry
2 What are assets?
amounts owed amounts owed items owned

to a business by a business by a business
A no no yes
B no yes yes
C yes no yes
D yes yes no
3 On 15 February, Kalou made the following entries in his accounts.
debit $ credit $
bank 228 Droghba 240

discount allowed 12
Which transaction was being recorded?
A Droghba paid Kalou by cheque after taking a cash discount.

B Droghba paid Kalou by cheque after taking a trade discount.
C Kalou paid Droghba by cheque after taking a cash discount.
D Kalou paid Droghba by cheque after taking a trade discount.
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4 Jai is a manufacturer. On 1 February he purchased a machine costing $15 000 from Vinita. He
paid $10 000 immediately with a cheque from his personal bank account. The balance was to be
paid in June.
Which entries did Jai make on 1 February?
accounts debited $ accounts credited $
A machinery 10 000 bank 10 000

B machinery 10 000 capital 10 000
C machinery 15 000 bank 10 000
Vinita 5 000
D machinery 15 000 capital 10 000
Vinita 5 000
5 Jameel’s financial year ends on 31 December. On 1 January 2021 he brought down a debit
balance on his stationery account.
What does this balance represent?
A amount owing for stationery on 1 January 2021

B amount paid for stationery during 2020
C cost of stationery used during 2020
D inventory of stationery on 1 January 2021
6 Daksha returned goods to Amina.
Which entries did Daksha make in her books?
debit entry credit entry

account ledger account ledger
A Amina general purchases returns purchases

B Amina purchases purchases returns general
C purchases returns general Amina purchases
D purchases returns purchases Amina general
7 Which book of prime entry is written up from the copies of credit notes issued by a trader?
A purchases journal
B purchases returns journal
C sales journal
D sales returns journal
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8 Which transaction is recorded in the general journal?
A correction of an error in recording sales returns

B drawings in cash by the owner
C purchase of a motor vehicle by cheque
D purchase of goods on credit
9 Raminder maintains a petty cash book using the imprest system. The monthly imprest of $250 is
restored on the first day of each month.
In January the petty cashier spent $105 and received a refund of $15 from a stationery supplier.
How much was given to the petty cashier on 1 February to restore the imprest?
A $90 B $105 C $145 D $160
10 The totals of a trial balance failed to agree. The total of the credit column was $10 000. Two
errors were later found.
The sales journal had been overcast by $100.

Goods sold to Sarah on credit for $200 had been incorrectly debited to Zara.
What was the total of the debit column of the trial balance?
A $9700 B $9900 C $10 100 D $10 300
11 On 31 December 2020, the bank column in Farad’s cash book showed an overdrawn balance
of $2000.
The following items had not been entered in the cash book.
standing order for rent 200

interest on bank overdraft 50
credit transfer from X Limited 2900
What was the corrected balance of the bank column in the cash book at 1 January 2021?
A $650 credit
B $650 debit
C $1150 credit
D $1150 debit
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12 Raj is both a customer of and a supplier to Balbir.
Raj’s account in Balbir’s sales ledger showed a debit balance of $300. There was a credit
balance of $100 on Raj’s account in the purchases ledger. A contra entry between the two
accounts was agreed.
Which entry would Balbir make in his purchases ledger control account?
A credit $100
B credit $200
C debit $100
D debit $200
13 Motor vehicle repairs, $2000, were debited to the motor vehicles account.
Motor vehicles are depreciated at 20% per annum on the balance of the account at the year end.
What was the effect of the error?
effect on motor vehicles

effect on
in statement of financial
profit for the year
position
$ $

B overstated 2000 overstated 2000
C understated 1600 understated 1600
14 Mandeep depreciates his motor vehicles at the rate of 20% using the straight-line method.
A full year’s depreciation is provided in the year of purchase.
Mandeep bought a motor vehicle on 1 January 2017 for $20 000. On 1 June 2020 he bought a
second motor vehicle for $10 000.
What was the depreciation charge on motor vehicles for the year ended 31 December 2020?
A $2000 B $4000 C $5000 D $6000

6
15 The following ledger account appeared in the books of a trader.
Rates account
$ $
Jan 1 Balance b / d 240 Dec 31 Income statement 2880

June 30 Bank 2160
Dec 31 Balance c / d 480
2880 2880
A Rates are accrued at both the start and the end of the year.
B Rates are accrued at the start of the year and prepaid at the end of the year.
C Rates are prepaid at both the start and the end of the year.
D Rates are prepaid at the start of the year and accrued at the end of the year.
16 A book-keeper made the following ledger entry.

bank debts recovered
Which transaction has been recorded?
A A credit customer has paid his account by the due date.

B A late payment has been received for a debt not yet written off.
C A payment has been received for a debt that had been written off.
D An irrecoverable debt has been written off.
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17 The following accounts appeared in the ledger of Delta Limited.
Total trade receivables account

$ $
Jan 1 Balance b / d 30 000 Dec 31 Bank 109 000

Dec 31 Sales 101 000 Balance c / d 22 000
131 000 131 000
Provision for doubtful debts account

$ $
Dec 31 Income statement 100 Jan 1 Balance b / d 1 200

Balance c / d 1 100
1 200 1 200
How had the total of trade receivables and the rate of provision for doubtful debts changed by
the end of the year?
total of trade rate of provision

receivables for doubtful debts
B decreased increased
C increased decreased
D increased increased
18 On 31 December 2020 Helmut had the following liabilities.
bank loan repayable 1 September 2021 1500

bank overdraft repayable on demand 1000
loan from finance company repayable 30 June 2024 5000
mortgage repayable 1 March 2022 2000
What was the total of Helmut’s non-current liabilities on 31 December 2020?
A $5000 B $7000 C $8500 D $9500

8
19 Vinita’s credit customer paid the amount owing in cash, after deducting 2% discount for prompt
payment.
How did this affect Vinita’s financial statements?
statement of financial
income statement
position
A increase expenses decrease current assets

B increase expenses increase current assets
C increase revenue decrease current assets
D increase revenue increase current assets
20 Mohan and Dipak are in partnership. They provided the following information at the end of the
financial year.
$ $

interest on capital Mohan 1 000
Dipak 1 500 2 500
interest on drawings Mohan 40
Dipak 320 360
salary Mohan 4 000
How much was available for distribution to the partners?
A $23 740 B $24 460 C $27 740 D $29 460
21 Raj and Rohit are in partnership sharing profits and losses in the ratio of 2 : 1. Raj is entitled to an
annual salary of $3000. The profit for the year ended 31 December 2020 was $14 100.
On 1 January 2020, Raj’s current account had a debit balance of $1800.
What was the credit balance on Raj’s current account on 1 January 2021?
A $8600 B $10 400 C $12 200 D $12 400
22 Which items appear in the capital and reserves section of a statement of financial position of a
limited company?
A debentures, ordinary share dividend, general reserve

B debentures, retained earnings, general reserve
C ordinary share capital, debentures, retained earnings
D ordinary share capital, general reserve, retained earnings
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9
23 The issued share capital of AN Limited consists of ordinary shares.
On 1 January 2020, the retained earnings were $78 000.
For the year ended 31 December 2020, the company earned a profit of $65 000.
An ordinary share dividend of $20 000 was paid during the year and a further dividend for the
year of $15 000 was proposed. A transfer was made to general reserve of $40 000.
What was the balance of retained earnings at 31 December 2020?
A $3000 B $5000 C $68 000 D $83 000
24 Which group contains only items which may be recorded in both the income statement of a
trading business and the income and expenditure account of a club?
A bank charges, depreciation, wages

B bank charges, gross profit, sales revenue
C deficit, sales revenue, treasurer’s expenses
D depreciation, treasurer’s expenses, wages
25 The following ledger account appeared in the books of a club for the year ended
31 December 2020.
Subscriptions account
$ $
2020 2020
Jan 1 Balance b / d 2 000 Dec 31 Bank 29 000
Dec 31 Income and expenditure 24 000
Balance c / d 3 000
29 000 29 000
A Subscriptions prepaid on 1 January 2020 amounted to $2000.

B Subscriptions prepaid on 31 December 2020 amounted to $3000.
C Subscriptions received during the year ended 31 December 2020 amounted to $24 000.
D Subscriptions relating to the year ended 31 December 2020 amounted to $29 000.

10
26 The following costs were incurred by a clothing manufacturer.
1 purchase of fabric
2 purchase of buttons
3 repairs to sewing machine
4 wages of factory supervisors
5 wages of sewing machinists
Which costs are indirect costs?
A 1, 2 and 5 B 1, 4 and 5 C 2 and 3 D 3 and 4
27 A manufacturer calculated the cost of production for the year at $57 000.
It was found that lighting and heating, $2000, had been omitted from the financial statements.
Lighting and heating is allocated 75% to the factory and 25% to the offices.
What was the correct cost of production?
A $55 500 B $56 500 C $57 500 D $58 500
28 Tariq provided the following information.
31 January 2020 31 January 2021

$ $
non-current assets 60 000 70 000

current assets 20 000 25 000
current liabilities 15 000 19 000
Tariq’s drawings for the year ended 31 January 2021 were $5000.
What was the profit for the year ended 31 January 2021?
A $6000 B $11 000 C $14 000 D $16 000
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11
29 Nour does not keep full accounting records. She provided the following information at the end of
the financial year.
decrease in trade receivables during the year 2 000

receipts from trade receivables 58 000
discount allowed 1 200
sales returns 1 500
What were the credit sales for the year?
A $55 700 B $57 300 C $58 700 D $62 700

current assets 28 000
current liabilities 12 000
interest paid on loan 2 000
Return on capital employed was 12.5%.
What was the profit for the year before loan interest?
A $16 500 B $18 250 C $18 500 D $20 500
31 Which change would cause an increase in the liquid (acid test) ratio?
A a decrease in inventory
B an increase in inventory
C a decrease in the provision for doubtful debts
D an increase in the provision for doubtful debts

12
32 Abhinav provided the following information.
year ended year ended

31 December 2019 31 December 2020
$ $
purchases 112 500 124 000

cost of sales 115 500 120 000
inventory $
1 January 2019 7000

31 December 2019 4000
31 December 2020 8000
What was the rate of turnover of inventory for the year ended 31 December 2020?
A 15 times B 20 times C 21 times D 30 times
33 Which action will improve the gross margin?
A increasing expenses
B increasing selling price
C reducing expenses
D reducing selling price
34 Amaira depreciates her non-current assets by the same rate and using the same method every
year.
Which group of accounting principles is she applying?
A business entity, consistency, matching

B business entity, prudence, realisation
C consistency, matching, prudence
D matching, prudence, realisation
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35 Kamika’s financial statements did not comply with the accounting principle of money
measurement.
What had Kamika done?
A included a value for the skill of her employees

B forgot to include prepaid insurance
C recorded her drawings in wages and salaries
D valued her inventory above original cost
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2
1 A trader prepares financial statements each year.
What do these assist the trader to do?
A calculate the amount owing to credit suppliers

B calculate the cash drawings
C check the bank statement balance
D make decisions about the future
2 The following balances appeared in Hussein's books.
fixtures 6000
inventory 3300
trade receivables 3000
trade payables 4500
other receivables 500
other payables 300
loan to Imran 1000
bank overdraft 1400
What was the total of the liabilities?
A $4800 B $6200 C $6400 D $7200
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3
3 The following account appeared in the books of Mary.
Paul account
$ $
April 1 balance b/d 90 April 21 returns 25

14 sales 150 30 bank 88
discount 2
balance c/d 125
240 240
A On 1 April Paul owed Mary $90.

B On 14 April Paul sold goods, $150, to Mary.
C On 21 April Mary returned goods, $25, to Paul.
D On 30 April Mary owed Paul $125.
4 Which business document is used to update the cash book for standing order payments?
A bank statement
B cheque counterfoil
C paying-in slip
D receipt
5 On 1 March 2020 the bank column of a cash book had a credit balance of $290.
During March cheques totalling $580 were received and cheques totalling $610 were paid to
suppliers. Bank charges of $12 incurred in February were also entered in the cash book.
What was the balance of the bank column in the cash book on 1 April 2020?
A $248 credit
B $248 debit
C $332 credit
D $332 debit

4
6 Ziningi prepared a trial balance. The total of the debit column was $225 750 and the total of the
credit column was $225 250.
What could explain the difference?
A Bank overdraft, $250, was recorded as a debit balance.

B Inventory, $500, was included as a debit balance.
C Purchases returns, $250, were included as a credit balance.
D Sales returns, $250, were included as a debit balance.
7 Rent received from a tenant was debited to the rent receivable account and credited to the cash
book.
Which type of error has been made?
A commission
B compensating
C complete reversal
D principle
8 A computer system purchased from Ace Computers for $1430 had been incorrectly recorded as
$1340 and was entered in the stationery account instead of the office equipment account.
debit credit
$ $
A Ace computers 90
stationery 1340
office equipment 1340
B Ace computers 90
stationery 1340
C office equipment 1340

Ace computers 90
stationery 1340
D office equipment 1430

Ace computers 90
stationery 1340
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5
9 Kate calculated her draft profit for the year at $28 400.
She later discovered the following errors.
1 Rent prepaid by Kate was understated by $1000.

2 Closing inventory was understated by $1500.
What was the correct profit for the year?
A $25 900 B $27 900 C $28 900 D $30 900
10 What would not be included in a sales ledger control account?
A cash sales recorded in the cash book

B cheques received from credit customers recorded in the cash book
C goods sold on credit recorded in the sales journal
D irrecoverable debts written off recorded in the journal
11 A trader debited the cost of repairing office equipment to the office equipment account.
How did this error affect the financial statements?
profit for non-current

the year assets
A overstated overstated
B overstated understated
C understated overstated
D understated understated
12 A trader uses the reducing balance method of depreciation.
What effect will this have over the life of the non-current asset?
A depreciation charged evenly over the years

B more depreciation charged in the early years
C more depreciation charged in the later years
D the non-current asset being revalued each year

6
13 Rashid provided the following information at 31 December.
machinery at cost 52 000

provision for depreciation of machinery 23 000
Depreciation for the year is calculated at 20% on cost.
After the statement of financial position was prepared it was found that the machinery repairs
costing $2000 had been debited to the machinery account.
What is the correct balance on the provision for the depreciation of machinery account?
A $21 000 B $22 600 C $23 400 D $25 000
14 At the end of his financial year on 31 August 2020 a trader had prepaid insurance.
How will this appear in the insurance account and the statement of financial position at
31 August 2020?
insurance account statement of financial position
A credit balance carried down current asset

B credit balance carried down current liability
C debit balance carried down current asset
D debit balance carried down current liability
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15 Hayley’s financial year ends on 30 September 2020. She provided the following information.
$
on 1 October 2019
rent receivable accrued 480
during the year ended 30 September 2020
rent received 6800
On 30 September 2020
rent received in advance 720
Which journal entry would be made on 30 September 2020?
debit credit
$ $
A income statement 5600
rent receivable 5600
B income statement 6560
C rent receivable 5600
income statement 5600
D rent receivable 6560
16 The balances in the books of Jason on 1 July 2019 included the following.

provision for doubtful debts 1 284
Trade receivables at 30 June 2020 were $58 500, of which $500 should be written off as
irrecoverable.
Jason wants to maintain his provision for doubtful debts at 2% of trade receivables.
What was the change in the provision for doubtful debts at 30 June 2020?
A $114 decrease
B $124 decrease
C $376 increase
D $386 increase

8
17 Nirmal sells two products, product G and product H.
The following information is available about his inventory at the end of the financial year.
number cost price net realisable

product
of units per unit value per unit
G 1000 $2.00 $2.50

H 800 $1.50 $1.20
It was found that 100 units of product G were damaged and were unsaleable.
What was the total value of Nirmal’s inventory?
A $2760 B $3000 C $3260 D $3460
18 Which items will not be shown in an income statement prepared for a service business?
1 cost of sales
2 gross profit
3 profit for the year
4 wages paid to employees
A 1 only B 1 and 2 C 2 and 4 D 3 and 4
capital at 1 October 2019 52 000

motor vehicle given to the business by the trader 3 500
personal expenses paid out of business bank account 1 500
cash drawings made during the year 500
What was the capital at 30 September 2020?
A $46 500 B $50 000 C $53 500 D $55 000
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20 John and Mark are in partnership. Profits and losses are shared in the ratio 3 : 2. John is entitled
to an annual salary of $12 000. The profit for the year ended 31 August 2020 was $52 000.
How much would be credited to the partners’ current accounts on 31 August 2020?
John’s Mark’s
current account current account
$ $
A 24 000 16 000
B 26 000 26 000
C 31 200 20 800
D 36 000 16 000
21 A partnership maintains both current and capital accounts for each partner. An inexperienced
book-keeper prepared the following account which contains errors.
Owen capital account

$ $
balance c / d 135 000 balance b / d 100 000

loan made to partnership 30 000
interest on capital 5 000
135 000 135 000
What should appear as the closing balance on Owen’s capital account?
A $75 000 B $100 000 C $105 000 D $130 000
22 Z Limited provided the following information.
5% debentures 50 000
general reserve 25 000
issued ordinary share capital 300 000
short-term bank loan 10 000
What was the equity?
A $325 000 B $400 000 C $450 000 D $460 000

10
23 Which statement about preference shares is not correct?
A Preference shareholders do not have voting rights.

B Preference shareholders receive a fixed dividend.
C Preference shareholders have a prior claim before ordinary shareholders in the event of
liquidation.
D Preference shareholders receive their dividend after the ordinary shareholders have been
paid.
24 A sports club was formed on 1 September 2019.
What may appear in the receipts and payments account for the year ended 31 August 2020?
A closing bank balance

B closing inventory of club shop
C depreciation of sports equipment
D subscriptions in arrears
25 A manufacturing company provided the following information.
cost of raw materials 186 000

direct wages 75 000
machinery depreciation 45 000
factory supervisor’s salary 32 000
factory rent 24 000
machinery repairs 18 000
What was the prime cost of manufacturing?
A $186 000 B $261 000 C $293 000 D $380 000
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11
26 A manufacturer’s work in progress at the start of the year was valued at $850. At the end of the
year it was valued at $10 200.
What was the effect of this increase on the cost of production and the cost of sales?
cost of cost of
production sales
A decrease decrease
B decrease increase
C increase decrease
D increase increase
27 A trader made the following forecasts for the business for the next financial year.
average inventory $80 000

rate of inventory turnover 6 times
mark-up 25%
What are the forecast sales for the next financial year?
A $360 000 B $480 000 C $576 000 D $600 000
28 Kim’s trade payables turnover increased.
What could have caused this?
A Kim’s customers took longer to pay their accounts.

B Kim’s credit purchases increased.
C Kim’s sales revenue increased.
D Kim took longer to pay her credit suppliers.

12
29 A company provided the following information about its rate of inventory turnover.
year 1 24 times
year 2 25 times
year 3 27 times
What would explain the changes in the ratio?
A cost of sales is decreasing

B inventory is increasing
C sales volume is increasing
D selling price is increasing
30 A company provided the following information about its current ratio.
year 1 2.3 : 1
year 2 2.4 : 1
year 3 2.5 : 1
A Inventory is decreasing.
B Other payables are increasing.
C Other receivables are increasing.
D Trade receivables are decreasing.
31 A trader wants to improve his gross margin.
How can this be done?
A Reduce administrative expenses.

B Reduce depreciation of equipment.
C Reduce rate of cash discount allowed.
D Reduce rate of trade discount allowed.
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32 Zak has depreciated his machinery at the rate of 20% per annum using the straight-line method.
At 31 December 2018 the statement of financial position included:

depreciation to date 12 000
18 000
On 31 December 2019 Zak was considering calculating the annual depreciation at 20% per
annum on the net book value of the machinery.
A depreciation would be $3600 applying the consistency principle

B depreciation would be $3600 applying the prudence principle
C depreciation would be $6000 applying the consistency principle
D depreciation would be $6000 applying the prudence principle
33 The financial statements of a business are prepared on the basis that it will continue to operate
for many years into the future.
Which accounting principle is being applied?
A business entity
B going concern
C money measurement
D realisation
34 When Marina opened a business she purchased a stapler for the office.
She recorded this as office expenses rather than as office equipment.
Which accounting principle did Marina apply?
A consistency
B historic cost
C materiality
D prudence

14
35 What is not an aim of international accounting standards?
A to ensure accounting standards in different countries agree

B to establish an organisation to set standards in every country
C to make it easier to compare companies’ financial statements
D to reduce the variety of accounting practices worldwide
© UCLES 2020 0452/13/O/N/20

2

fixtures 6000
inventory 3300
trade payables 4500
other payables 300
loan to Imran 1000
bank overdraft 1400
A $4800 B $6200 C $6400 D $7200
© UCLES 2020 0452/11/O/N/20

3
Paul account
$ $

14 sales 150 30 bank 88
discount 2
balance c/d 125
240 240

4 Which business document is used to update the cash book for standing order payments?
A bank statement
C paying-in slip
D receipt
5 On 1 March 2020 the bank column of a cash book had a credit balance of $290.
During March cheques totalling $580 were received and cheques totalling $610 were paid to
suppliers. Bank charges of $12 incurred in February were also entered in the cash book.
What was the balance of the bank column in the cash book on 1 April 2020?
A $248 credit
B $248 debit
C $332 credit
D $332 debit

4
6 Ziningi prepared a trial balance. The total of the debit column was $225 750 and the total of the
credit column was $225 250.
A Bank overdraft, $250, was recorded as a debit balance.

B Inventory, $500, was included as a debit balance.
C Purchases returns, $250, were included as a credit balance.
D Sales returns, $250, were included as a debit balance.
7 Rent received from a tenant was debited to the rent receivable account and credited to the cash
book.
A commission
B compensating
C complete reversal
D principle
8 A computer system purchased from Ace Computers for $1430 had been incorrectly recorded as
$1340 and was entered in the stationery account instead of the office equipment account.
debit credit
$ $
A Ace computers 90
stationery 1340
B Ace computers 90
stationery 1340
C office equipment 1340

Ace computers 90
stationery 1340
D office equipment 1430

Ace computers 90
stationery 1340
© UCLES 2020 0452/11/O/N/20

5

A $25 900 B $27 900 C $28 900 D $30 900
10 What would not be included in a sales ledger control account?
A cash sales recorded in the cash book

B cheques received from credit customers recorded in the cash book
C goods sold on credit recorded in the sales journal
D irrecoverable debts written off recorded in the journal

the year assets
12 A trader uses the reducing balance method of depreciation.
What effect will this have over the life of the non-current asset?
A depreciation charged evenly over the years

B more depreciation charged in the early years
C more depreciation charged in the later years
D the non-current asset being revalued each year

6

A $21 000 B $22 600 C $23 400 D $25 000
14 At the end of his financial year on 31 August 2020 a trader had prepaid insurance.
How will this appear in the insurance account and the statement of financial position at
31 August 2020?
insurance account statement of financial position
A credit balance carried down current asset

B credit balance carried down current liability
C debit balance carried down current asset
D debit balance carried down current liability
© UCLES 2020 0452/11/O/N/20

7
15 Hayley’s financial year ends on 30 September 2020. She provided the following information.
$
on 1 October 2019
rent receivable accrued 480
during the year ended 30 September 2020
rent received 6800
On 30 September 2020
rent received in advance 720
Which journal entry would be made on 30 September 2020?
debit credit
$ $
C rent receivable 5600
D rent receivable 6560
16 The balances in the books of Jason on 1 July 2019 included the following.

irrecoverable.
Jason wants to maintain his provision for doubtful debts at 2% of trade receivables.
A $114 decrease
B $124 decrease
C $376 increase
D $386 increase

8

product
G 1000 $2.00 $2.50

H 800 $1.50 $1.20
A $2760 B $3000 C $3260 D $3460
18 Which items will not be shown in an income statement prepared for a service business?
1 cost of sales
2 gross profit
3 profit for the year
4 wages paid to employees
A 1 only B 1 and 2 C 2 and 4 D 3 and 4
capital at 1 October 2019 52 000

motor vehicle given to the business by the trader 3 500
personal expenses paid out of business bank account 1 500
cash drawings made during the year 500
What was the capital at 30 September 2020?
A $46 500 B $50 000 C $53 500 D $55 000
© UCLES 2020 0452/11/O/N/20

9
20 John and Mark are in partnership. Profits and losses are shared in the ratio 3 : 2. John is entitled
to an annual salary of $12 000. The profit for the year ended 31 August 2020 was $52 000.
How much would be credited to the partners’ current accounts on 31 August 2020?
John’s Mark’s
current account current account
$ $
A 24 000 16 000
B 26 000 26 000
C 31 200 20 800
D 36 000 16 000
21 A partnership maintains both current and capital accounts for each partner. An inexperienced
book-keeper prepared the following account which contains errors.
Owen capital account

$ $
balance c / d 135 000 balance b / d 100 000

loan made to partnership 30 000
135 000 135 000
What should appear as the closing balance on Owen’s capital account?
A $75 000 B $100 000 C $105 000 D $130 000
22 Z Limited provided the following information.
issued ordinary share capital 300 000
short-term bank loan 10 000
What was the equity?
A $325 000 B $400 000 C $450 000 D $460 000

10
23 Which statement about preference shares is not correct?
A Preference shareholders do not have voting rights.

B Preference shareholders receive a fixed dividend.
C Preference shareholders have a prior claim before ordinary shareholders in the event of
liquidation.
D Preference shareholders receive their dividend after the ordinary shareholders have been
paid.
24 A sports club was formed on 1 September 2019.
What may appear in the receipts and payments account for the year ended 31 August 2020?
A closing bank balance

B closing inventory of club shop
C depreciation of sports equipment
D subscriptions in arrears
cost of raw materials 186 000

direct wages 75 000
factory rent 24 000
machinery repairs 18 000
What was the prime cost of manufacturing?
A $186 000 B $261 000 C $293 000 D $380 000
© UCLES 2020 0452/11/O/N/20

11
26 A manufacturer’s work in progress at the start of the year was valued at $850. At the end of the
year it was valued at $10 200.
What was the effect of this increase on the cost of production and the cost of sales?
cost of cost of
production sales
A decrease decrease
B decrease increase
C increase decrease
D increase increase

mark-up 25%
A $360 000 B $480 000 C $576 000 D $600 000
28 Kim’s trade payables turnover increased.
A Kim’s customers took longer to pay their accounts.

B Kim’s credit purchases increased.
C Kim’s sales revenue increased.
D Kim took longer to pay her credit suppliers.

12
29 A company provided the following information about its rate of inventory turnover.
year 1 24 times
year 2 25 times
year 3 27 times
A cost of sales is decreasing

B inventory is increasing
C sales volume is increasing
D selling price is increasing
year 1 2.3 : 1
year 2 2.4 : 1
year 3 2.5 : 1

© UCLES 2020 0452/11/O/N/20

13
32 Zak has depreciated his machinery at the rate of 20% per annum using the straight-line method.
At 31 December 2018 the statement of financial position included:

depreciation to date 12 000
18 000
On 31 December 2019 Zak was considering calculating the annual depreciation at 20% per
annum on the net book value of the machinery.
A depreciation would be $3600 applying the consistency principle

B depreciation would be $3600 applying the prudence principle
C depreciation would be $6000 applying the consistency principle
D depreciation would be $6000 applying the prudence principle
33 The financial statements of a business are prepared on the basis that it will continue to operate
for many years into the future.
A business entity
B going concern
C money measurement
D realisation
34 When Marina opened a business she purchased a stapler for the office.
She recorded this as office expenses rather than as office equipment.
Which accounting principle did Marina apply?
A consistency
B historic cost
C materiality
D prudence

14

© UCLES 2020 0452/11/O/N/20

2

2 What is not an example of a book-keeping entry?
A an entry made in the bank column of the cash book for a cheque received
B cost of goods purchased on credit entered in the supplier’s account
C expenses paid during the year entered in the income statement
D goods returned by a customer entered in the sales returns journal
fixtures 6000
inventory 3300
trade payables 4500
other payables 300
loan to Imran 1000
bank overdraft 1400
A $4800 B $6200 C $6400 D $7200
4 What does the owner’s equity consist of?
A the amount of money in the business bank account

B the amount owed by the business to the owner
C the total of the assets owned by the business
D the total of the current assets less the current liabilities
© UCLES 2020 0452/12/O/N/20

3
5 Which entries did Sally make to record the following transaction?
Rashid, a credit customer, returned damaged goods.
A purchase returns Rashid

B Rashid purchase returns
C sales returns Rashid
D Rashid sales returns
Paul account
$ $

14 sales 150 30 bank 88
discount 2
balance c/d 125
240 240

7 In which sections of Zamir’s ledger would the following accounts be maintained?
1 the sales account

2 the account of Harjit, a trade receivable
sales account Harjit account
A nominal (general) ledger purchases ledger

B nominal (general) ledger sales ledger
C purchases ledger sales ledger
D sales ledger purchases ledger

4
8 Sue allows 2% cash discount to credit customers who settle their account within 28 days. Jane
purchased goods, list price $200, on 10 September. She returned these goods on 15 September.
Which entry would Sue make on 15 September?
A purchases returns journal $196

B purchases returns journal $200
C sales returns journal $196
D sales returns journal $200
9 A transaction was posted to the wrong account of the same class.
Which type of error was made?
A commission
B original entry
C principle
D reversal
10 Motor vehicle expenses, $50, were incorrectly debited to the motor vehicles account.
debit credit
$ $
A motor vehicle expenses 50

motor vehicles 50
B motor vehicles 50
motor vehicle expenses 50
C motor vehicles expenses 50
motor vehicles 50
suspense 100
D suspense 100
motor vehicles expenses 50
motor vehicles 50
© UCLES 2020 0452/12/O/N/20

5

A $25 900 B $27 900 C $28 900 D $30 900
12 A trader’s bank statement showed a credit balance of $2940. The following items had not been
entered in the cash book.
bank interest received 70

credit transfer 280
What was the debit balance in the cash book before it was updated?
A $2590 B $2730 C $3150 D $3290
13 What is a purpose of preparing a sales ledger control account?
A to identify irrecoverable debts

B to make fraud more difficult
C to provide the total owed to trade payables
D to show the total of cash and credit sales
14 George is preparing his purchases ledger control account.
Which information would he obtain from his general journal?
A contra entries with the sales ledger

B goods returned to credit suppliers
C irrecoverable debts written off
D refunds received from credit suppliers

6

the year assets

A $21 000 B $22 600 C $23 400 D $25 000
17 A machine which cost $32 000 was sold for $14 000. The total depreciation at the date of disposal
was $15 000.
What was the profit or loss on disposal?
A $3000 profit
B $3000 loss
C $18 000 profit
D $18 000 loss
© UCLES 2020 0452/12/O/N/20

7
18 Beena maintains a provision for doubtful debts of 3% of the trade receivables at the end of each
financial year.
On 1 September 2019 the provision for doubtful debts was $900.
On 31 August 2020 the trade receivables amounted to $42 800.
Which journal entry did Beena make on 31 August 2020?
debit credit
$ $
C provision for doubtful debts 384
D provision for doubtful debts 1284

product
G 1000 $2.00 $2.50

H 800 $1.50 $1.20
A $2760 B $3000 C $3260 D $3460
20 What is not a service business?
A hairdressing salon
B accountant’s practice
C supermarket
D computer repair shop

8
21 The financial year of Peter ends on 30 September. On 1 August 2020 Peter received rent $1000.
This covered the period from 1 July to 30 November 2020.
Which entry will be made in Peter’s statement of financial position on 30 September 2020?
A current asset $400

B current asset $500
C current liability $400
D current liability $500
22 In addition to a share of the profit a partner receives interest on capital, a salary and is charged
interest on drawings.
How are these recorded in the ledger accounts of the partner?
interest on capital salary interest on drawings
A credit capital account credit current account debit capital account

B credit current account debit capital account credit current account
C credit current account credit current account debit current account
D debit current account debit current account credit current account
23 A sports club provided the following information.
subscriptions for the year 26 800

profit on sale of refreshments 4 200
depreciation 1 500
rent and insurance 12 600
wages 3 200
What was the total income for the year?
A $15 800 B $17 300 C $22 600 D $31 000
© UCLES 2020 0452/12/O/N/20

9
24 A club was formed on 1 July 2019.
During the year ended 30 June 2020 subscriptions received from members totalled $2500.
This included $120 paid in advance for the next financial year. Subscriptions outstanding on
30 June 2020 amounted to $280.
How much was recorded for subscriptions in the income and expenditure account for the year
ended 30 June 2020?
A $2100 B $2500 C $2660 D $2780
25 Anthony does not keep a full set of accounting records. He knows his opening and closing cash
balances and wishes to calculate his cash sales.
Which item does Anthony not need in order to calculate his cash sales?
A cash banked
B cash discount
C cash drawings
D cash expenses
26 A trader has not maintained a full set of accounting records.
How can she calculate the credit sales for the year?
A receipts from credit customers + closing trade receivables – discount allowed

– opening trade receivables
B receipts from credit customers – closing trade receivables + discount allowed
+ opening trade receivables
C receipts from credit customers – closing trade receivables – discount allowed
+ opening trade receivables
D receipts from credit customers + closing trade receivables + discount allowed
– opening trade receivables

mark-up 25%
A $360 000 B $480 000 C $576 000 D $600 000

10
year 1 2.3 : 1
year 2 2.4 : 1
year 3 2.5 : 1

30 Meesha provided the following information for her first year of trading.
sales (1000 units at $10 each) 10 000

cost of sales (1000 units at $4.50 each) 4 500
gross profit 5 500
In her second year of trading, Meesha reduced the selling price and sold 1500 units. Her gross
profit decreased by $250. There was no change in the cost per unit.
What was the total value of sales in the second year of trading?
A $9750 B $10 250 C $12 000 D $12 500
© UCLES 2020 0452/12/O/N/20

11
31 AB Limited and CD Limited both started business on 1 January 2019 with an ordinary share
capital of $100 000. Neither company had any debentures or loans.
Both companies had the same profit in 2019.
Only AB Limited paid a dividend.
The return on capital employed (ROCE) was calculated using closing capital employed.
Which statement about AB Limited’s ROCE is correct when compared to that of CD Limited?
A It is higher because the dividend reduced retained earnings.

B It is lower because the dividend reduced capital employed.
C It is lower because the dividend reduced the profit for the year.
D It is the same as that of CD Limited.
32 Which interested party uses the financial statements of a business to assess current performance
and plan for future activities?
A banks
B employees
C government
D managers
33 The special skills of the employees are not recorded in the financial statements of a business.
A historic cost
B materiality
C money measurement
D realisation
34 How can a business comply with the accounting principle of prudence?
assets losses
A avoid overstating avoid overstating

B avoid overstating avoid understating
C avoid understating avoid overstating
D avoid understating avoid understating

12

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2020 0452/12/O/N/20

2
1 Which are examples of book-keeping?
1 entering details of a cheque received from a customer in a cash book

2 entering details of goods purchased on credit in a purchases journal
3 producing an income statement to calculate the profit for the year
4 recording details of credit sales in the account of a credit customer
A 1, 2 and 3 B 1, 2 and 4 C 1 and 2 only D 3 and 4
2 How does a trader use the information provided by financial statements?
A to calculate the amount of cash drawings taken

B to calculate the amount that is owed by trade receivables
C to check the balance shown on a bank statement
D to compare the business performance over a number of years
3 A trader bought new fixtures. He paid half of the purchase price in cash and agreed to pay the
balance in two months’ time.
How does this purchase affect the accounting equation?
owner’s
assets liabilities
equity
A decrease decrease no effect

B decrease no effect increase
C increase decrease increase
D increase no effect increase
4 On 2 April Nina received a cheque from Zaffar, a credit customer. On 12 April the cheque was
returned unpaid by the bank.
What entry would Nina make on 12 April?
A irrecoverable debts bank

B irrecoverable debts Zaffar
C provision for doubtful debts Zaffar
D Zaffar bank
© UCLES 2020 0452/13/M/J/20

3
5 Ann is a trader. On 1 April Cindy’s account in Ann’s ledger showed a credit balance of $520. The
following transactions took place during April.
April 2 Ann returned goods, $30, to Cindy.

14 Ann bought goods, $210, from Cindy, and paid in cash.
Which statement about the balance on Cindy’s account in Ann’s ledger on 30 April is correct?
A Ann owes Cindy $490.

B Ann owes Cindy $700.
C Cindy owes Ann $490.
D Cindy owes Ann $700.
6 Goods bought on credit by Tumelo from Tebogo are returned before they are paid for. Tumelo
keeps a full double entry system.
Where will Tumelo record the return of goods?
A cash book and sales ledger

B general ledger only
C general ledger and purchases ledger
D purchases ledger only
7 Dave supplies goods to Peter on credit. On 1 April, Peter owed Dave $440. Dave sent or
received the following documents in April.
April 7 invoice 360

12 cheque (after deducting $11 cash discount) 429
13 debit note 50
15 credit note 50
What was the closing balance on the statement of account on 30 April?
A $260 B $310 C $321 D $421

4
8 A business sold goods with a list price of $50 each.
The terms of trade were:
trade discount for more than 20 items bought 10%

cash discount if customer pays within 30 days 4%
How much was received in full settlement from a customer who bought 25 items and paid after
35 days?
A $900 B $1075 C $1125 D $1200
9 Paul rents premises from John and pays the rent by credit transfer.
How would John record this?
A bank rent receivable

B cash rent receivable
C rent receivable bank
D rent receivable cash
10 Sita discovers that $1000 received from the sale of fixtures had been entered in the sales
account.
Which journal entry corrected this error?
debit credit
$ $
bank 1000
A
disposal of fixtures 1000
bank 1000
B
fixtures 1000
sales 1000
C
sales 1000
D
fixtures 1000
© UCLES 2020 0452/13/M/J/20

5
11 The totals of a trial balance did not agree and $200 was debited to a suspense account. On
checking the books it was found that two errors had been made.
1 A sales invoice for $700 had been recorded in the sales journal as $770.
2 The sales journal had been totalled incorrectly.
What was the error made in totalling the sales journal?
A overcast by $130
B overcast by $200
C undercast by $130
D undercast by $200
12 The income statement of a business showed a loss for the year of $16 000. On checking the
books the following errors were discovered.
1 No adjustment had been made for insurance prepaid, $480.

2 No entry had been made for bank charges, $620.
What was the correct loss for the year?
A $14 900 B $15 860 C $16 140 D $17 100
13 What would result in a cash book balance being lower than the balance showing on a bank
statement?
A A cheque received from a customer was not recorded in the bank statement.
B A customer’s cheque dishonoured by the bank appeared only on the bank statement.
C Payment by a customer directly into the bank was not recorded in the cash book.
D Payment of insurance by standing order was not recorded in the cash book.
14 Thembi is preparing her sales ledger control account. She needs to know:
1 The total for goods which have been returned by credit customers.
2 The amount owed by credit customers which have been written off as irrecoverable.
Where can she obtain this information?
goods returned irrecoverable debts
A purchase returns account irrecoverable debts account

B purchase returns journal general journal
C sales returns account irrecoverable debts account
D sales returns journal general journal

6
15 The following payments were made when a new machine was purchased.
cost of the machine 32 000

charge for delivering the machine 1 800
insurance of the machine 2 000
wages of employees installing the machine 1 300
How much was the capital expenditure?
A $32 000 B $33 300 C $35 100 D $37 100
16 A non-current asset was depreciated at the end of the first year of ownership using the
straight-line method based on the following information.
cost $20 000

working life 4 years
residual value $4000
It was then found that the reducing balance method at 30% per annum should have been used.
What was the effect on the profit for the year of correcting this error?
A decrease by $2000
B increase by $2000
C decrease by $6000
D increase by $6000
17 Elzevir purchased a motor vehicle costing $8000 on 1 January 2018. It is depreciated at 40% on
the reducing balance basis.
Which journal entry records the depreciation for the year ended 31 December 2019?
debit credit
provision for depreciation of motor vehicles 1920
C provision for depreciation of motor vehicles 1920
motor vehicles 1920
D provision for depreciation of motor vehicles 3200
motor vehicles 3200
© UCLES 2020 0452/13/M/J/20

7
18 Alice’s financial year ends on 31 December.
The balances on her books on 1 January 2020 included the following.
commission receivable 250 debit

rent receivable 500 credit
What do these balances represent?
commission receivable rent receivable
A income outstanding income outstanding

B income outstanding income prepaid
C income prepaid income outstanding
D income prepaid income prepaid
19 Annual rental income due from Kumar, a tenant, is $3600. At the start of the year Kumar had
prepaid rent of $900. At the end of the year he owed two months’ rent.
How much rent was received from Kumar during the year?
A $2100 B $3300 C $3900 D $5100
20 Joel’s inventory on 31 December 2019 was valued at $4800. It was discovered that:
1 Goods, cost $100, had not been included.

2 Goods, cost $170, had been included at net realisable value $210.
What was the effect of the incorrect inventory valuation on Joel’s financial statements at
31 December 2019?
profit for
$ inventory $ equity $
the year
A overstated 40 understated 40 nil

B overstated 60 understated 60 nil
C understated 40 understated 40 understated 40
D understated 60 understated 60 understated 60

8
21 The owner of a business took goods for his own use but forgot to make an entry in the accounts.
What was the effect of this error?
profit for the year capital employed
A overstated no effect
C understated no effect
D understated overstated
22 Rajid and Sunil formed a partnership on 1 January 2019 but did not prepare a partnership
agreement.
They provided the following information.
Rajid Sunil
capital introduced 1 January 2019 $40 000 $20 000

during the year ended 31 December 2019
drawings $5 000 $3 500
share of work 50% 50%
They decided to draw up a partnership agreement for future years.
Which item would be most beneficial to Rajid in 2020?
A interest on capital
B interest on drawings
C limit on annual drawings
D partnership salaries
23 Harry and Jane are in partnership. The following information relates to Harry for the financial
year.
salary 8000
drawings 2800
share of profit 4600
The opening credit balance on Harry’s current account was $28 200.
What was the closing balance on his current account?
A $30 000 B $38 000 C $40 800 D $43 600
© UCLES 2020 0452/13/M/J/20

9
24 The statement of financial position of X Limited at 31 December 2018 included the following:
ordinary share capital 40 000

8% debentures (repayable 2025) 30 000
Profit for the year ended 31 December 2019 was $42 000 and dividends paid totalled $10 000.
What was the total equity on 31 December 2019?
A $137 000 B $145 000 C $155 000 D $175 000
25 Which is a feature of debentures?
A are a long-term liability of a company

B carry a fixed rate of dividend
C carry voting rights
D on liquidation are paid back after shareholders
26 Which cost is part of the prime cost for a manufacturing business?
A carriage inwards
B carriage outwards
C factory rent
D factory supervisor’s salary
27 A manufacturing business provided the following information.
prime cost 236 000

factory overheads 42 000
opening work in progress 8 000
closing work in progress 6 000
What was the factory cost of production?
A $234 000 B $238 000 C $276 000 D $280 000

10
trade receivables at start of the year 5 000

trade receivables at end of the year 8 500
cash received from trade receivables 34 700
irrecoverable debts written off 200
discount allowed 185
What was the amount of the credit sales?
A $38 200 B $38 385 C $38 400 D $38 585
29 Gordon provided the following information for the year.
revenue $90 000

opening inventory $8 000
closing inventory $2 000
mark up 50%
Gordon took goods, $7000, for his own use.
What were the purchases?
A $43 000 B $47 000 C $54 000 D $61 000
30 Sabelo’s liquid (acid test) ratio was higher on 1 January 2019 than it was on 31 December 2019.
A bank overdraft decreased

B inventory decreased
C other payables decreased
D trade receivables decreased
© UCLES 2020 0452/13/M/J/20

11
31 The following ratios have been calculated for a trader.
year 1 year 2

return on capital employed (ROCE) 9% 6%
What explains these changes?
A Drawings have increased by more than profit for the year.

B Gross profit has increased but profit for the year has decreased.
C Profit for the year has increased and capital has been introduced.
D Profit for the year has increased and a long-term loan has been repaid.
32 Which external parties would be interested in the accounting ratios of a business?
A government
B investors
C managers
D tax authorities
33 At the end of the financial year, a company did not account for the unused stationary valued
at $50.
Which accounting principle did the company apply?
A matching
B materiality
C money measurement
D prudence
34 A trader wrote off the balance on a credit customer’s account as irrecoverable.
Which accounting principle was applied?
A business entity
B consistency
C money measurement
D prudence

12
35 A limited company applied the accounting objective of comparability in preparing its financial
statements.
What is the effect of this on the interested parties?
A They can be sure that information in the financial statements is up to date.

B They can identify similarities with the financial statements of other businesses.
C They can understand the financial statements easily.
D They can use the financial statements in decision-making.
© UCLES 2020 0452/13/M/J/20

2
1 Which are examples of book-keeping?
1 entering details of a cheque received from a customer in a cash book

2 entering details of goods purchased on credit in a purchases journal
2 How does a trader use the information provided by financial statements?
A to calculate the amount of cash drawings taken

B to calculate the amount that is owed by trade receivables
C to check the balance shown on a bank statement
D to compare the business performance over a number of years
3 A trader bought new fixtures. He paid half of the purchase price in cash and agreed to pay the
balance in two months’ time.
How does this purchase affect the accounting equation?
owner’s
assets liabilities
equity
A decrease decrease no effect

B decrease no effect increase
C increase decrease increase
D increase no effect increase

D Zaffar bank
© UCLES 2020 0452/12/M/J/20

3



April 7 invoice 360

13 debit note 50
15 credit note 50
A $260 B $310 C $321 D $421

4
8 A business sold goods with a list price of $50 each.
The terms of trade were:
trade discount for more than 20 items bought 10%

cash discount if customer pays within 30 days 4%
How much was received in full settlement from a customer who bought 25 items and paid after
35 days?
A $900 B $1075 C $1125 D $1200
9 Paul rents premises from John and pays the rent by credit transfer.
How would John record this?
A bank rent receivable

B cash rent receivable
C rent receivable bank
D rent receivable cash
10 Sita discovers that $1000 received from the sale of fixtures had been entered in the sales
account.
Which journal entry corrected this error?
debit credit
$ $
bank 1000
A
bank 1000
B
fixtures 1000
sales 1000
C
sales 1000
D
fixtures 1000
© UCLES 2020 0452/12/M/J/20

5
11 The totals of a trial balance did not agree and $200 was debited to a suspense account. On
checking the books it was found that two errors had been made.
1 A sales invoice for $700 had been recorded in the sales journal as $770.
2 The sales journal had been totalled incorrectly.
What was the error made in totalling the sales journal?
A overcast by $130
B overcast by $200
C undercast by $130
D undercast by $200

A $14 900 B $15 860 C $16 140 D $17 100
13 What would result in a cash book balance being lower than the balance showing on a bank
statement?
A A cheque received from a customer was not recorded in the bank statement.
B A customer’s cheque dishonoured by the bank appeared only on the bank statement.
C Payment by a customer directly into the bank was not recorded in the cash book.
D Payment of insurance by standing order was not recorded in the cash book.
1 The total for goods which have been returned by credit customers.
2 The amount owed by credit customers which have been written off as irrecoverable.


6

A $32 000 B $33 300 C $35 100 D $37 100
cost $20 000

A decrease by $2000
B increase by $2000
C decrease by $6000
D increase by $6000
17 Elzevir purchased a motor vehicle costing $8000 on 1 January 2018. It is depreciated at 40% on
the reducing balance basis.
Which journal entry records the depreciation for the year ended 31 December 2019?
debit credit
motor vehicles 1920
motor vehicles 3200
© UCLES 2020 0452/12/M/J/20

7


19 Annual rental income due from Kumar, a tenant, is $3600. At the start of the year Kumar had
prepaid rent of $900. At the end of the year he owed two months’ rent.
A $2100 B $3300 C $3900 D $5100
20 Joel’s inventory on 31 December 2019 was valued at $4800. It was discovered that:
1 Goods, cost $100, had not been included.

2 Goods, cost $170, had been included at net realisable value $210.
What was the effect of the incorrect inventory valuation on Joel’s financial statements at
31 December 2019?
profit for
$ inventory $ equity $
the year
A overstated 40 understated 40 nil

B overstated 60 understated 60 nil
C understated 40 understated 40 understated 40
D understated 60 understated 60 understated 60

8
agreement.
Rajid Sunil

drawings $5 000 $3 500
year.
salary 8000
drawings 2800
A $30 000 B $38 000 C $40 800 D $43 600
© UCLES 2020 0452/12/M/J/20

9
24 The statement of financial position of X Limited at 31 December 2018 included the following:

8% debentures (repayable 2025) 30 000
Profit for the year ended 31 December 2019 was $42 000 and dividends paid totalled $10 000.
What was the total equity on 31 December 2019?
A $137 000 B $145 000 C $155 000 D $175 000
25 Which is a feature of debentures?
A are a long-term liability of a company

B carry a fixed rate of dividend
C carry voting rights
D on liquidation are paid back after shareholders
26 Which cost is part of the prime cost for a manufacturing business?
A carriage inwards
B carriage outwards
C factory rent
D factory supervisor’s salary
prime cost 236 000

opening work in progress 8 000
A $234 000 B $238 000 C $276 000 D $280 000

10
trade receivables at start of the year 5 000

trade receivables at end of the year 8 500
cash received from trade receivables 34 700
irrecoverable debts written off 200
discount allowed 185
What was the amount of the credit sales?
A $38 200 B $38 385 C $38 400 D $38 585
revenue $90 000

mark up 50%
A $43 000 B $47 000 C $54 000 D $61 000

© UCLES 2020 0452/12/M/J/20

11
31 The following ratios have been calculated for a trader.
year 1 year 2

return on capital employed (ROCE) 9% 6%
What explains these changes?
A Drawings have increased by more than profit for the year.

B Gross profit has increased but profit for the year has decreased.
C Profit for the year has increased and capital has been introduced.
D Profit for the year has increased and a long-term loan has been repaid.
32 Which external parties would be interested in the accounting ratios of a business?
A government
B investors
C managers
D tax authorities
33 At the end of the financial year, a company did not account for the unused stationary valued
at $50.
Which accounting principle did the company apply?
A matching
B materiality
C money measurement
D prudence
34 A trader wrote off the balance on a credit customer’s account as irrecoverable.
A business entity
B consistency
C money measurement
D prudence

12
35 A limited company applied the accounting objective of comparability in preparing its financial
statements.
What is the effect of this on the interested parties?
A They can be sure that information in the financial statements is up to date.

B They can identify similarities with the financial statements of other businesses.
C They can understand the financial statements easily.
D They can use the financial statements in decision-making.
© UCLES 2020 0452/12/M/J/20

2
1 Which statement is correct?
A Accounting involves measuring profits and losses.

B Accounting is the recording of financial transactions.
C Book-keeping involves communicating financial data.
D Book-keeping requires the use of ratio analysis.
2 The balances remaining on the books of a business after the preparation of the income statement
included the following.
loan from XY Finance 10 000

wages due 620
rent prepaid 240
motor vehicles 8 000
provision for depreciation of motor vehicles 2 000
A $13 920 B $14 890 C $15 270 D $17 270

D Zaffar bank
© UCLES 2020 0452/11/M/J/20

3



April 7 invoice 360

13 debit note 50
15 credit note 50
A $260 B $310 C $321 D $421
7 What is recorded in the sales journal?
A all money received from sales

B all sales transactions
C cash sales transactions
D credit sales transactions

4
8 Which statement about a two-column cash book is correct?
A It is a ledger account for bank transactions only.

B It is a ledger account for cash transactions only.
C It is a book of prime entry.
D It records cash discounts.
9 Which statements about trade discount are correct?
1 It is debited to the supplier’s account.

2 It is only given if the invoice is paid within the period allowed by the supplier.
3 It is shown as a deduction from the price of the goods on an invoice.
4 It is used to encourage bulk buying.
10 Why is a trial balance prepared?
A to analyse the financial information

B to assist preparation of financial statements
C to control the costs of the business
D to evaluate the performance of the business

A $14 900 B $15 860 C $16 140 D $17 100
© UCLES 2020 0452/11/M/J/20

5
12 Peter’s bank statement showed a debit balance of $600 on 1 April. The following transactions
took place in April.
total cheque deposits 7400

total cheque payments 6200
direct debit for insurance premium 180
credit transfer from customer 450
What was the bank statement balance on 30 April?
A $870 credit
B $870 debit
C $2070 credit
D $2070 debit
13 A sales ledger control account had a debit balance of $10 000.
It was found that a $2000 contra entry to the purchases ledger control account had been entered
on the wrong side of the sales ledger control account.
What was the correct debit balance on the sales ledger control account?
A $6000 B $8000 C $12 000 D $14 000
14 A business had a new extension to its workshop premises. It incurred the following expenditure.
building cost 65 000

legal fees 1 800
air conditioning system for the original workshop 2 300
air conditioning system for the new workshop extension 1 100
decorating the original workshop 1 400
decorating the new workshop extension 800
What was the total capital expenditure of the business?
A $67 900 B $70 200 C $71 000 D $72 400

6
cost $20 000

A decrease by $2000
B increase by $2000
C decrease by $6000
D increase by $6000
16 A company’s financial year ended on 31 December 2019. On 1 December 2019 it paid rent,
$8000, for the four months ending 31 March 2020.
What was the opening balance on the rent account on 1 January 2020?
A $2000 credit
B $2000 debit
C $6000 credit
D $6000 debit


© UCLES 2020 0452/11/M/J/20

7
18 Joseph sells goods on credit and maintains a provision for doubtful debts. He wants to increase
his provision for doubtful debts by $250.
Which journal entry records an increase in the provision for doubtful debts?
debit credit
$ $
A credit customer 250
credit customer 250
C income statement 250
19 Which items are deducted from the gross profit when calculating the profit for the year?
1 balance on the provision for doubtful debts account

2 carriage paid on goods supplied to customers
3 drawings made by the owner during the year
4 wages paid to employees during the year
A 1, 2 and 3 B 1 and 4 C 2 and 3 only D 2 and 4
20 On 31 December 2019 John had net assets of $2000 and capital of $2000.
On 1 January 2020, goods costing $140 were sold on credit for $220.
What was the effect of this transaction on the statement of financial position?
net assets capital
$ $
A 80 decrease 80 decrease
B 80 increase 80 increase
C 220 decrease 220 decrease
D 220 increase 220 increase

8
21 At the end of his financial year, Raminder made an adjustment for rent owed by a tenant.
How did this affect Raminder’s financial statements?
profit for
current assets
the year
A decrease decrease
B decrease increase
C increase decrease
D increase increase
agreement.
Rajid Sunil

drawings $5 000 $3 500
© UCLES 2020 0452/11/M/J/20

9
year.
salary 8000
drawings 2800
A $30 000 B $38 000 C $40 800 D $43 600
25 Which item is shown in the income statement of a company and statement of changes in equity?
A interest on debentures accrued

B ordinary share dividend paid
C profit for the year
D transfer to general reserve
26 Hassan’s capital decreased by $200 over the year, even though he made a profit of $7000.
Which transactions caused this?
capital introduced drawings

$ $
A 1000 8200
B 1200 6000
C 2000 8800
D 2200 4600

10
27 Ahmed provided the following information.
trade receivables at 1 January 2019 15 000

for the year ended 31 December 2019:
credit sales 85 000
cash sales 12 000
cheques received from trade receivables 65 000
irrecoverable debts 2 000
By how much had the trade receivables increased by the end of the financial year?
A $18 000 B $30 000 C $33 000 D $45 000
revenue $90 000

mark up 50%
A $43 000 B $47 000 C $54 000 D $61 000
for the year ended 31 March 2020

revenue 250 000
purchases: cash 125 000
credit 115 000
at March 2020
What was the trade payables turnover?
© UCLES 2020 0452/11/M/J/20

11
30 On 1 January 2019 current assets totalled $16 000 and the current ratio was 2 : 1.
On 31 December 2019 the current liabilities had increased by 50% and the current ratio was
1.5 : 1.
What was the value of the current assets on 31 December 2019?
A $16 000 B $18 000 C $32 000 D $36 000
31 A company provided the following information about its liquid (acid test) ratio.
Year 1 1.2 : 1
Year 2 1.4 : 1
Year 3 1.6 : 1
Which would explain the changes in the ratio?
A Inventory is increasing.
B Other payables are decreasing.
C Trade payables are increasing.
32 Which user of accounting statements is interested in past performance and taking remedial action
where necessary?
A government
B investors
C managers
D suppliers
33 Rashid’s financial year ends on 31 December. He paid rent on 1 February, 1 May, 1 August and
1 November.
An adjustment was made in the income statement for rent prepaid.
A duality
B matching
C money measurement
D prudence

12
34 Which statement describes the going concern principle?
A Accounting methods must be used consistently from one accounting period to the next.
B It is assumed that the business will continue to operate for the foreseeable future.
C Revenue is earned when legal title to goods passes from the seller to the buyer.
D The business is treated as being completely separate from the owner of the business.
35 Brad purchased a machine for $1000 on 1 January 2019. The machine was expected to last for
four years and have no residual value. On 31 December 2019 the same machine cost $1200 to
purchase.
At which value should the machine be included in the statement of financial position on
31 December 2019?
A current cost with no depreciation

B current cost with one year’s depreciation
C original purchase price with no depreciation
D original purchase price with one year’s depreciation
© UCLES 2020 0452/11/M/J/20

2
1 Which task would be carried out by a book-keeper but not an accountant?
A comparing one year’s results with those of previous years

B interpreting the accounting records
C preparing financial statements
D recording transactions in the ledgers and cash book
2 A business provided the following information on 1 February 2019.

The business made a profit of $10 000 for the year ended 31 January 2020.
The owner did not make any drawings during the year.
What was the capital on 31 January 2020?
A $35 000 B $50 000 C $70 000 D $100 000
3 Dilip is a manufacturer. He purchased a machine on credit from Sachin.
How did Dilip record this?
A machinery Sachin
B purchases Sachin
C Sachin machinery
D Sachin purchases
© UCLES 2020 0452/12/F/M/20

3
4 Mui owns a household appliance store. He took home a washing machine for his personal use.
Mui recorded this transaction as follows.
drawings sales
Did Mui make the correct entries to record this transaction?
debit entry credit entry
A no no
B no yes
C yes no
D yes yes
5 The following account appeared in the books of Abdul.
Hanif account
2020 $ 2020 $
Jan 18 returns 100 Jan 1 balance b / d 400

31 bank 392 4 purchases 250
discount 8
balance c / d 150
650 650
A On 1 January Abdul owed Hanif $400.

B On 4 January Hanif purchased goods, $250, from Abdul.
C On 31 January Abdul allowed Hanif $8 trade discount.
D On 31 January Hanif owed Abdul $150.
6 Which business document contains details of purchases, returns and payments occurring during
a trading period?
A credit note
B debit note
C invoice

4
7 Rashida sells goods on credit and allows her customers a trade discount.
Which statements are correct?
1 A debit entry is made in the customer’s account in the sales ledger for the net value
of the goods sold.
2 The date of sale, name of the customer, cost price and trade discount are entered in
the sales journal.
3 The trade discount is debited to the customer’s account and credited to the discount
allowed account.
8 The totals of a trial balance agreed but it was found that the purchase of office equipment had
been debited to office expenses account.
A commission
B compensating
C original entry
D principle
9 On 31 January, Somraj’s bank statement showed a credit balance of $740. Comparing the bank
statement with the cash book he found the following.
bank charges not recorded in the cash book 30

cheque paid but not presented to the bank 150
Somraj updated his cash book as required.
What was the updated cash book balance on 31 January?
A $590 B $620 C $860 D $890
10 When Mark started a car repair business, he purchased premises and equipment.
Two years later he spent $5000 on building an extension, $600 on new equipment and $750 on
repainting the original premises.
By how much will the non-current assets increase because of these transactions?
A $5000 B $5600 C $5750 D $6350
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11 A farmer sold a piece of land at market value.
How should the proceeds of this sale be treated?
A as a capital receipt
B as a revenue receipt
C as capital expenditure
D as revenue expenditure
12 Why should a trader provide for the depreciation of a non-current asset?
1 to match the cost against the revenue of the years which benefit from the use of the
asset
2 to provide a cash fund to enable the asset to be replaced at the end of its useful life
3 to recognise that most non-current assets lose value with the passage of time
4 to spread the cost of the asset over its expected working life to avoid overstating
profit
A 1 and 2 only B 1, 3 and 4 C 2 and 3 only D 2, 3 and 4
13 Equipment costing $20 000 was purchased on 1 January 2019. It has a useful working life of
5 years and a residual value of $3000. Depreciation using the straight-line method was included
in the income statement for the year ended 31 December 2019.
What was the effect on the profit for the year ended 31 December 2019 of this error?
A $2000 overstated
B $2000 understated
C $2600 overstated
D $2600 understated

6
14 A business provided the following information about two expenses.
amount paid during

1 January 2019 year ended 31 December 2019
$ 31 December 2019 $
$
electricity 240 accrued 1500 360 accrued

insurance 180 prepaid 1200 220 prepaid
Which amounts will be charged to the income statement for the year ended 31 December 2019?
electricity insurance
$ $
A 900 800
B 1380 1240
C 1620 1160
D 2100 1600
15 Anjum rents part of her premises to Ajay for $6120 per annum. At the beginning of the year Ajay
had paid two months rent in advance. At the end of the year Ajay had paid three months rent in
advance.
How much rent was received from Ajay during the year?
A $3570 B $5610 C $6630 D $8670
16 A business maintains a provision for doubtful debts of 5% of trade receivables. The balance on
the provision for doubtful debts account on 31 December 2018 was $2700.
On 31 December 2019 the trade receivables amounted to $50 000.
How will the provision for doubtful debts be recorded on 31 December 2019?
provision for
$ income statement $
doubtful debts account
A credit 200 added to gross profit 200

B credit 200 deducted from gross profit 200
C debit 200 added to gross profit 200
D debit 200 deducted from gross profit 200
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17 At the end of the financial year Cindy valued her inventory at cost. This valuation incorrectly
included damaged goods costing $300. Cindy estimated these goods could be sold for $100.
What is the effect of correcting the inventory valuation?
gross profit profit for the year current assets
A decreases by $200 decreases by $200 decrease by $200

B decreases by $300 decreases by $300 decrease by $300
C increases by $100 increases by $100 decrease by $100
D increases by $200 increases by $200 decrease by $200
18 Hassan had the following assets on 31 January 2020.
premises 12 000
inventory 500
balance at bank 360
goodwill 3 000
cash 120
There were no liabilities on 31 January 2020.
Which entries will be made in Hassan’s statement of financial position on 31 January 2020?
intangible non-current current

capital
assets assets assets
$
$ $ $
A nil 12 000 980 12 980

B nil 15 000 480 15 480
C 3000 12 000 980 15 980
D 3000 15 000 480 18 480
19 AB Stores had the following transactions.
1 The owner invested a further $20 000 capital.

2 $2000 was paid to trade payables.
3 A long-term loan of $5000 was repaid.
By how much would the working capital increase after these transactions?
A $13 000 B $15 000 C $20 000 D $27 000

8
20 The balances in the books of a business included the following.
goodwill 10 000
premises 25 000
inventory 15 000
cash at bank 500 debit
long-term loan 5 000
What was the capital employed?
A $50 000 B $54 000 C $60 000 D $65 000
21 What is a disadvantage of operating a business as a partnership?
A Partners may not agree on how to run the business.

B Partners may not have the same skills.
C The financial statements must be published.
D The risks and responsibilities are shared.
22 What does not affect the total equity of a limited company?
A issue of ordinary shares

B ordinary share dividend paid
C profit for the year
D transfer from retained earnings to general reserve
23 What is called-up share capital?
A the amount received by the company for issued shares

B the amount requested from shareholders by the company
C the value of shares the company could issue
D the value of shares actually issued by the company
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24 A limited company provided the following information.
issued share capital (50 000 ordinary shares of $1 each) 50 000

profit for the year ended 31 December 2019 13 000
transfer to general reserve on 31 December 2019 6 000
interim ordinary share dividend paid during the year 3 000
On 31 December 2019 it was decided to use the remaining profit to pay a final ordinary share
dividend.
What percentage final dividend would the ordinary shareholders receive?
A 8% B 14% C 20% D 26%
25 A cricket club set up a snack bar on 1 January 2019.
The following information is available.
for the year ended 31 December 2019

receipts from sales of snacks 3250
cost of purchases of snacks 2500
wages of snack bar assistant 250
at 31 December 2019
cost of snacks unsold 520
What was the profit made by the snack bar?
A $500 B $750 C $1020 D $1270

10
26 A social club had the following assets and liabilities.
non-current assets 6550

cafe expenses owing 25
subscriptions owing by members 50
balance at bank 500 debit
owing to credit suppliers 300
cafe inventory 500
What was the accumulated fund?
A $6275 B $6325 C $7175 D $7275
27 A manufacturing business provided the following information for the year ended
30 November 2019

factory power 5 000
machinery operators’ wages 29 000
raw materials consumed 82 000
What was the total of the direct costs?
A $111 000 B $116 000 C $127 000 D $152 000
28 What would be included in the statement of financial position of a manufacturing business but not
a wholesale business?
A cash
B office equipment
C trade receivables
D work in progress
29 The average inventory of a business was $40 000. The rate of inventory turnover was 5 times a
year. Mark-up was 20%.
What was the revenue for the year?
A $160 000 B $200 000 C $240 000 D $250 000
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30 Sumit does not maintain a full set of accounting records.
What does Sumit not need to calculate his credit sales?
A customer’s dishonoured cheque

B discounts allowed
C discounts received
D returns from credit customers
31 Jake had current liabilities of trade payables and had current assets of inventory, trade
receivables and cash at bank.
Which measure would improve his current ratio?
A buying additional inventory and paying in cash

B decreasing drawings
C revaluing non-current assets
D selling inventory on credit rather than for cash
32 Flo and Mo are traders selling similar goods at similar prices. They provided the following
information.
Flo Mo

Which trader has better control of cost of sales and expenses?
costs of sales expenses
A Flo Flo
B Flo Mo
C Mo Flo
D Mo Mo
33 Which is an application of the materiality principle?
A always using the straight-line method when depreciating assets

B buying raw materials on credit rather than paying immediately
C charging the cost of light bulbs and batteries to operating expenses
D recording goods sold only when its legal title passes to the buyer

12
34 Which accounting principle states that revenue should not be recorded before it is earned?
A consistency
B matching
C money measurement
D realisation
35 Which accounting objective requires that financial statements are free from bias and errors?
A comparability
B relevance
C reliability
D understandability
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2
1 Which action does not reduce the owner’s capital?
A business expenses paid using a personal cheque

B cash withdrawn from the business bank account for personal use
C goods taken from inventory for personal use
D personal expenses paid using business cash
2 Which statement correctly describes the accounting equation?
A capital = assets – liabilities

B capital = assets + liabilities
C capital = current assets – current liabilities
D capital = current assets + current liabilities
3 What could a credit balance on a ledger account represent?
A accrued income
B asset
C expense
D prepaid income
4 Aiden purchased goods from Jai and paid for them by bank transfer when he received a
statement of account. Jai says he has not received the payment.
Which document would help Aiden check that he had made the payment?
A bank statement
C paying-in slip
D petty cash voucher
5 At the end of the month, how is the total from the sales journal recorded in the ledger?
A credited to the customers’ personal accounts

B credited to the sales account
C debited to the customers’ personal accounts
D debited to the sales account
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3
6 A customer paid $15 600 to a supplier after receiving a 2 21 % cash discount and a trade discount
of 20%.
What was the amount of the invoice entered in the purchases journal?
A $12 480 B $15 600 C $16 000 D $20 000
7 A trader maintains a petty cash book using the imprest system. The imprest amount is $120. The
petty cash transactions during the month of June were:
receipt from a customer 21

payments
stationery 25
postage 10
cleaning 20
payment to a supplier 40
How much was given to the petty cashier on 1 July to restore the imprest?
A $46 B $74 C $95 D $120
8 Paula’s trial balance contains errors.
debit credit
$ $
fixtures and fittings 4 000

light and heat 600
purchases 11 200
insurance 1 200
sales 16 500
capital 3 500
drawings 2 000
23 500 25 500
What is the corrected trial balance total?
A $23 500 B $24 500 C $25 500 D $26 500

4
9 The following entry was made in a journal to record the correction of an error.
debit credit
$ $
Wasim 320
bank 320
Which error has been corrected?
A A cheque, $160, was credited to Wasim’s account but no debit entry was made.
B A cheque, $160, was debited to the bank account but no credit entry was made.
C A cheque paid to Wasim, $160, was credited to his account and debited to the bank.
D A cheque received from Wasim, $160, was credited to his account and debited to the bank.
10 Which statement correctly describes a suspense account?
A It is an account opened to check for errors in a trial balance.

B It is a permanent account used to correct the statement of financial position.
C It is a temporary account used to correct errors of complete reversal.
D It is an account that is opened when the totals of a trial balance disagree.
11 A trader prepared a draft income statement which showed a profit for the year of $36 000.
A check of the books revealed the following information.
1 Drawings made by the owner of $900 had been debited to the wages account.
2 The provision for doubtful debts was increased by $20 at the year-end. The income
statement was charged with the total provision of $260.
3 The total of the discount allowed column in the cash book, $140, for one month had
not been debited to the discount allowed account.
A $34 720 B $36 520 C $37 000 D $37 280
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5
12 Alicia’s cash book showed a debit balance of $100 on her bank account. She compared her cash
book to the bank statement and updated the cash book for the following items.
credit transfer to a credit supplier 80

credit transfer from a credit customer 112
bank interest paid 19
What was the debit balance on the bank account after the cash book was updated?
A $49 B $73 C $113 D $151
13 The balance of cash at bank shown in the cash book is $1200. The bank statement at the same
date shows the balance to be $1440.
A payment to a supplier, $120, entered on the wrong side of the cash book
B bank charges, $240, not in the cash book
C cheques to suppliers, $240, not yet presented to the bank
D receipts from customers, $240, banked but not yet entered in the bank statement
14 Jane wished to make a contra entry between a sales ledger account and a purchases ledger
account.
The credit entry was made correctly but the debit entry was entered in the sales returns account
in error.
A Total purchases ledger balances were overstated.

B Total purchases ledger balances were understated.
C Total sales ledger balances were overstated.
D Total sales ledger balances were understated.
15 Which transaction is capital expenditure?
A capital introduced by the owner

B payment of wages
C purchase of a new computer
D repair of equipment

6
16 Sales returns were incorrectly recorded as purchases returns in an income statement.
A Capital employed was understated.

B Cost of sales was overstated.
C Gross profit was understated.
D Profit for the year was overstated.
17 What is a reason for charging depreciation on a non-current asset?
A to build up a fund of money that can be used to replace the asset

B to charge the cost of the asset over the years which benefit from its use
C to ensure that profit is not understated in the income statement
D to show the asset at its market value in the statement of financial position
18 Which non-current asset should be depreciated using the revaluation method?
A loose tools
B mines and wells
C motor vehicles
D office equipment
19 A motor van originally cost $11 500 and had been depreciated by $9000. The van was sold for
$2750.
How should the profit or loss on the sale of the van be shown in the disposal account?
A $250 credit
B $250 debit
C $2500 credit
D $2500 debit
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Which journal entry records this increase in the provision for doubtful debts?
debit credit
$ $
credit customer 400
21 What is an advantage of operating as a sole trader?
A being entitled to all profits

B being responsible for all losses
C having limited liability
D having unlimited liability
22 Emma provided the following information at the end of her financial year.
fees receivable from clients 78 000

rent receivable 11 000
office expenses 20 000
motor expenses 9 000
drawings 2 000
What was her profit for the year?
A $47 000 B $49 000 C $58 000 D $60 000

8
23 A trader provided the following data.
total purchases 25 301

purchase returns 1 945
carriage inwards 748
goods taken for own use 1 425
What was the net figure for purchases in the income statement?
A $21 931 B $22 679 C $23 356 D $24 104
24 Pari and Ira are in a partnership, sharing profits and losses equally.
Interest on the capital account balances is allowed at 6% per annum.
Pari is entitled to a salary of $5000 per annum.
The capital account balances at the start of the year were $60 000 for Pari and $40 000 for Ira.
The profit for the year was $27 500.
How much residual profit was credited to Pari’s current account at the end of the year?
A $8250 B $10 750 C $11 250 D $13 250
25 Which item is directly affected by the dividend policy of a limited company?
A general reserve
B ordinary share capital
C preference share capital
D retained earnings
26 What are the features of a debenture?
return received rate of return voting rights
A dividend based on profit yes

B dividend fixed rate no
C interest based on profit yes
D interest fixed rate no
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27 How are subscriptions received and subscriptions written off recorded in a receipts and payments
account?
subscriptions subscriptions
received written off
A as a credit as a debit
B as a credit no entry made
C as a debit as a credit
D as a debit no entry made
28 Par Golf Club had a shop that sold golfing equipment to its members. The treasurer provided the
following information for the shop for the year ended 31 December.
sales of golfing equipment 5 300

opening inventory of golfing equipment 400
closing inventory of golfing equipment 450
purchases of golfing equipment 2 700
returns from customers 200
carriage on purchases 100
What was the shop’s gross profit for the year?
A $2250 B $2350 C $2450 D $2750
29 Which option contains only indirect costs?
A carriage inwards, factory rent, wages of factory supervisors

B carriage inwards, raw materials, wages of machine operators
C depreciation of machinery, factory rent, wages of factory supervisors
D depreciation of machinery, raw materials, wages of machine operators
30 The capital of a business is higher at the end of year 2 than it was at the end of year 1. No
additional capital has been introduced during year 2.
A The business has made a loss.

B The business has made a profit.
C The business has sold some non-current assets.
D The business has taken a long-term loan.

10
31 Rahat has not maintained a full set of double entry records. She has details of her assets and
liabilities at the start and end of the year.
Which additional information does Rahat need in order to be able to prepare her income
statement for the year?
A a statement of affairs at the start of the year

B a summary of receipts and payments for the year
C the amount of her capital at the end of the year
D the rate of inventory turnover for the year
32 Toby’s purchases for the year were $13 000. His closing inventory was $1000 more than his
opening inventory. Toby’s gross margin is 20%.
What was Toby’s revenue for the year?
A $14 400 B $15 000 C $16 800 D $17 500
33 CD Limited took out a long-term bank loan and used part of the funds to pay some of its credit
suppliers early.
How did this affect the trade payables turnover (days) and the return on capital employed
(ROCE)?
trade payables return on capital

turnover (days) employed (ROCE)
A decrease decrease
B decrease increase
C increase decrease
D increase increase
34 Jimmy made credit sales of $98 550 in each of the years 2021 and 2022.
In 2022, his trade receivables turnover was exactly two days shorter than it had been in 2021.
What was the change in his total trade receivables in 2022?
A $135 decrease
B $135 increase
C $540 decrease
D $540 increase
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35 Which characteristic of financial information requires that financial statements be clearly

presented and assumes that the users of the financial statements will have a reasonable
knowledge of accounting?
A comparability
B relevance
C reliability
D understandability
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2
1 Which actions are examples of book-keeping?
1 entering details of a cheque received from a customer in the cash book

2 entering details of goods purchased on credit in the purchases journal
2 A trader supplied the following information at her year end.
non-current assets 4000

inventory 350
cash at bank 650 debit
trade payables 280
What was the trader’s capital?
A $4900 B $5100 C $5180 D $5460
3 A trader, Karim, purchases a new vehicle by cheque. He will use the vehicle to deliver goods to
his customers.
How should Karim record this transaction in his books?
A bank motor vehicles

B bank purchases
C motor vehicles bank
D purchases bank
© UCLES 2023 0452/12/O/N/23

3
4 The following ledger account was in Meena’s sales ledger.
$ $
Jan 1 balance b / d 100 Jan 15 bank 100

Jan 31 balance c / d 20 Jan 30 sales returns 20
120 120
Feb 1 balance b / d 20
Which statement about the balance on 1 February in Meena’s books of account is correct?
A It is an asset.
B It is an expense.
C It is a liability.
D It is revenue.
5 Which document would a supplier issue to a credit customer if the credit customer had returned
goods or had been overcharged?
A cheque
B credit note
C debit note
D invoice
6 Andy was a regular customer of Khalid. He bought goods with a list price of $1000 and later paid
$760 in full settlement after receiving a discount for prompt payment of 5%.
How much trade discount did Andy receive?
A $40 B $190 C $200 D $278
7 The totals of a trial balance agree.
A All the arithmetic in the ledger is correct.

B All transactions have been entered in the correct ledger accounts.
C All transactions have been entered on the correct sides of the ledger.
D Total debit balances equal total credit balances in the ledger.

4
8 A cheque received from Joe was credited to Joanna’s account.
Which type of error was made?
A commission
B compensating
C original entry
D principle
9 A trader’s journal shows the following entry.
debit credit
details
$ $
John 300
Jane 300
correction of error
Both John and Jane are credit customers of the trader.
Which error is the journal entry correcting?
A Goods bought from Jane were wrongly credited to John.

B Goods bought from John were wrongly credited to Jane.
C Goods sold to Jane were wrongly debited to John.
D Goods sold to John were wrongly debited to Jane.
10 A trial balance does not balance and a suspense account is opened. It is found that a sale of
$250 was credited in the sales account as $2500.
Which entry will correct this error?
$ $
A sales 250 suspense 250

B sales 2250 suspense 2250
C suspense 2250 sales 2250
D suspense 2500 sales 2500
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5
11 A cheque received from D Pawson, a trade receivable, was correctly debited to the bank account
but was credited to the account of P Dawson, a trade payable.
What was the effect of correcting this error?
trade trade
receivables payables
A decrease decrease
B decrease increase
C increase decrease
D increase increase
12 The balance of the bank column in a trader’s cash book was $520 debit.
The trader later discovered that the following items did not appear on his bank statement.
cheque not yet presented $80

cheque not yet credited $470
What was the balance on the trader’s bank statement?
A $130 credit B $130 debit C $910 credit D $910 debit
13 Why does a trader prepare a sales ledger control account?
A to determine when interest should be charged on overdue accounts

B to identify irrecoverable debts that should be written off
C to locate incorrect postings in the sales ledger
D to obtain totals to enter in the books of prime entry
14 When preparing a sales ledger control account, what is the source of information for amounts
received from credit customers?
A bank statements
B cash book
C sales ledger accounts
D statements of account

6
15 Plant and machinery, $2000, was incorrectly posted to the credit side of the purchases account.
The draft profit for the year was $63 000.
Ignore depreciation.
What was the revised profit for the year after the correction of the error?
A $59 000 B $61 000 C $65 000 D $67 000
16 Why are non-current assets depreciated?
1 to avoid overstating the value of non-current assets

2 to charge the cost of an asset as an expense over its lifetime
3 to comply with the accounting principle of historic cost
4 to match capital expenditure against the income it has helped earn
17 On 1 January, Raheem purchased equipment costing $850.
It was estimated to have a working life of 5 years and a scrap value of $50.
The asset was depreciated using the straight-line method.
At the end of 3 years, the machine was sold for $100.
What was the profit or loss on disposal?
A $240 loss
B $270 loss
C $50 profit
D $220 profit
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18 Imran maintains a provision for doubtful debts of 5% of the trade receivables at the end of each
financial year.
The balance on his provision for doubtful debts account on 1 January 2022 was $700.
Trade receivables on 31 December 2022 owed $2000 more than they owed on 31 December 2021.
How did the change in the provision for doubtful debts affect the profit for the year ended
31 December 2022?
A $100 decrease
B $100 increase
C $800 decrease
D $800 increase
19 Ariadne prepares her financial statements to 31 December each year. She valued all her
inventory at cost on 31 December 2021, even though some inventory with a cost of $500 had a
net realisable value of $350.
A Gross profit for the year 2021 was overstated.

B Total assets at 31 December 2021 were understated.
C Profit for the year 2022 was overstated.
D Capital at 31 December 2022 was understated.
20 A trader has capital of $24 400. His non-current assets are $16 100 and his current liabilities are
$4500. There are no non-current liabilities.
What is the amount of his current assets?
A $8300 B $11 600 C $12 800 D $28 900
21 At 1 January 2022, there was a credit balance of $800 on the electricity account. Payments made
during the year totalled $4900. At 31 December 2022, a further $1800 of electricity had been
used since the last invoice was paid.
What is the charge to the income statement for electricity for the year 2022?
A $2300 B $5900 C $6700 D $7500

8
22 Josh and Karen are in a partnership sharing profits and losses 3 : 2. Interest on capital is allowed
at 5%. Salary payable to Josh is $10 000 per annum.
The residual profit after deduction of salary and interest on capital was $20 000. The capital
account balances at the start of the year were: Josh $60 000 and Karen $40 000.
What was the total amount credited to Josh’s current account at the end of the year?
A $12 000 B $15 000 C $22 000 D $25 000
23 A partner is charged interest on the drawings he made during a financial year.
How is this recorded in the partner’s accounts?
A credit the partner’s capital account

B credit the partner’s current account
C debit the partner’s capital account
D debit the partner’s current account
24 Which organisation is the most difficult to establish and has to comply with many legal
formalities?
A partnership
B sole trader
C limited liability company
D club or society
25 Z Limited has the following types of equity and liabilities.
1 debentures
2 general reserves
3 long-term bank loan
4 ordinary share capital
5 preference share capital (non-redeemable)
6 retained earnings
What is included in the company’s shareholders’ equity?
A 1, 2, 4 and 5
B 1, 3, 4 and 5
C 2, 3, 4 and 6
D 2, 4, 5 and 6
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26 A sports club operates a shop selling running shoes to members. These shoes are purchased on
credit terms from suppliers.
Which item is recorded in the receipts and payments account?
A inventory of shoes
B payments to suppliers
C purchases of shoes
D shop profit or loss
27 Which cost is a direct factory cost?
A carriage outwards
B depreciation of factory machinery
C factory supervisors’ wages
D manufacturing royalties
closing work in progress 840

opening work in progress 910
prime cost 40 750
A $19 735 B $19 875 C $61 625 D $61 765
29 Elaine is starting a business.
She wants to make sure she doesn’t miss out on any cash discount which is offered to her.
Which action would help her achieve this?
A issuing her invoices promptly

B maintaining full accounting records of dealings with suppliers
C making purchases in bulk
D undertaking credit checks on all prospective customers

10
30 Ahmed provided the following information.
trade receivables at 1 January 2022 15 000

for the year ended 31 December 2022:
credit sales 85 000
cash sales 12 000
cheques received from trade receivables 65 000
irrecoverable debts 2 000
By how much had the trade receivables increased by the end of the financial year?
A $18 000 B $30 000 C $33 000 D $45 000
revenue $20 000

gross margin 25%
profit margin 10%
There was no other income.
How much were expenses?
A $2000 B $2250 C $3000 D $5000
32 A business has the following assets and liabilities.
inventory 2000
trade payables 1100
bank overdraft 3100
The owner plans to pay some of his own funds into the business bank account to increase the
current ratio to 2 : 1.
How much does he need to pay into the business bank account to achieve this?
A $900 B $1200 C $1900 D $2200
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11
33 Lynne provided the following information about her trading business.
for the year ended 31 August 2023

revenue: cash sales 250 000
credit sales 230 000
at 31 August 2023
other receivables 2 100
What was Lynne’s trade receivables turnover?
34 A trader values his inventory on the same basis at the end of each financial year.
Which accounting principle is the trader observing?
A consistency
B duality
C matching
D realisation
35 Jack is a shareholder in a company. He received the company’s financial statements.
Why did he find the financial statements relevant?
A He was confident that they did not contain errors.

B The financial information was clearly presented.
C The same depreciation methods had been used as in previous years.
D They confirmed his expectations about the future of the company.
© UCLES 2023 0452/12/O/N/23

2
1 Which action does not reduce the owner’s capital?
A business expenses paid using a personal cheque

B cash withdrawn from the business bank account for personal use
C goods taken from inventory for personal use
D personal expenses paid using business cash
2 Which statement correctly describes the accounting equation?
A capital = assets – liabilities

B capital = assets + liabilities
C capital = current assets – current liabilities
D capital = current assets + current liabilities
3 What could a credit balance on a ledger account represent?
A accrued income
B asset
C expense
D prepaid income
4 Aiden purchased goods from Jai and paid for them by bank transfer when he received a
statement of account. Jai says he has not received the payment.
Which document would help Aiden check that he had made the payment?
A bank statement
C paying-in slip
D petty cash voucher
5 At the end of the month, how is the total from the sales journal recorded in the ledger?
A credited to the customers’ personal accounts

B credited to the sales account
C debited to the customers’ personal accounts
D debited to the sales account
© UCLES 2023 0452/11/O/N/23

3
6 A customer paid $15 600 to a supplier after receiving a 2 21 % cash discount and a trade discount
of 20%.
What was the amount of the invoice entered in the purchases journal?
A $12 480 B $15 600 C $16 000 D $20 000
7 A trader maintains a petty cash book using the imprest system. The imprest amount is $120. The
petty cash transactions during the month of June were:
receipt from a customer 21

payments
stationery 25
postage 10
cleaning 20
payment to a supplier 40
How much was given to the petty cashier on 1 July to restore the imprest?
A $46 B $74 C $95 D $120
8 Paula’s trial balance contains errors.
debit credit
$ $
fixtures and fittings 4 000

light and heat 600
purchases 11 200
insurance 1 200
sales 16 500
capital 3 500
drawings 2 000
23 500 25 500
What is the corrected trial balance total?
A $23 500 B $24 500 C $25 500 D $26 500

4
9 The following entry was made in a journal to record the correction of an error.
debit credit
$ $
Wasim 320
bank 320
Which error has been corrected?
A A cheque, $160, was credited to Wasim’s account but no debit entry was made.
B A cheque, $160, was debited to the bank account but no credit entry was made.
C A cheque paid to Wasim, $160, was credited to his account and debited to the bank.
D A cheque received from Wasim, $160, was credited to his account and debited to the bank.
10 Which statement correctly describes a suspense account?
A It is an account opened to check for errors in a trial balance.

B It is a permanent account used to correct the statement of financial position.
C It is a temporary account used to correct errors of complete reversal.
D It is an account that is opened when the totals of a trial balance disagree.
11 A trader prepared a draft income statement which showed a profit for the year of $36 000.
A check of the books revealed the following information.
1 Drawings made by the owner of $900 had been debited to the wages account.
2 The provision for doubtful debts was increased by $20 at the year-end. The income
statement was charged with the total provision of $260.
3 The total of the discount allowed column in the cash book, $140, for one month had
not been debited to the discount allowed account.
A $34 720 B $36 520 C $37 000 D $37 280
© UCLES 2023 0452/11/O/N/23

5
12 Alicia’s cash book showed a debit balance of $100 on her bank account. She compared her cash
book to the bank statement and updated the cash book for the following items.
credit transfer to a credit supplier 80

credit transfer from a credit customer 112
bank interest paid 19
What was the debit balance on the bank account after the cash book was updated?
A $49 B $73 C $113 D $151
13 The balance of cash at bank shown in the cash book is $1200. The bank statement at the same
date shows the balance to be $1440.
A payment to a supplier, $120, entered on the wrong side of the cash book
B bank charges, $240, not in the cash book
C cheques to suppliers, $240, not yet presented to the bank
D receipts from customers, $240, banked but not yet entered in the bank statement
14 Jane wished to make a contra entry between a sales ledger account and a purchases ledger
account.
The credit entry was made correctly but the debit entry was entered in the sales returns account
in error.
A Total purchases ledger balances were overstated.

B Total purchases ledger balances were understated.
C Total sales ledger balances were overstated.
D Total sales ledger balances were understated.
15 Which transaction is capital expenditure?
A capital introduced by the owner

B payment of wages
C purchase of a new computer
D repair of equipment

6
16 Sales returns were incorrectly recorded as purchases returns in an income statement.
A Capital employed was understated.

B Cost of sales was overstated.
C Gross profit was understated.
D Profit for the year was overstated.
17 What is a reason for charging depreciation on a non-current asset?
A to build up a fund of money that can be used to replace the asset

B to charge the cost of the asset over the years which benefit from its use
C to ensure that profit is not understated in the income statement
D to show the asset at its market value in the statement of financial position
18 Which non-current asset should be depreciated using the revaluation method?
A loose tools
B mines and wells
C motor vehicles
D office equipment
19 A motor van originally cost $11 500 and had been depreciated by $9000. The van was sold for
$2750.
How should the profit or loss on the sale of the van be shown in the disposal account?
A $250 credit
B $250 debit
C $2500 credit
D $2500 debit
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7
Which journal entry records this increase in the provision for doubtful debts?
debit credit
$ $
credit customer 400
21 What is an advantage of operating as a sole trader?
A being entitled to all profits

B being responsible for all losses
C having limited liability
D having unlimited liability
22 Emma provided the following information at the end of her financial year.
fees receivable from clients 78 000

rent receivable 11 000
office expenses 20 000
motor expenses 9 000
drawings 2 000
What was her profit for the year?
A $47 000 B $49 000 C $58 000 D $60 000

8
23 A trader provided the following data.
total purchases 25 301

purchase returns 1 945
carriage inwards 748
goods taken for own use 1 425
What was the net figure for purchases in the income statement?
A $21 931 B $22 679 C $23 356 D $24 104
24 Pari and Ira are in a partnership, sharing profits and losses equally.
Interest on the capital account balances is allowed at 6% per annum.
Pari is entitled to a salary of $5000 per annum.
The capital account balances at the start of the year were $60 000 for Pari and $40 000 for Ira.
How much residual profit was credited to Pari’s current account at the end of the year?
A $8250 B $10 750 C $11 250 D $13 250
25 Which item is directly affected by the dividend policy of a limited company?
A general reserve
B ordinary share capital
C preference share capital
D retained earnings
26 What are the features of a debenture?
return received rate of return voting rights
A dividend based on profit yes

B dividend fixed rate no
C interest based on profit yes
D interest fixed rate no
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9
27 How are subscriptions received and subscriptions written off recorded in a receipts and payments
account?
subscriptions subscriptions
received written off
A as a credit as a debit
B as a credit no entry made
C as a debit as a credit
D as a debit no entry made
28 Par Golf Club had a shop that sold golfing equipment to its members. The treasurer provided the
following information for the shop for the year ended 31 December.
sales of golfing equipment 5 300

opening inventory of golfing equipment 400
closing inventory of golfing equipment 450
purchases of golfing equipment 2 700
returns from customers 200
carriage on purchases 100
What was the shop’s gross profit for the year?
A $2250 B $2350 C $2450 D $2750
29 Which option contains only indirect costs?
A carriage inwards, factory rent, wages of factory supervisors

B carriage inwards, raw materials, wages of machine operators
C depreciation of machinery, factory rent, wages of factory supervisors
D depreciation of machinery, raw materials, wages of machine operators
30 The capital of a business is higher at the end of year 2 than it was at the end of year 1. No
additional capital has been introduced during year 2.
A The business has made a loss.

B The business has made a profit.
C The business has sold some non-current assets.
D The business has taken a long-term loan.

10
31 Rahat has not maintained a full set of double entry records. She has details of her assets and
liabilities at the start and end of the year.
Which additional information does Rahat need in order to be able to prepare her income
statement for the year?
A a statement of affairs at the start of the year

B a summary of receipts and payments for the year
C the amount of her capital at the end of the year
D the rate of inventory turnover for the year
32 Toby’s purchases for the year were $13 000. His closing inventory was $1000 more than his
opening inventory. Toby’s gross margin is 20%.
What was Toby’s revenue for the year?
A $14 400 B $15 000 C $16 800 D $17 500
33 CD Limited took out a long-term bank loan and used part of the funds to pay some of its credit
suppliers early.
How did this affect the trade payables turnover (days) and the return on capital employed
(ROCE)?
trade payables return on capital

turnover (days) employed (ROCE)
A decrease decrease
B decrease increase
C increase decrease
D increase increase
34 Jimmy made credit sales of $98 550 in each of the years 2021 and 2022.
In 2022, his trade receivables turnover was exactly two days shorter than it had been in 2021.
What was the change in his total trade receivables in 2022?
A $135 decrease
B $135 increase
C $540 decrease
D $540 increase
© UCLES 2023 0452/11/O/N/23

11
35 Which characteristic of financial information requires that financial statements be clearly

presented and assumes that the users of the financial statements will have a reasonable
knowledge of accounting?
A comparability
B relevance
C reliability
D understandability
© UCLES 2023 0452/11/O/N/23

2
1 What is the main function of book-keeping?
A communicating information
B interpreting information
C recording information
D summarising information
2 Which components of a statement of financial position do descriptions 1, 2 and 3 relate to?
1 finance and other resources that have been provided by the owner
2 money owed for goods supplied, unpaid expenses and loans made to the business
3 property owned by the business, amounts owed by customers, unsold goods and
money in the bank
1 2 3
A assets capital liabilities

B assets liabilities capital
C capital assets liabilities
D capital liabilities assets
3 A cheque received from Kate, a credit customer, was dishonoured.
How was this dishonoured cheque recorded?
account account
debited credited
A bank Kate
B Kate bank
C Kate sales
D sales Kate
4 What does the sales ledger of a business contain?
A accounts of trade payables

B accounts of trade receivables
C sales account
D sales ledger control account
© UCLES 2023 0452/13/M/J/23

3
5 Which action is an example of double entry book-keeping?
A making a journal entry to record the correction of an error made in the ledger
B making entries in the sales journal and the sales ledger to record goods sold on credit
C recording a cheque paid to a trade payable in the cash book and purchases ledger
D recording the purchase of goods on credit in the purchases journal and purchases account
6 What is true about cash discounts received?
they are they increase

recorded in profit for
the cash book the year
A
B
C
D
7 Tahir prepared a trial balance. He entered both the balance on the discount allowed account,
$900, and the bank overdraft, $750, in the wrong column.
Which total of the trial balance was higher and what was the amount of the difference between
the debit total and the credit total?
amount of
total that
difference
was higher
$
A credit column 300

B credit column 1650
C debit column 150
D debit column 3300
8 Goods sold on credit to J Sharp were debited in error to the account of T Sharpe.
A commission
B complete reversal
C original entry
D principle

4
9 Khalid made entries in a suspense account to correct two errors found in his ledger accounts.
Once the errors were corrected, the suspense account was closed.
error 1 $700 sales had been omitted from the sales account.
error 2 The purchases journal had been overcast by $550.
Which entry was made in the suspense account to balance the trial balance?
A credit $150
B credit $1250
C debit $150
D debit $1250
10 Maya depreciates her motor vehicle at 25% per annum using the straight-line method.
The motor vehicle cost $15 000.
The depreciation for the current financial year was incorrectly calculated at 15% per annum.
How will correcting the error affect the profit for the year?
A decrease $1500
B decrease $2250
C increase $1500
D increase $2250
11 Waseem received a bank statement. He found that the bank had charged interest twice in error
and that a dividend had been received on an investment.
Waseem then updated the cash book and prepared a bank reconciliation statement.
Where did he record these two items?
bank error dividend
A bank reconciliation statement bank reconciliation statement

B bank reconciliation statement updated cash book
C updated cash book bank reconciliation statement
D updated cash book updated cash book
© UCLES 2023 0452/13/M/J/23

5
1 the total for goods which have been returned by credit customers
2 the amount owed by credit customers which have been written off as irrecoverable.

13 On 1 August, the sales ledger control account had a debit balance of $1800.
During August, a debt of $200 was written off as irrecoverable and $10 000 was received from
credit customers. On 31 August, the credit customers owed $3000.
What was the total of credit sales in August?
A $7200 B $11 200 C $11 400 D $11 600
14 A wholesaler had the following transactions.
sold goods, $30 000, on credit

received cheque, $12 000, from sale of old fixtures at book value
How would these amounts be classified?
revenue receipt capital receipt

$ $
A nil 42 000
B 12 000 30 000
C 30 000 12 000
D 42 000 nil

6

the year assets
16 A business bought two assets, X and Y, on 1 January 2022, for $2000 each.
It depreciates asset X by 10% per annum using the straight-line method, and asset Y by 10% per
annum using the reducing balance method.
asset X will be fully in 2022 the depreciation

depreciated before charge is lower for
asset Y asset X than for asset Y
A incorrect incorrect
B incorrect correct
C correct incorrect
D correct correct
17 Ravi’s financial year ends on 30 April.
Ravi bought a motor vehicle for $8000 on 1 May 2020 and sold it for $4050 on 1 May 2022.
He uses the reducing balance method of depreciation at 20% per annum.
What would be recorded in the income statement for the year ended 30 April 2023 for the
disposal of the motor vehicle?
A $750 loss
B $750 profit
C $1070 loss
D $1070 profit
© UCLES 2023 0452/13/M/J/23

7
18 On 2 January, Razia wrote off $450 owed to her by Annette, a credit customer, as irrecoverable.
On 2 October, Annette paid $100 by cheque in part settlement of that debt.
Which entries would Razia make on 2 October?
A bank debts recovered

B bank irrecoverable debts
C debts recovered bank
D irrecoverable debts bank
19 Asha provided the following information about her inventory at the end of the financial year.
cost price selling price

number
product per unit per unit
of units
$ $
P 200 2.50 2.00

J 300 3.00 3.50
What was the total value of Asha’s inventory?
A $1300 B $1400 C $1450 D $1550
20 Which group contains only service businesses?
A book shop, language school, newsagent

B jewellery repairer, taxi firm, food store
C language school, taxi firm, jewellery repairer
D taxi firm, newsagent, food store
21 What does the statement of financial position of a business show?
A assets and liabilities at a certain date

B calculation of the annual profit or loss
C changes in equity during the financial year
D income and expenditure for the financial year

8
22 A trader pays her insurance premium on 1 January each year for the following 12 months.
She made the following payments for insurance.
1 January 2022 1680

1 January 2023 1920
How much did the trader include for insurance in her income statement for the year ended
31 March 2023?
A $1680 B $1740 C $1920 D $2160
23 Which item is added to the profit for the year in a partnership appropriation account?
C partners’ drawings
D partners’ salaries
24 Abi and Erni are in partnership. Erni is entitled to an annual partnership salary of $3000. They
share residual profits and losses equally. The profit for the year ended 31 August 2022 was
$12 600.
On 1 September 2021, the partners’ current account balances were as follows.
Abi 2500 credit

Erni 1400 debit
What was the credit balance on Erni’s current account on 1 September 2022?
A $400 B $3200 C $6400 D $9200
25 What is meant by the term equity?
A dividend paid to ordinary shareholders

B funds raised through borrowing
C interest paid to debenture holders
D total funds provided by shareholders
© UCLES 2023 0452/13/M/J/23

9
26 During the financial year, AB Limited paid debenture interest of $1400 relating to that financial
year. At the end of the year, debenture interest of $700 was accrued.
How was debenture interest shown in the financial statements for the year?
income statement of
statement changes in equity
$ $
A 1400 no entry
B 2100 no entry
C no entry 1400
D no entry 2100
27 Which items are included in an income and expenditure account prepared for a sports club?
1 cost of new furniture purchased during the year for the clubhouse
2 depreciation on furniture and sports equipment
3 rates for the clubhouse paid in advance for the next financial year
4 subscriptions that remain unpaid by club members at the end of the financial year
28 Melody is a music club. The club holds a music concert once every year. Prizes are awarded to
musicians selected by a judge.
The club provided the following information related to the latest music concert.
sale of concert tickets 1 500

purchases of concert prizes 450
sale of concert programmes 150
payment of fee to the concert judge 250
What was the profit from the concert?
A $950 B $1050 C $1450 D $2100

10
opening inventory of raw material 50 000

closing inventory of raw material 60 000
purchases of raw material 80 000
carriage inwards on raw material 2 000
What was the cost of raw material consumed?
A $70 000 B $72 000 C $90 000 D $92 000
30 Ashwin started a business as a taxi driver on 1 January 2022. His taxi cost $5000 and he paid
$100 into a business bank account.
He did not keep any accounting records. On 31 December 2022, he had $1750 in the business
bank account, his taxi was valued at $4000 and he owed $50 to the garage for repairs. During the
year, he took $1600 out of the business bank account as drawings.
What was the profit for the year?
A $1650 B $2200 C $2250 D $3250
31 A trader did not keep a complete set of accounts. He provided the following information for the
year.
opening trade payables 5 000

closing trade payables 9 800
payments to credit suppliers 35 000
cash discounts received 3 000
A $30 200 B $36 800 C $39 800 D $42 800
© UCLES 2023 0452/13/M/J/23

11
32 T Limited provided the following information.
net profit before interest 29 200

equity at the year-end 192 000
What was T Limited’s return on capital employed?
A 13.21% B 13.77% C 14.58% D 15.21%

34 The following ratios relate to the businesses of Ewa and Max.
Ewa Max

liquid (acid test) ratio 1.4 : 1 1.0 : 1
An accounting student made the following statements.
1 Ewa can meet her current liabilities from her current assets more easily than Max.
2 Ewa can meet her current liabilities from her liquid assets more easily than Max.
3 Max has insufficient current assets to meet his current liabilities.
4 Max has sufficient liquid assets to meet his current liabilities.

12
35 A café owner made no entry in her accounts for increased competition when another café opened
nearby.
A historic cost
B materiality
C money measurement
D prudence
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2023 0452/13/M/J/23

2
1 What is the main function of book-keeping?
A communicating information
B interpreting information
C recording information
D summarising information
2 Which components of a statement of financial position do descriptions 1, 2 and 3 relate to?
1 finance and other resources that have been provided by the owner
2 money owed for goods supplied, unpaid expenses and loans made to the business
3 property owned by the business, amounts owed by customers, unsold goods and
money in the bank
1 2 3
A assets capital liabilities

B assets liabilities capital
C capital assets liabilities
D capital liabilities assets
3 A cheque received from Kate, a credit customer, was dishonoured.
How was this dishonoured cheque recorded?
account account
debited credited
A bank Kate
B Kate bank
C Kate sales
D sales Kate
4 What does the sales ledger of a business contain?
A accounts of trade payables

B accounts of trade receivables
C sales account
D sales ledger control account
© UCLES 2023 0452/12/M/J/23

3
5 Which action is an example of double entry book-keeping?
A making a journal entry to record the correction of an error made in the ledger
B making entries in the sales journal and the sales ledger to record goods sold on credit
C recording a cheque paid to a trade payable in the cash book and purchases ledger
D recording the purchase of goods on credit in the purchases journal and purchases account
6 What is true about cash discounts received?
they are they increase

recorded in profit for
the cash book the year
A
B
C
D
7 Tahir prepared a trial balance. He entered both the balance on the discount allowed account,
$900, and the bank overdraft, $750, in the wrong column.
Which total of the trial balance was higher and what was the amount of the difference between
the debit total and the credit total?
amount of
total that
difference
was higher
$
A credit column 300

B credit column 1650
C debit column 150
D debit column 3300
8 Goods sold on credit to J Sharp were debited in error to the account of T Sharpe.
A commission
B complete reversal
C original entry
D principle

4
9 Khalid made entries in a suspense account to correct two errors found in his ledger accounts.
Once the errors were corrected, the suspense account was closed.
error 1 $700 sales had been omitted from the sales account.
error 2 The purchases journal had been overcast by $550.
Which entry was made in the suspense account to balance the trial balance?
A credit $150
B credit $1250
C debit $150
D debit $1250
10 Maya depreciates her motor vehicle at 25% per annum using the straight-line method.
The motor vehicle cost $15 000.
The depreciation for the current financial year was incorrectly calculated at 15% per annum.
How will correcting the error affect the profit for the year?
A decrease $1500
B decrease $2250
C increase $1500
D increase $2250
11 Waseem received a bank statement. He found that the bank had charged interest twice in error
and that a dividend had been received on an investment.
Waseem then updated the cash book and prepared a bank reconciliation statement.
Where did he record these two items?
bank error dividend
A bank reconciliation statement bank reconciliation statement

B bank reconciliation statement updated cash book
C updated cash book bank reconciliation statement
D updated cash book updated cash book
© UCLES 2023 0452/12/M/J/23

5
1 the total for goods which have been returned by credit customers
2 the amount owed by credit customers which have been written off as irrecoverable.

13 On 1 August, the sales ledger control account had a debit balance of $1800.
During August, a debt of $200 was written off as irrecoverable and $10 000 was received from
credit customers. On 31 August, the credit customers owed $3000.
What was the total of credit sales in August?
A $7200 B $11 200 C $11 400 D $11 600
14 A wholesaler had the following transactions.
sold goods, $30 000, on credit

received cheque, $12 000, from sale of old fixtures at book value
How would these amounts be classified?
revenue receipt capital receipt

$ $
A nil 42 000
B 12 000 30 000
C 30 000 12 000
D 42 000 nil

6

the year assets
16 A business bought two assets, X and Y, on 1 January 2022, for $2000 each.
It depreciates asset X by 10% per annum using the straight-line method, and asset Y by 10% per
annum using the reducing balance method.
asset X will be fully in 2022 the depreciation

depreciated before charge is lower for
asset Y asset X than for asset Y
A incorrect incorrect
B incorrect correct
C correct incorrect
D correct correct
17 Ravi’s financial year ends on 30 April.
Ravi bought a motor vehicle for $8000 on 1 May 2020 and sold it for $4050 on 1 May 2022.
He uses the reducing balance method of depreciation at 20% per annum.
What would be recorded in the income statement for the year ended 30 April 2023 for the
disposal of the motor vehicle?
A $750 loss
B $750 profit
C $1070 loss
D $1070 profit
© UCLES 2023 0452/12/M/J/23

7
18 On 2 January, Razia wrote off $450 owed to her by Annette, a credit customer, as irrecoverable.
On 2 October, Annette paid $100 by cheque in part settlement of that debt.
Which entries would Razia make on 2 October?
A bank debts recovered

B bank irrecoverable debts
C debts recovered bank
D irrecoverable debts bank
19 Asha provided the following information about her inventory at the end of the financial year.
cost price selling price

number
product per unit per unit
of units
$ $
P 200 2.50 2.00

J 300 3.00 3.50
What was the total value of Asha’s inventory?
A $1300 B $1400 C $1450 D $1550
20 Which group contains only service businesses?
A book shop, language school, newsagent

B jewellery repairer, taxi firm, food store
C language school, taxi firm, jewellery repairer
D taxi firm, newsagent, food store
21 What does the statement of financial position of a business show?
A assets and liabilities at a certain date

B calculation of the annual profit or loss
C changes in equity during the financial year
D income and expenditure for the financial year

8
22 A trader pays her insurance premium on 1 January each year for the following 12 months.
She made the following payments for insurance.
1 January 2022 1680

1 January 2023 1920
How much did the trader include for insurance in her income statement for the year ended
31 March 2023?
A $1680 B $1740 C $1920 D $2160
23 Which item is added to the profit for the year in a partnership appropriation account?
C partners’ drawings
D partners’ salaries
24 Abi and Erni are in partnership. Erni is entitled to an annual partnership salary of $3000. They
share residual profits and losses equally. The profit for the year ended 31 August 2022 was
$12 600.
On 1 September 2021, the partners’ current account balances were as follows.
Abi 2500 credit

Erni 1400 debit
What was the credit balance on Erni’s current account on 1 September 2022?
A $400 B $3200 C $6400 D $9200
25 What is meant by the term equity?
A dividend paid to ordinary shareholders

B funds raised through borrowing
C interest paid to debenture holders
D total funds provided by shareholders
© UCLES 2023 0452/12/M/J/23

9
26 During the financial year, AB Limited paid debenture interest of $1400 relating to that financial
year. At the end of the year, debenture interest of $700 was accrued.
How was debenture interest shown in the financial statements for the year?
income statement of
statement changes in equity
$ $
A 1400 no entry
B 2100 no entry
C no entry 1400
D no entry 2100
27 Which items are included in an income and expenditure account prepared for a sports club?
1 cost of new furniture purchased during the year for the clubhouse
2 depreciation on furniture and sports equipment
3 rates for the clubhouse paid in advance for the next financial year
4 subscriptions that remain unpaid by club members at the end of the financial year
28 Melody is a music club. The club holds a music concert once every year. Prizes are awarded to
musicians selected by a judge.
The club provided the following information related to the latest music concert.
sale of concert tickets 1 500

purchases of concert prizes 450
sale of concert programmes 150
payment of fee to the concert judge 250
What was the profit from the concert?
A $950 B $1050 C $1450 D $2100

10
opening inventory of raw material 50 000

closing inventory of raw material 60 000
purchases of raw material 80 000
carriage inwards on raw material 2 000
What was the cost of raw material consumed?
A $70 000 B $72 000 C $90 000 D $92 000
30 Ashwin started a business as a taxi driver on 1 January 2022. His taxi cost $5000 and he paid
$100 into a business bank account.
He did not keep any accounting records. On 31 December 2022, he had $1750 in the business
bank account, his taxi was valued at $4000 and he owed $50 to the garage for repairs. During the
year, he took $1600 out of the business bank account as drawings.
A $1650 B $2200 C $2250 D $3250
31 A trader did not keep a complete set of accounts. He provided the following information for the
year.
opening trade payables 5 000

closing trade payables 9 800
payments to credit suppliers 35 000
cash discounts received 3 000
A $30 200 B $36 800 C $39 800 D $42 800
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32 T Limited provided the following information.
net profit before interest 29 200

equity at the year-end 192 000
What was T Limited’s return on capital employed?
A 13.21% B 13.77% C 14.58% D 15.21%

34 The following ratios relate to the businesses of Ewa and Max.
Ewa Max

liquid (acid test) ratio 1.4 : 1 1.0 : 1
An accounting student made the following statements.
1 Ewa can meet her current liabilities from her current assets more easily than Max.
2 Ewa can meet her current liabilities from her liquid assets more easily than Max.
3 Max has insufficient current assets to meet his current liabilities.
4 Max has sufficient liquid assets to meet his current liabilities.

12
35 A café owner made no entry in her accounts for increased competition when another café opened
nearby.
A historic cost
B materiality
C money measurement
D prudence
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2023 0452/12/M/J/23

2
1 Why does the accountant of a business analyse its financial statements?
A to provide information for the customers

B to provide information for the government
C to provide information for the managers
D to provide information for the suppliers
2 Padma started a business on 1 April 2022 with $30 000 of her own money. On 31 March 2023,
her assets and liabilities were as shown.
machinery at net book value 38 000

other assets 15 000
long-term loan from bank 16 500
What was Padma’s capital on 31 March 2023?
A $30 000 B $36 500 C $46 500 D $53 000
3 A trader credited the income statement and debited his capital account.
What does this double entry record?
A capital introduced
B drawings
C loss for the year
D profit for the year
4 Ted, a manufacturer, purchased a machine on credit from T Limited.
How did Ted record this?
A T Limited machinery
B T Limited purchases
C machinery T Limited
D purchases T Limited
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5 The following account appeared in the books of Abdul.
Hanif account
2023 $ 2023 $
Jan 18 returns 100 Jan 1 balance b / d 400

discount 8
balance c / d 150
650 650
A On 1 January, Abdul owed Hanif $400.

B On 4 January, Hanif purchased goods, $250, from Abdul.
C On 31 January, Abdul allowed Hanif $8 trade discount.
D On 31 January, Hanif owed Abdul $150.
6 Which items are shown on a statement of account?
A bank charges
B credit notes
C debit notes
D trade discounts
7 A trader issues an invoice for goods sold on credit. The full price of the goods is $2500.
The trader allows a trade discount of 15%, and offers a cash discount of 4% for prompt payment.
Which amount is recorded in the sales journal?
A $2025 B $2040 C $2125 D $2500
8 A trader prepared a trial balance at 31 December.
Which statement about this trial balance is correct?
A It shows a summary of the financial position at 31 December.

B It shows the ledger account balances at 31 December.
C It shows the profit for the year ended 31 December.
D It shows the transactions for the year to 31 December.

4
9 After completing the trial balance, it was found that an amount of $4000 for motor vehicle repairs
had been entered in the motor vehicle account.
Which type of error is this?
A commission
B compensating
C omission
D principle
10 At the end of his financial year, Zane opened a suspense account.
Why was it necessary to open this account?
A the suspense account had been omitted from the ledger

B the trial balance totals did not agree
C to correct an error of commission
D to make sure no errors were made in the ledger
11 Jack has opened a suspense account. He has found that rent paid of $250 has been correctly
entered in the rent account but credited to the bank account as $520.
Which entries will correct this error?
debit $ credit $
A bank account 270 suspense account 270

B bank account 520 suspense account 520
C suspense account 270 bank account 270
D suspense account 520 bank account 520
12 Naila provided the following information at 31 August.
debit balance in cash book at 31 August 449

uncredited deposits 424
unpresented cheques 175
interest charged in error by the bank 10
What was the credit balance on the bank statement at 31 August?
A $190 B $210 C $688 D $708
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13 Which statement about a sales ledger control account is not correct?
A It assists in the location of errors.

B It helps to deter fraud.
C It prevents debts becoming irrecoverable.
D It provides a quick total of trade receivables.
14 The following partly completed account appeared in Candy’s ledger.
Purchases ledger control account

$ $
Dec 31 bank 42 000 Dec 1 balance b / d 720

discount received 600 31 purchases 48 000
The following entries still need to be made in the account.
Interest of $15 was charged by credit suppliers for overdue payments.

Balances owing in the purchases ledger totalling $450 were set off against balances in
the sales ledger.
What will be the closing balance on the purchases ledger control account after these entries are
made?
A $5655 B $5685 C $6555 D $6585
15 A trader’s expenditure during the year includes the following amounts.
redecoration of premises 5 000

insurance of motor vehicles 2 000
purchase of machinery 10 000
How much should the trader charge to her income statement for the year?
A $7000 B $10 000 C $12 000 D $17 000
16 Which statement about depreciation is correct?
A It is a cash fund to replace a non-current asset.

B It is a monetary expense as it involves the outflow of money.
C It is an estimate of the loss in value of a current asset over its expected life.
D It is recorded in the nominal ledger and the income statement.

6
17 Rashid provided the following balances at 31 December.

Depreciation for the year was calculated at 20% on cost and is included in the balance for the
provision.
After the balances had been extracted, it was found that machinery repairs costing $2000 had
been debited in error to the machinery account.
A $21 000 B $22 600 C $23 400 D $25 000
18 Annual rental income due from Kumar, a tenant, is $3600. At the start of the year, Kumar had
prepaid rent of $900. At the end of the year, he owed two months’ rent.
A $2100 B $3300 C $3900 D $5100
19 At the end of the financial year, Gina had the following items of clothing in her inventory.
100 t-shirts: cost price per unit $15, selling price per unit $30
200 dresses: cost price per unit $40, selling price per unit $30
What was the value of Gina’s inventory?
A $7500 B $9000 C $9500 D $11 000
20 Which error causes the gross profit to be overstated?
A closing inventory under-valued

B opening inventory omitted from the income statement
C purchases recorded before deduction of trade discount
D sales invoices omitted from the sales journal
21 Which group consists of only intangible assets?
A bank balance, brand names, goodwill

B bank balance, trademarks, trade receivables
C brand names, goodwill, trademarks
D goodwill, trademarks, trade receivables
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22 At the end of the financial year, Karim decided to increase his provision for doubtful debts.
How will this affect his income statement and the statement of financial position?
statement of
income statement
financial position
A decrease expenses increase current assets

B decrease expenses increase current liabilities
C increase expenses decrease current assets
D increase expenses decrease current liabilities
23 What is included in an appropriation account of a partnership?
1 annual salary to which each partner is entitled

2 drawings made by each partner during the year
3 the closing balance on each partner’s capital account
4 the division of residual profit between the partners
A 1, 2 and 3 B 1 and 4 C 2 and 3 only D 4 only
24 X and Y are in partnership with capital of $50 000 and $30 000 respectively.
The partnership agreement provides that profits are to be shared in proportion to capital invested
and each partner is entitled to 10% interest on capital.
Profit for the year was $37 000.
What was the total amount credited to Y’s current account at the end of the year?
A $10 875 B $13 875 C $18 125 D $23 125
25 What is an advantage of being a member of a limited company?
A Loan capital is easy to obtain.

B Dividends must be paid to the member.
C Financial statements are prepared quickly.
D The company is a separate legal entity.

8
issued share capital (50 000 ordinary shares of $1 each) 50 000

profit for the year ended 31 December 2022 13 000
transfer to general reserve during the year 6 000
interim ordinary share dividend paid during the year 3 000
On 31 December 2022, it was decided to use the remaining profit to pay a final ordinary share
dividend.
Which percentage final dividend would the ordinary shareholders receive?
A 8% B 14% C 20% D 26%
27 P Limited maintains a provision for doubtful debts account. On 1 April 2022, this account had a
balance of $6200.
The provision should have been increased to $7400 on 31 March 2023, but this adjustment was
not made.
What was the effect of this error on the retained earnings in the statement of financial position on
31 March 2023?
A overstated $1200
B overstated $7400
C understated $1200
D understated $7400
28 What is included in the income and expenditure account of a tennis club?
A all amounts received and paid during the year

B all capital and revenue expenditure incurred during the year
C the closing balances on the accumulated fund
D the profit for the year from the club’s shop
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29 Tim started a manufacturing business on 1 January. He provided the following information about
his first year in business.
closing inventory of finished goods 2 060

prime cost 70 570
What was Tim’s cost of production?
A $82 200 B $84 260 C $86 100 D $87 940
30 Hassan’s capital decreased by $200 over the year, even though he made a profit of $7000.
Which transactions caused this?
capital introduced drawings

$ $
A 1000 8200
B 1200 6000
C 2000 8800
D 2200 4600
credit sales $36 000

cash sales 10% of total sales
net profit margin 30%
How much is the net profit?
A $9720 B $10 800 C $11 880 D $12 000

10
32 The table shows the gross margin and profit margin for four businesses.
Which business controls its overheads most efficiently?
gross margin profit margin

% %
A 40 17
B 37 15
C 35 14
D 30 12
33 Ramiz works as a sales manager in a car showroom. He is paid on the basis of the number of
cars sold.
Which accounting ratio will be relevant to Ramiz?
A gross margin
B profit margin
C rate of inventory turnover
D trade receivables turnover
34 Manvinder started a business and paid a cheque for $1000 into a business bank account. He
recorded this in the books of the business by debiting the bank account and crediting the capital
account.
Which accounting principles did he apply?
A business entity and duality

B business entity and going concern
C going concern and matching
D matching and duality
35 A trader always records assets and expenses in his ledger at the price he paid for them.
Which accounting principle is he applying?
A business entity
B historic cost
C prudence
D realisation
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1 What is the purpose of accounting?
A to enter each business transaction twice in the books of account

B to prepare financial statements and provide information for decision making
C to prove that the total of the debit entries equals the total of the credit entries
D to provide financial information for the business’s bank manager
2 How would a business owner know that he is receiving a return on his investment?
A His bank account is no longer overdrawn.

B His drawings have increased.
C His income statement shows a profit for the year.
D His working capital has increased during the year.
3 What is the correct order of processing accounting data using the double entry system?
A business documents, journals, ledgers, trial balance

B journals, business documents, ledgers, trial balance
C ledgers, business documents, trial balance, journals
D trial balance, business documents, ledgers, journals
4 Ada bought goods on credit from Zuri. Later, she returned some of the goods to Zuri.
How did Ada record the return in her books?
A purchases returns Zuri

B sales returns Zuri
C Zuri purchases returns
D Zuri sales returns
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5 Samir owns a shop. To determine his selling price he marks up his inventory by 50%. He took
inventory for his own use costing $100 but did not pay for it.
How should this be entered in the accounts?
debit credit
A drawings $100 purchases $100

B drawings $150 purchases $150
C trade receivables $100 sales $100
D trade receivables $150 sales $150
6 In April, Meena sent Ralph invoices for $170, $240, $125 and a credit note for $63. In the same
month, Ralph sent Meena a debit note for $70 and a cheque for $107. There was no opening
balance on Meena's account at the start of April.
What was the balance on Meena’s account in Ralph’s books on 1 May?
A $295 credit
B $295 debit
C $365 credit
D $365 debit
7 On 1 May, Bashir purchases goods on credit with a list price of $200. He is given a trade discount
of $20. If payment is made within 28 days a cash discount of $10 will be given.
Which amount is credited to the supplier’s account on 1 May?
A $170 B $180 C $190 D $200
8 The following errors were found after a trial balance had been completed.
The total of the sales account was overstated by $25.
The total of the wages account was overstated by $25.
Which statement is correct about the trial balance that had been completed?
A The total of the debit column was $25 more than that of the credit column.
B The total of the credit column was $50 more than that of the debit column.
C The total of the debit column was $50 more than that of the credit column.
D The total of the debit column and the total of the credit column were equal.

4
9 The following trial balance failed to balance.
debit credit
$ $
premises at cost 60 000

fittings at cost 20 000
provision for depreciation of fittings 4 000
bank loan 30 000
purchases 85 904
sales 181 657
general expenses 16 471
wages 34 000
cash in hand 236
opening inventory 4 577
capital 6 270
Which items have been entered onto the wrong side of the trial balance?
A bank loan, general expenses, trade payables, bank overdraft, opening inventory
B purchases, sales, trade payables, bank overdraft, cash in hand
C premises at cost, bank loan, sales, trade payables, opening inventory
D trade payables, trade receivables, wages, cash in hand, capital
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10 Mona paid $32 000 for a new motor vehicle. This included $100 for fuel and $250 for road tax.
She debited the purchases account and credited the bank account with $32 000.
debit credit
$ $
A motor vehicle 32 000

purchases 32 000
B purchases 32 000
C motor vehicles 31 650

purchases 32 000
D purchases 32 000
11 Shazia’s trial balance failed to agree and the difference was placed in a suspense account.
Shazia discovered the following errors.
1 A cheque received, $280, had been credited to the bank account.

2 A cheque to Nunu, $50, had not been entered in Nunu’s account.
What was the balance on the suspense account before the errors were corrected?
A $230 debit
B $330 credit
C $510 credit
D $610 debit

6
12 On 31 July, the bank column in Jay’s cash book showed he had $312 in the bank. On the same
date, his bank statement showed a debit balance of $53.
It was found that bank charges, $47, had not been recorded in the cash book and a cheque,
$318, from a customer had not been credited by the bank.
What is the bank balance that should be shown in Jay’s statement of financial position on
31 July?
A $265 asset
B $324 liability
C $359 asset
D $371 liability
13 Why is a sales ledger control account prepared?
A to enable the income statement to be prepared quickly

B to ensure that all ledger accounts are accurate
C to provide a summary of transactions with credit customers
D to show the amount due from each trade receivable
14 Jason provided the following information.
March 1 sales ledger control account balance 400 debit

31 credit sales 520
cheques received from trade receivables 300
bad debts written off 45
cheque received from a credit customer dishonoured 10
What was the debit balance on the sales ledger control account on 31 March?
A $565 B $585 C $620 D $655
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7

A $32 000 B $33 300 C $35 100 D $37 100
16 Why should a manufacturer charge depreciation on her factory equipment?
A to calculate the residual value of the equipment

B to provide for the replacement of the equipment
C to spread the flow of cash over a number of years
D to spread the cost of the equipment over its useful life
17 A manufacturer provided the following information.
at 1 January 2022 machinery at cost 20 000

loose tools at valuation 2 100
Machinery is depreciated at 20% per annum using the reducing balance method.
Additional loose tools were purchased in August 2022 for $300. No depreciation is provided on
loose tools purchased during the financial year.
On 31 December 2022, loose tools more than 12 months old were valued at $1850.
What was the depreciation charge for the year ended 31 December 2022?
machinery loose tools

$ $
A 2560 250
B 2560 550
C 4000 250
D 4000 550

8
18 A trader made the following entries in his ledger.
irrecoverable debts Peter
What was he recording?
A A credit customer has failed to pay within the agreed time limit.
B A debt which had been written off has now been recovered.
C An amount owed by a customer cannot be recovered.
D The trader has been unable to pay his supplier.
19 The balances in the books of Julie on 1 July 2021 included the following.

irrecoverable.
Julie wants to maintain her provision for doubtful debts at 2% of trade receivables.
A $114 decrease
B $124 decrease
C $376 increase
D $386 increase
20 When valuing his closing inventory, Asim omitted goods costing $990.
What is the effect of this error?
gross profit equity
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21 The owner of a restaurant is concerned about high operating costs.
Which statement will show the operating costs for the year?
A bank statement
B bank reconciliation statement
C income statement
D statement of financial position
22 A service business provided the following information at the end of the year.

capital 14 100
trade payables 800
What was the bank balance?
A $1250 credit
B $1250 debit
C $2850 credit
D $2850 debit
23 How is interest on drawings recorded in the books of a partnership?
debit credit
A appropriation account partner’s capital account

B appropriation account partner’s current account
C partner’s capital account appropriation account
D partner’s current account appropriation account

10
24 Javed and Yani were in a partnership, sharing profits and losses equally. The residual profit for
the year, after appropriation, was $47 000. Yani provided the following information.
Yani $

interest on drawings 600
salary 3 000
drawings 18 000
Yani’s current account balance at the start of the year was $1500 credit.
What was Yani’s current account balance at the end of the year?
A $5800 credit
B $8200 credit
C $8800 credit
D $11 800 credit
25 A limited liability company is formed.
Who has limited liability?
A directors
B employees
C lenders
D shareholders
26 Which statements are correct in relation to the financial statements of a limited company?
1 Ordinary dividend paid is shown in the income statement.

2 A transfer to the general reserve is shown in the statement of changes in equity.
3 Debentures issued are shown in the statement of changes in equity.
4 Proposed dividend is not shown in the income statement.
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27 A golf club sells refreshments to its members. Suppliers of refreshments were owed $250 on
1 January 2022 and $400 on 31 December 2022. Payments to suppliers during the year were
$7200.
The inventory at the end of the year was $100 less than the inventory at the start of the year.
What was the cost of sales of refreshments for the year ended 31 December 2022?
A $7050 B $7150 C $7300 D $7450
28 A social club provided the following information.
subscriptions paid in advance at 31 December 2021 40

subscriptions paid in advance at 31 December 2022 50
subscriptions received during the year 2022 660
What was the amount of subscriptions in the income and expenditure account for the year ended
31 December 2022?
A $570 B $650 C $660 D $670
29 A manufacturing business provided the following information for the year ended
30 November 2022.

factory heat and light 5 000
machinery operators’ wages 29 000
raw materials consumed 82 000
A $111 000 B $116 000 C $127 000 D $152 000
30 Where is work-in-progress shown in the statement of financial position of a manufacturing

business?
A current assets

12
31 How is profit calculated from incomplete records?
A closing capital + opening capital – drawings

B closing capital – opening capital + drawings
C opening capital + closing capital + drawings
D opening capital – closing capital – drawings
32 A company provided the following list of balances at 30 September 2022.
cash in hand 150

bank loan – repayable 31 December 2022 2 000
bank loan – repayable 1 May 2024 3 000
bank overdraft 400
inventory 24 000
other payables 95
What was the current ratio?
A 1:1 B 2.83 : 1 C 3.82 : 1 D 4.06 : 1
33 Alan provided the following information about his business.
liquid (acid test) ratio 2.5 : 1

current liabilities $12 000
inventory $6000
What was the value of his current assets?
A $15 000 B $24 000 C $30 000 D $36 000
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34 A trader wants to improve her gross margin.

35 To finance further expansion, a business owner paid $10 000 into the business bank account.
In the ledger, a debit entry was made in the bank account and a credit entry made in the capital
account.
Which accounting principles were being applied?
A business entity and prudence

B business entity and duality
C matching and duality
D matching and prudence
© UCLES 2023 0452/12/F/M/23

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1 Ahmed is a trader.
Why should he prepare financial statements?
A to apply the principle of business entity

B to monitor his business’s performance
C to prepare a bank reconciliation statement
D to record changes to his personal wealth
2 Which transaction will increase both assets and capital by the same amount?
A A credit customer settled his account after deducting a cash discount.

B Goods were sold for cash at a price higher than their cost price.
C Rent received included an amount prepaid for the next accounting period.
D The owner repaid a business loan from his personal bank account.
3 Pradip settled Amal’s account by credit transfer and received a cash discount for prompt
payment.
How did Pradip record this discount?
debit credit
A Amal discount received

B cash discount received
C discount allowed Amal
D discount allowed cash
4 Morgan made the following double entry in his ledgers.
debit sales returns account

credit Sally account
A goods returned by Morgan to Sally, Morgan’s credit customer

B goods returned by Morgan to Sally, Morgan’s credit supplier
C goods returned by Sally to Morgan, Sally’s credit customer
D goods returned by Sally to Morgan, Sally’s credit supplier
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5 Abdul sells goods to Rekha on credit. Some goods were damaged in transit.
Which document would Rekha send to Abdul?
A credit note
B debit note
C invoice
6 Which business documents provide information for writing up the sales journal and the sales
returns journal?
sales journal sales returns journal
A invoices issued credit notes issued

B invoices issued credit notes received
C invoices received credit notes issued
D invoices received credit notes received
7 On 1 September, Peter sent a cheque to his credit supplier, John. This was correctly entered
in John’s books. On 10 September, the cheque was returned unpaid due to lack of funds.
Which entries should be made in John’s books on 10 September?
A bank irrecoverable debts

B bank Peter
C irrecoverable debts bank
D Peter bank
8 What would not be recorded in the ledgers of a business?
A cash discount
B irrecoverable debts
C trade discount
D wages accrued

4
9 Which errors would be revealed by the preparation of a trial balance?
1 credit purchases, $240, entered as $420 in both the purchases account and the
trade payable’s account
2 credit sales entered as $96 in the sales account and $69 in the trade receivable’s
account
3 purchase of a motor vehicle, $15 000, entered in the motor vehicle repairs account
4 wages paid, $1050, debited in both the wages account and the bank account
A 1 and 2 B 1 and 3 C 2 and 4 only D 2, 3 and 4
10 Saddique’s trial balance failed to balance. The debit column totalled $12 250 and the credit
column totalled $12 200.
The following errors were discovered.
No entry had been made for cash sales, $150.

The total of the discount received account, $50, had been omitted from the trial balance.
What were the totals of the trial balance after the errors had been corrected?
A $12 250 B $12 300 C $12 350 D $12 400
11 Jacob purchased a motor vehicle for business use on credit from Waheed for $20 000. This was
not recorded in Jacob’s books.
Which journal entry would correct this error in Jacob’s books?
debit credit
$ $
A Jacob 20 000
B motor vehicles 20 000
Jacob 20 000
Waheed 20 000
D Waheed 20 000
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12 After the preparation of her income statement, Emma discovered the following errors.
A debt, $1500, should have been written off as irrecoverable.

No adjustment had been made for rent prepaid by Emma of $2800.
What was the corrected profit for the year?
A $30 700 B $33 700 C $36 300 D $39 300
13 Jamal’s bank statement on 1 September 2022 showed a bank overdraft of $1460.
What was the bank balance in the cash book on 1 September 2022?
A $1330 credit
B $1330 debit
C $1590 credit
D $1590 debit
14 A sales ledger control account included the following items.
1 discount allowed
2 dishonoured cheques
3 interest on overdue accounts
4 irrecoverable debts
For which of these items was the information obtained from the general journal?
15 A sales ledger control account had a debit balance of $4000 on 1 August.
During the month of August, credit sales totalled $50 000, sales returns from credit customers
were $600 and discounts allowed were $400.
The debit balance on the sales ledger control account on 1 September was $6000.
What was the total amount received from credit customers in August?
A $47 000 B $47 800 C $48 200 D $49 000

6
16 Manjit depreciates her motor vehicles by $1000 at the end of each financial year.
Which journal entry would Manjit make at the end of each financial year?
debit credit
$ $
B motor vehicles 1000
motor vehicles 1000
17 On the first day of his financial year, Jason purchased a new machine costing $20 000.
On that date his old machine had a book value of $6000. Jason was allowed $4500 for the old
machine in part exchange. He paid the balance by cheque.
Machinery is depreciated at 20% per annum.
How much should be charged to Jason's income statement for the year?
A $1500 B $2500 C $4000 D $5500
18 A trader provided the following information about his inventory at the end of his financial year.
total number of units 500

cost price of each unit $4
net realisable value of each unit $6
80 units were damaged and could be sold for $3 per unit.
What was the value of the closing inventory?
A $1920 B $2000 C $2760 D $2840
19 For which purposes would a trader use his income statement and statement of financial position?
1 to enable decisions to be made about the performance of the business

2 to show the business bank account balance at a given date
3 to show the financial position of the business at a given date
4 to show whether the business made a profit or a loss in the financial year
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20 What may appear in a partnership appropriation account?
A capital and current account balances

B interest on drawings and interest on partners’ loans
C partners’ salaries, drawings and profit for the year
D partners’ salaries, interest on capital and profit shares
21 Anne and Paul are in partnership.
How would interest on Anne’s capital be recorded in the ledger accounts of the partnership?
A credited to Anne’s capital account

B debited to Anne’s capital account
C credited to Anne’s current account
D debited to Anne’s current account
22 Which statement about the members of a limited company is correct?
A Their liability is limited to the total of their investment in the company.

B Their liability is limited to the total of their personal assets.
C They are not liable for the debts of the company.
D They have unlimited liability for the debts of the company.

net current assets 30 000
What were the retained earnings?
A $15 000 B $25 000 C $55 000 D $115 000

8
24 A limited company raised funds by issuing ordinary shares, preference shares and debentures.
1 Debentures are part of the loan capital.

2 Ordinary shares are part of the equity.
3 Ordinary dividend is paid before debenture interest.
4 Preference shares carry a fixed rate of dividend.
A 1, 2 and 3 B 1, 2 and 4 C 2, 3 and 4 D 3 and 4 only
25 The financial year of a club ends on 30 September. During the year ended 30 September 2022,
the club received an interest-free loan from a member.
In which of the club’s financial statements will this appear?
A income and expenditure account and statement of financial position

B receipts and payments account and income and expenditure account
C receipts and payments account and statement of financial position
D statement of financial position only
26 A cricket club provided the following information.
at 1 August 2021 balance at bank 950

during the year ended 31 July 2022 net receipts from competition 1050
subscriptions received 2500
general expenses paid 1020
insurance paid 500
rent paid 1800
at 31 July 2022 subscriptions owing by members 120
insurance prepaid 20
depreciation of equipment 260
What was the balance at bank on 31 July 2022?
A $920 B $1180 C $1200 D $1300
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27 A club had an accumulated fund at the start of the year of $18 000 and at the end of the year of
$16 200.
New equipment costing $1100 was bought during the year. Total expenses for the year were
$9550. The only income came from subscriptions.
How much were subscriptions for the year?
A $7750 B $8850 C $11 350 D $12 450
28 A food processing factory fills cans with vegetables. The filled cans are then sold to shops.
Which wages are direct labour costs for the factory?
1 wages paid to workers who load the cans on to lorries for delivery to shops
2 wages paid to workers who operate machines that fill the cans with vegetables
3 wages paid to people working on the maintenance of the machinery in the factory
4 wages paid to people working on the assembly line putting labels on the cans
A 1, 2 and 4 B 1 and 3 C 2 and 3 D 2 and 4 only
29 Thembi manufactures wooden toys. She provided the following information for the financial year
ended 31 August 2022.
prime cost 35 000

work in progress:
What was the cost of production of finished goods?
A $49 700 B $51 100 C $52 000 D $52 900

10
30 Chan provided the following information.
1 October 2021 30 September 2022

$ $

inventory 2 500 2 000
trade receivables 1 500 1 300
trade payables 1 000 1 900
What was Chan’s profit or loss for the year?
A $300 loss
B $300 profit
C $500 loss
D $500 profit
31 Thabo provided the following information.
revenue $250 000

gross margin 20%
What was the average inventory for the year?
A $10 000 B $37 500 C $40 000 D $50 000
32 How can a trader increase her current ratio?
A keep inventory at the lowest possible level

B obtain a long-term bank loan
C reduce the trade receivables turnover
D sell goods for cash instead of on credit
33 The application of which accounting principle makes it easier to compare financial statements
year-on-year?
A business entity
B consistency
C duality
D going concern
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34 What does the principle of prudence ensure?
A Assets are not understated.

B Liabilities are not estimated.
C Losses are not anticipated.
D Profits are not overstated.
35 Which statement is not correct about reasons for using international accounting standards?
A assists when making comparisons between companies

B improves the reliability of accounting information
C narrows the areas of difference in financial reporting
D makes the preparation of financial statements less time-consuming
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2 On 1 June 2021, Sue’s capital account had a credit balance of $120 000. During the year ended
31 May 2022 she withdrew goods costing $1800. The loss for the year was $14 200.
What was the credit balance on Sue’s capital account on 1 June 2022?
A $104 000 B $105 800 C $107 600 D $134 200
3 Bilal purchased goods on credit from Asim.
Where should Asim record this transaction?
1 cash book
2 nominal (general) ledger
3 purchases ledger
4 sales ledger
A credit note
B debit note
C invoice
5 What is not shown on an invoice?
A amount of trade discount

B date payment made
C details of goods supplied
D terms of payment
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B bank Peter
D Peter bank
7 Which entries should be made to post the monthly totals of the discount allowed and discount
received columns of the cash book?
discount allowed discount received
A credit discount allowed account debit discount received account

B credit income statement debit income statement
C debit discount allowed account credit discount received account
D debit income statement credit income statement
8 Jasvinder maintains a petty cash book using the imprest system. The monthly imprest of $100 is
restored on the first day of each month.
In September the petty cash book showed the following.
total expenses 83
total receipts 7
How much cash did Jasvinder need to restore the imprest on 1 October?
A $24 B $76 C $83 D $100

A $12 250 B $12 300 C $12 350 D $12 400

4
10 $68 paid by credit transfer for insurance was entered in the accounting records as $86.
Which double entry will correct this error?
account debited $ account credited $
A bank 18 insurance 18
B bank 68 insurance 68
C insurance 18 bank 18
D insurance 68 bank 68

A $30 700 B $33 700 C $36 300 D $39 300
12 Hamid purchased a motor vehicle from an overseas motor manufacturer.
Which expenditure relating to the motor vehicle is capital expenditure?
A delivery charge
B insurance
C petrol
D replacement tyres
13 Wentile purchased a motor vehicle for $35 000. He estimated it would be used for five years and
then sold for $5000.
Wentile depreciated the motor vehicle using the straight-line method at a rate of 20% per annum.
What was the accumulated depreciation on this motor vehicle at the end of year 2?
A $10 800 B $12 000 C $12 600 D $14 000
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A $1500 B $2500 C $4000 D $5500
15 Martha rents out part of her business premises.
On 1 September 2021, she was owed rent of $1500 and on 31 August 2022 she was owed
$1800 rent.
During the year ended 31 August 2022, Martha received rent of $6000.
How much was transferred to Martha’s income statement for the year ended 31 August 2022?
A $2700 B $5700 C $6300 D $9300
16 Parker received cash from Alexi for a debt that had been written off as irrecoverable.
How should Parker record this in his accounts?
A cash irrecoverable debts

B cash debts recovered
C debts recovered cash
D irrecoverable debts cash
17 Why should inventory be valued at the lower of cost and net realisable value?
A to avoid undervaluing the inventory

B to comply with the historic cost principle
C to comply with the principle of materiality
D to ensure that profits are not overstated
18 How would current assets be listed if they are arranged in decreasing order of liquidity?
A bank, cash, trade receivables, inventory

B cash, bank, trade receivables, inventory
C inventory, trade receivables, bank, cash
D inventory, trade receivables, cash, bank

6
19 During the year, Sam paid advertising expenses, some of which related to the following financial
year. Sam made an adjustment for this when preparing his financial statements for the current
year.
What was the effect on Sam’s financial statements of making this adjustment?
decrease profit increase profit increase increase

for the year for the year current assets current liabilities
A
B
C
D
20 Members of a limited company have limited liability for the debts of that company.
A Members are equally liable for the debts of the company.

B Members are liable only up to the value of their personal assets.
C Members are liable only up to the amount they agree to pay for their shares in the company.
D Members are liable only up to the value of the debentures they hold in the company.

A $15 000 B $25 000 C $55 000 D $115 000
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22 What is included in the equity of a limited company?
ordinary retained general

debentures
share capital earnings reserve
A
B
C
D

$16 200.
A $7750 B $8850 C $11 350 D $12 450
25 Dan makes t-shirts which are stamped with a design using fabric paint. He provided the following
information.
fabric for t-shirts 10 000

factory heating and lighting 5 000
fabric paint 4 000
factory rent 8 000
wages of machine operators 16 000
A $19 000 B $23 000 C $30 000 D $31 000

8
26 In a manufacturing account, carriage on raw materials was incorrectly treated as a factory

overhead.
How did this error affect the prime cost and the cost of production?
cost of
prime cost
production
B overstated overstated

$ $

A $300 loss
B $300 profit
C $500 loss
D $500 profit
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28 Aruna does not maintain a full set of double entry records.
She provided the following information.
trade payables on 1 August 2021 23 450

trade payables on 31 July 2022 27 290
cash purchases made during the year 16 000
payments made to credit suppliers 168 000
What was the cost of her purchases for the year ended 31 July 2022?
A $164 160 B $171 840 C $180 160 D $187 840
revenue $250 000

gross margin 20%
A $10 000 B $37 500 C $40 000 D $50 000
30 Naeema provided the following information.
revenue 28 000
gross profit 11 900
What was her profit margin?
A 12.5% B 29.4% C 30.0% D 42.5%
31 When calculating the liquid (acid test) ratio, what is compared to the liquid assets?
A current liabilities
B intangible assets

10
year 1 year 2
gross profit $40 000 $75 000

What would explain these changes?
A an increase in selling price and a decrease in sales quantity

B an increase in selling price and an increase in expenses
C an increase in sales quantity and a decrease in selling price
D an increase in sales quantity and a decrease in expenses
33 A business renewed an insurance policy. The total amount paid was charged as an expense in
the income statement for the year even though half related to the next financial year.
Which accounting principle has not been applied?
A duality
B historic cost
C matching
D money measurement
34 What is meant by the business entity principle?
A All aspects of the business are recorded in money terms.

B Goods taken by the owner for personal use are not recorded.
C It is assumed that the business will continue to operate indefinitely.
D Transactions are recorded from the point of view of the business.

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1 Ahmed is a trader.
Why should he prepare financial statements?
A to apply the principle of business entity

B to monitor his business’s performance
C to prepare a bank reconciliation statement
D to record changes to his personal wealth

3 Pradip settled Amal’s account by credit transfer and received a cash discount for prompt
payment.
How did Pradip record this discount?
debit credit
A Amal discount received

B cash discount received
C discount allowed Amal
D discount allowed cash
4 Morgan made the following double entry in his ledgers.
debit sales returns account

credit Sally account
A goods returned by Morgan to Sally, Morgan’s credit customer

B goods returned by Morgan to Sally, Morgan’s credit supplier
C goods returned by Sally to Morgan, Sally’s credit customer
D goods returned by Sally to Morgan, Sally’s credit supplier
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A credit note
B debit note
C invoice
6 Which business documents provide information for writing up the sales journal and the sales
returns journal?
sales journal sales returns journal
A invoices issued credit notes issued

B invoices issued credit notes received
C invoices received credit notes issued
D invoices received credit notes received

B bank Peter
D Peter bank
8 What would not be recorded in the ledgers of a business?
A cash discount
B irrecoverable debts
C trade discount
D wages accrued

4
9 Which errors would be revealed by the preparation of a trial balance?
1 credit purchases, $240, entered as $420 in both the purchases account and the
trade payable’s account
2 credit sales entered as $96 in the sales account and $69 in the trade receivable’s
account
3 purchase of a motor vehicle, $15 000, entered in the motor vehicle repairs account
4 wages paid, $1050, debited in both the wages account and the bank account
A 1 and 2 B 1 and 3 C 2 and 4 only D 2, 3 and 4

A $12 250 B $12 300 C $12 350 D $12 400
11 Jacob purchased a motor vehicle for business use on credit from Waheed for $20 000. This was
not recorded in Jacob’s books.
Which journal entry would correct this error in Jacob’s books?
debit credit
$ $
A Jacob 20 000
B motor vehicles 20 000
Jacob 20 000
Waheed 20 000
D Waheed 20 000
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A $30 700 B $33 700 C $36 300 D $39 300
13 Jamal’s bank statement on 1 September 2022 showed a bank overdraft of $1460.
What was the bank balance in the cash book on 1 September 2022?
A $1330 credit
B $1330 debit
C $1590 credit
D $1590 debit
14 A sales ledger control account included the following items.
1 discount allowed
2 dishonoured cheques
3 interest on overdue accounts
4 irrecoverable debts
For which of these items was the information obtained from the general journal?
15 A sales ledger control account had a debit balance of $4000 on 1 August.
During the month of August, credit sales totalled $50 000, sales returns from credit customers
were $600 and discounts allowed were $400.
The debit balance on the sales ledger control account on 1 September was $6000.
What was the total amount received from credit customers in August?
A $47 000 B $47 800 C $48 200 D $49 000

6
16 Manjit depreciates her motor vehicles by $1000 at the end of each financial year.
Which journal entry would Manjit make at the end of each financial year?
debit credit
$ $
B motor vehicles 1000
motor vehicles 1000
A $1500 B $2500 C $4000 D $5500
18 A trader provided the following information about his inventory at the end of his financial year.
total number of units 500

cost price of each unit $4
net realisable value of each unit $6
80 units were damaged and could be sold for $3 per unit.
What was the value of the closing inventory?
A $1920 B $2000 C $2760 D $2840
19 For which purposes would a trader use his income statement and statement of financial position?
1 to enable decisions to be made about the performance of the business

2 to show the business bank account balance at a given date
3 to show the financial position of the business at a given date
4 to show whether the business made a profit or a loss in the financial year
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20 What may appear in a partnership appropriation account?
A capital and current account balances

B interest on drawings and interest on partners’ loans
C partners’ salaries, drawings and profit for the year
D partners’ salaries, interest on capital and profit shares
21 Anne and Paul are in partnership.
How would interest on Anne’s capital be recorded in the ledger accounts of the partnership?
A credited to Anne’s capital account

B debited to Anne’s capital account
C credited to Anne’s current account
D debited to Anne’s current account
22 Which statement about the members of a limited company is correct?
A Their liability is limited to the total of their investment in the company.

B Their liability is limited to the total of their personal assets.
C They are not liable for the debts of the company.
D They have unlimited liability for the debts of the company.

A $15 000 B $25 000 C $55 000 D $115 000

8
24 A limited company raised funds by issuing ordinary shares, preference shares and debentures.
1 Debentures are part of the loan capital.

2 Ordinary shares are part of the equity.
3 Ordinary dividend is paid before debenture interest.
4 Preference shares carry a fixed rate of dividend.
A 1, 2 and 3 B 1, 2 and 4 C 2, 3 and 4 D 3 and 4 only

26 A cricket club provided the following information.
at 1 August 2021 balance at bank 950

during the year ended 31 July 2022 net receipts from competition 1050
subscriptions received 2500
general expenses paid 1020
insurance paid 500
rent paid 1800
at 31 July 2022 subscriptions owing by members 120
depreciation of equipment 260
What was the balance at bank on 31 July 2022?
A $920 B $1180 C $1200 D $1300
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$16 200.
A $7750 B $8850 C $11 350 D $12 450
28 A food processing factory fills cans with vegetables. The filled cans are then sold to shops.
Which wages are direct labour costs for the factory?
1 wages paid to workers who load the cans on to lorries for delivery to shops
2 wages paid to workers who operate machines that fill the cans with vegetables
3 wages paid to people working on the maintenance of the machinery in the factory
4 wages paid to people working on the assembly line putting labels on the cans
A 1, 2 and 4 B 1 and 3 C 2 and 3 D 2 and 4 only
29 Thembi manufactures wooden toys. She provided the following information for the financial year
ended 31 August 2022.
prime cost 35 000

work in progress:
What was the cost of production of finished goods?
A $49 700 B $51 100 C $52 000 D $52 900

10

$ $

A $300 loss
B $300 profit
C $500 loss
D $500 profit
revenue $250 000

gross margin 20%
A $10 000 B $37 500 C $40 000 D $50 000
32 How can a trader increase her current ratio?
A keep inventory at the lowest possible level

B obtain a long-term bank loan
C reduce the trade receivables turnover
D sell goods for cash instead of on credit
33 The application of which accounting principle makes it easier to compare financial statements
year-on-year?
A business entity
B consistency
C duality
D going concern
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34 What does the principle of prudence ensure?
A Assets are not understated.

B Liabilities are not estimated.
C Losses are not anticipated.
D Profits are not overstated.

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1 Which task would be carried out by a book-keeper?
A comparison of financial statements between years

B preparation of financial statements
C provision of information for decision-making
D recording financial transactions
2 The following ledger account appeared in the books of Leah, a trader.
Amraz account
$ $
April 26 purchases returns 150 April 1 balance b / d 2100

discount 100
balance c / d 2950 ____
5100 5100
A Amraz allowed Leah $100 trade discount on 30 April.

B Amraz owed Leah $2100 on 1 April.
C Leah owed Amraz $2950 on 30 April.
D Leah’s net purchases from Amraz in April were $2900.
3 Sarah sold goods on credit to Zafar.
How was this recorded in Sarah’s ledgers?
general ledger sales ledger
A credit sales account debit Zafar account

B debit sales account credit Zafar account
C credit Zafar account debit sales account
D debit Zafar account credit sales account
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4 Omar sent a credit note to Miriam for goods returned.
How would Miriam record this transaction?
A purchases returns Omar

B sales returns Miriam
C Omar purchases returns
D Miriam sales returns
5 Ben sold goods to David for $900 cash.
In which book of prime entry would David record this transaction?
A cash book
B general journal
C purchases journal
D sales journal
6 A petty cashier received $100 from the chief cashier and $10 from an employee who had made
private calls on the business telephone.
How would these amounts be recorded in the petty cash book and the cash book?
debit petty credit petty debit credit

cash book cash book cash book cash book
$ $ $ $
A 0 110 100 0
B 10 100 0 100
C 100 10 0 100
D 110 0 0 100
7 What is an example of a compensating error?
A A payment for office equipment repairs was debited to the office equipment account.
B A purchase of goods from C Jones was credited to the account of C Johns.
C The sale of goods, $65, to A Aziz was entered in the books as $56.
D The wages account was undercast by $100 and the rent account was overcast by $100.

4
8 After the preparation of Abdul’s draft financial statements, two errors were discovered.
The purchase of a machine by bank transfer, $5000, was omitted from the accounts.
The purchase of a motor vehicle, $15 000, was entered in the motor vehicle repair
account.
What effect will correcting these errors have on the non-current assets and the working capital?
non-current assets working capital

$ $
A increase 15 000 decrease 5000

B increase 15 000 no effect
C increase 20 000 decrease 5000
D increase 20 000 no effect
9 Why is a sales ledger control account usually prepared by a different member of staff than the
person who maintains the sales ledger?
A to deter fraud
B to locate errors
C to provide an instant total of trade receivables
D to speed production of financial statements
10 What would be recorded on the credit side of a sales ledger control account?
A cash refunded to credit customers

B credit sales
C interest charged on overdue accounts
D sales returns
11 Maria’s draft income statement for the year ended 31 March 2022 showed a profit for the year of
$38 750.
On 31 December 2021, Maria received a 5% bank loan of $4800 which was incorrectly treated
as a revenue receipt.
In error, a whole year’s interest on the bank loan was included in the draft income statement for
the year ended 31 March 2022.
What was the correct profit for the year ended 31 March 2022?
A $33 770 B $34 130 C $43 370 D $43 730
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12 Which statement about the reducing balance method of depreciation is not correct?
A A lower amount of depreciation is charged in the early years of the asset’s life than in the
later years.
B Each year a given percentage is deducted from the cost of the asset less the depreciation to
date.
C It is used for assets which give greater benefits in the early years of their life.
D The net book value of the non-current asset will never reach a nil value.
13 The financial year of Yeung ends on 31 March. On 1 April 2021, he purchased a machine for
$4000.
He estimated that it would have a useful working life of 3 years and a residual value of $100.
Yeung uses the straight-line method of depreciation.
The machine was sold on 1 April 2022 for $1500.
What was the loss on disposal?
A $1100 B $1200 C $2400 D $2500
14 On 1 April 2021, commission receivable, $210, was outstanding. Commission received during the
year ended 31 March 2022 amounted to $4850.
Which journal entry should have been made at the end of the financial year on 31 March 2022?
debit credit
$ $
A commission receivable 4640

B commission receivable 5060
commission receivable 4640
D income statement 5060
15 Nula’s financial year ends on 31 December. She maintains a provision for doubtful debts of 5%
of trade receivables.
On 1 January 2021, the provision amounted to $800. On 31 December 2021, trade receivables
owed $13 400, of which $600 was regarded as irrecoverable.
How much was the provision for doubtful debts on 1 January 2022?
A $600 B $640 C $660 D $670

6
16 After the financial statements for the year ended 30 April 2022 had been prepared, a trader
discovered that the closing inventory had been over-valued.
What will be the effect of this error?
profit for the year capital on profit for the year

ended 30 April 2022 30 April 2022 ending 30 April 2023
A overstated overstated understated

B overstated understated no effect
C understated no effect no effect
D understated understated overstated
17 Mariam owns a business providing accounting services. She provided the following information
for the financial year ended 31 March 2022.
fees owed by clients on 1 April 2021 4 500

fees received from clients during the year ended 31 March 2022 22 500
fees owed by clients on 31 March 2022 1 500
What was the amount of fees shown in the income statement for the year ended 31 March 2022?
A $19 500 B $22 500 C $25 500 D $28 500
18 Which item would not appear in the appropriation account of a partnership?
A interest charged on partners’ drawings

B interest paid on loans from partners
C interest paid on partners’ capital
D salaries paid to partners
19 Carol and Denise are in partnership sharing profits and losses in the ratio 2 : 1.
Denise’s current account balances were as follows.
at 1 May 2021 $2000 debit

at 1 May 2022 $7000 credit
She had made no drawings during the year.
What was the total profit made by the partnership in the year ended 30 April 2022?
A $9000 B $15 000 C $18 000 D $27 000
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20 Which statements are correct?
1 A debenture holder of a limited company is liable for the debts of the company.
2 A partner is liable to pay business debts from personal assets.
3 A shareholder of a limited company is responsible for the company’s debts.
4 A sole trader is responsible for all the debts of his business.
21 The draft financial statements of a limited company showed retained earnings of $31 820. It was
then found that no adjustment had been made for the following.
commission receivable accrued 450

What was the correct amount of the retained earnings?
A $31 195 B $31 545 C $32 095 D $32 445
22 Which statement about club accounts is correct?
A Capital and revenue transactions are recorded in the income and expenditure account.
B Non-cash transactions are recorded in the income and expenditure account.
C Only revenue transactions are recorded in the receipts and payments account.
D The closing balance in the receipts and payments account represents a surplus or deficit.
23 A sports club provided the following information for the financial year ended 31 December 2021.
1 January 2021 subscriptions paid in advance 200

31 December 2021 subscriptions outstanding 450
subscriptions received during the year 8800
What was the total of the subscriptions that related to the year ended 31 December 2021?
A $8150 B $8550 C $9050 D $9450

8
24 The work in progress of ZT Manufacturers on 1 January was valued at $6200. At the end of the
year it was valued at $5400.
What was the effect on the cost of production for the year?
A decrease $800
B decrease $11 600
C increase $800
D increase $11 600
cost of production 345 000

finished goods 1 January 2021 42 000
31 December 2021 36 000
purchases of finished goods 15 000
What was the cost of sales?
A $324 000 B $336 000 C $351 000 D $366 000
26 Tahir provided the following information for his first year of trading.
sales 170 000

sales returns 6 000
purchases 129 000
Tahir’s gross margin was 25%.
What was the value of closing inventory?
A $1000 B $2200 C $6000 D $7500
opening inventory $6800

closing inventory $6000
A $29 200 B $31 200 C $32 000 D $32 800
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28 A trader provided the following information at the end of the financial year.
revenue 80 000
gross profit 20 000
expenses 12 000
A 10% B 15% C 25% D 40%

working capital 20 000
capital 120 000
non-current liability 30 000
What was the return on capital employed?
A 14.12% B 16.00% C 17.14% D 20.00%
30 Samuel, a trader, decided to issue statements of account each month.
Which ratio does Samuel hope to improve by doing this?
A current ratio
C trade payables turnover
31 John’s rate of inventory turnover was 10 times in year 1 and 8 times in year 2.
What may have caused the change in the rate of inventory turnover?
A fall in demand
B higher sales
C lower inventory levels
D lower selling price

10
32 Maya had annual revenue of $100 000.
In year 1, her gross margin was 45% and her profit margin was 5%.
What happened to Maya’s cost of sales and expenses in year 2?
cost of sales expenses
33 Why would a bank manager be interested in the financial statements of a business?
A to calculate and assess the trade payables turnover

B to check that the correct amount of tax is being paid
C to ensure that employees are being paid the correct hourly rate
D to ensure that funds are sufficient to cover loan interest
34 ‘Revenue should only be regarded as earned when the legal title of goods and services passes
from the seller to the buyer.’
To which accounting principle does this statement refer?
A going concern
B matching
C money measurement
D realisation
35 ‘The information provided in financial statements should be capable of being independently

verified.’
To which accounting policy does this statement refer?
A comparability
B relevance
C reliability
D understandability
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2 The following ledger account appeared in the books of Leah, a trader.
Amraz account
$ $
April 26 purchases returns 150 April 1 balance b / d 2100

discount 100
balance c / d 2950 ____
5100 5100
A Amraz allowed Leah $100 trade discount on 30 April.

B Amraz owed Leah $2100 on 1 April.
C Leah owed Amraz $2950 on 30 April.
D Leah’s net purchases from Amraz in April were $2900.

© UCLES 2022 0452/13/M/J/22

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5 Ben sold goods to David for $900 cash.
In which book of prime entry would David record this transaction?
A cash book
B general journal
C purchases journal
D sales journal
6 A petty cashier received $100 from the chief cashier and $10 from an employee who had made
private calls on the business telephone.
How would these amounts be recorded in the petty cash book and the cash book?
debit petty credit petty debit credit

cash book cash book cash book cash book
$ $ $ $
A 0 110 100 0
B 10 100 0 100
C 100 10 0 100
D 110 0 0 100

4
account.

$ $

A to deter fraud
B to locate errors
10 What would be recorded on the credit side of a sales ledger control account?
A cash refunded to credit customers

B credit sales
C interest charged on overdue accounts
D sales returns
11 Maria’s draft income statement for the year ended 31 March 2022 showed a profit for the year of
$38 750.
On 31 December 2021, Maria received a 5% bank loan of $4800 which was incorrectly treated
as a revenue receipt.
In error, a whole year’s interest on the bank loan was included in the draft income statement for
the year ended 31 March 2022.
What was the correct profit for the year ended 31 March 2022?
A $33 770 B $34 130 C $43 370 D $43 730
© UCLES 2022 0452/13/M/J/22

5
12 Which statement about the reducing balance method of depreciation is not correct?
A A lower amount of depreciation is charged in the early years of the asset’s life than in the
later years.
B Each year a given percentage is deducted from the cost of the asset less the depreciation to
date.
C It is used for assets which give greater benefits in the early years of their life.
D The net book value of the non-current asset will never reach a nil value.
$4000.
A $1100 B $1200 C $2400 D $2500
debit credit
$ $

A $600 B $640 C $660 D $670

6
16 After the financial statements for the year ended 30 April 2022 had been prepared, a trader
discovered that the closing inventory had been over-valued.
What will be the effect of this error?
profit for the year capital on profit for the year

ended 30 April 2022 30 April 2022 ending 30 April 2023
A overstated overstated understated

B overstated understated no effect
C understated no effect no effect
D understated understated overstated
17 Mariam owns a business providing accounting services. She provided the following information
for the financial year ended 31 March 2022.
fees owed by clients on 1 April 2021 4 500

fees received from clients during the year ended 31 March 2022 22 500
fees owed by clients on 31 March 2022 1 500
What was the amount of fees shown in the income statement for the year ended 31 March 2022?
A $19 500 B $22 500 C $25 500 D $28 500
18 Which item would not appear in the appropriation account of a partnership?
A interest charged on partners’ drawings

B interest paid on loans from partners
C interest paid on partners’ capital
D salaries paid to partners
19 Carol and Denise are in partnership sharing profits and losses in the ratio 2 : 1.
Denise’s current account balances were as follows.
at 1 May 2021 $2000 debit

at 1 May 2022 $7000 credit
She had made no drawings during the year.
What was the total profit made by the partnership in the year ended 30 April 2022?
A $9000 B $15 000 C $18 000 D $27 000
© UCLES 2022 0452/13/M/J/22

7
20 Which statements are correct?
1 A debenture holder of a limited company is liable for the debts of the company.
2 A partner is liable to pay business debts from personal assets.
3 A shareholder of a limited company is responsible for the company’s debts.
4 A sole trader is responsible for all the debts of his business.
21 The draft financial statements of a limited company showed retained earnings of $31 820. It was
then found that no adjustment had been made for the following.
commission receivable accrued 450

What was the correct amount of the retained earnings?
A $31 195 B $31 545 C $32 095 D $32 445
22 Which statement about club accounts is correct?
A Capital and revenue transactions are recorded in the income and expenditure account.
B Non-cash transactions are recorded in the income and expenditure account.
C Only revenue transactions are recorded in the receipts and payments account.
D The closing balance in the receipts and payments account represents a surplus or deficit.
23 A sports club provided the following information for the financial year ended 31 December 2021.
1 January 2021 subscriptions paid in advance 200

31 December 2021 subscriptions outstanding 450
subscriptions received during the year 8800
What was the total of the subscriptions that related to the year ended 31 December 2021?
A $8150 B $8550 C $9050 D $9450

8
A decrease $800
B decrease $11 600
C increase $800
D increase $11 600
cost of production 345 000

finished goods 1 January 2021 42 000
31 December 2021 36 000
purchases of finished goods 15 000
What was the cost of sales?
A $324 000 B $336 000 C $351 000 D $366 000
26 Tahir provided the following information for his first year of trading.
sales 170 000

sales returns 6 000
purchases 129 000
Tahir’s gross margin was 25%.
What was the value of closing inventory?
A $1000 B $2200 C $6000 D $7500

A $29 200 B $31 200 C $32 000 D $32 800
© UCLES 2022 0452/13/M/J/22

9
28 A trader provided the following information at the end of the financial year.
revenue 80 000
gross profit 20 000
expenses 12 000
A 10% B 15% C 25% D 40%

capital 120 000
A 14.12% B 16.00% C 17.14% D 20.00%
30 Samuel, a trader, decided to issue statements of account each month.
Which ratio does Samuel hope to improve by doing this?
A current ratio
31 John’s rate of inventory turnover was 10 times in year 1 and 8 times in year 2.
What may have caused the change in the rate of inventory turnover?
A fall in demand
B higher sales
C lower inventory levels
D lower selling price

10
32 Maya had annual revenue of $100 000.
What happened to Maya’s cost of sales and expenses in year 2?
cost of sales expenses
33 Why would a bank manager be interested in the financial statements of a business?
A to calculate and assess the trade payables turnover

B to check that the correct amount of tax is being paid
C to ensure that employees are being paid the correct hourly rate
D to ensure that funds are sufficient to cover loan interest
34 ‘Revenue should only be regarded as earned when the legal title of goods and services passes
from the seller to the buyer.’
To which accounting principle does this statement refer?
A going concern
B matching
C money measurement
D realisation
35 ‘The information provided in financial statements should be capable of being independently

verified.’
To which accounting policy does this statement refer?
A comparability
B relevance
C reliability
D understandability
© UCLES 2022 0452/13/M/J/22

2

2 What is the accounting equation?
A assets = capital – liabilities

B assets = liabilities – capital
C assets – liabilities = capital
D assets + capital = liabilities


5 The discount column on the debit side of a trader’s cash book totalled $1300 and the discount
column on the credit side totalled $700.
How much discount did the trader receive?
A $600 B $700 C $1300 D $2000
© UCLES 2022 0452/11/M/J/22

3
6 Kai bought office equipment from Meena and paid immediately by bank transfer.
How should Kai record this in his accounting records?
A bank Meena
B bank office equipment
C Meena bank
D office equipment bank
7 Jabari maintains a petty cash book using the imprest system. The imprest is restored at the end
of each month.
Which amount restores the imprest at the end of a month?
A the amount left in petty cash less the total of vouchers received
B the amount left in petty cash plus the total of vouchers received
C the imprest amount less the total of vouchers received
D the total of vouchers received
8 Which statement about a trial balance is correct?
A It assists in locating arithmetical errors in the book-keeping records.

B It is proof that the entries in the ledger accounts are free from error.
C It reveals all book-keeping errors.
D It shows ledger account errors only.

4
account.

$ $

11 Raj had a debit balance of $10 800 in the bank column of his cash book. He discovered that
purchases, $890, paid by cheque, had been recorded as $980.
The following appeared in the bank statement but had not been entered in the cash book.
bank charges 76
interest received 120
What was the debit balance in the bank column of Raj’s cash book after adjusting for these
items?
A $10 514 B $10 666 C $10 754 D $10 934
A to deter fraud
B to locate errors
© UCLES 2022 0452/11/M/J/22

5
13 Tamal provided the following information for March, his first month of trading.
credit purchases 9100

credit purchases returned 322
total payments to credit suppliers 5358
During the month, Tamal overpaid a supplier by $94. He did not make any further purchases from
this supplier in March.
What were the balances on Tamal’s purchases ledger control account on 1 April?
debit balance credit balance

$ $
A 0 3420
B 0 3514
C 94 3420
D 94 3514
14 The following payments were made by John when he purchased a machine.
purchase of machine 10 000

delivery charge 1 200
insurance 800
installation charge 900
pre-paid maintenance charge 400
How much should have been debited to the machinery account?
A $10 900 B $11 200 C $12 100 D $12 500

6
15 On 1 January, Zac entered the cost of repairing equipment, $420, in the equipment account.
On 31 December, depreciation of 20% per annum, using the straight-line method, was charged
on the balance of the equipment account.
What was the overall effect on the book value of the equipment on 31 December?
A $84 understated
B $336 overstated
C $420 overstated
D $504 understated
16 Atif depreciates his motor vehicles at a rate of 20% per annum using the reducing balance
method.
On 1 May 2021, Atif owned motor vehicles which cost $35 000. At that date, the motor vehicles
had been depreciated by $12 600.
What was the balance on Atif’s provision for depreciation account on 1 May 2022?
A $17 080 B $17 920 C $19 600 D $22 400
$4000.
A $1100 B $1200 C $2400 D $2500
© UCLES 2022 0452/11/M/J/22

7
debit credit
$ $

19 Which statement about a debts recovered account is correct?
A The account is used when an amount, previously written off, is received from a customer.
B The account is used when doubtful debts are recovered.
C The balance of the account is debited to the income statement at the end of the year.
D The balance of the account is shown in the statement of financial position.
A $600 B $640 C $660 D $670

8
21 When preparing his financial statements, a trader valued his inventory at cost.
He then found that 10 units of inventory, costing $12 per unit, were damaged. If he spent $2 per
unit on repairs, he could sell them for $9 each.
What was the effect on the income statement of the incorrect inventory valuation?
gross profit profit for the year
A overstated $30 no effect

B overstated $50 overstated $50
C understated $30 no effect
D understated $50 understated $50
22 At the end of his financial year, Marek was owed $200 for interest on a loan he had made to an
employee. He recorded this in his financial statements.
How did the interest on this loan affect Marek’s profit for the year and where was it recorded in
his statement of financial position?
statement of
profit for the year
financial position
A decreased current assets

B decreased current liabilities
C increased current assets
D increased current liabilities
23 What is the purpose of preparing a partnership appropriation account?
A to calculate the interest to be charged on the drawings made by each partner

B to calculate the interest to be paid on the capital invested by each partner
C to show the amount of salary to which each partner is entitled
D to show the division of the profit or loss for the year between the partners
24 Raj and Seema are in partnership sharing profits and losses 2 : 1.
Raj withdrew $5000 during the year and was charged interest at 3%. Seema did not make any
withdrawals during the year.
How much was credited to Raj’s current account at the end of the year?
A $19 850 B $19 900 C $20 000 D $20 100
© UCLES 2022 0452/11/M/J/22

9
25 A limited company raised funds from an issue of debentures.
A The debentures are part of the equity of the company.

B The debenture holders cannot vote at the annual general meeting.
C The debenture holders are repaid only if the company is wound up.
D The debenture interest is paid only if the company earns a profit.
total equity on 1 January 2021 500 000

ordinary share dividend paid 30 June 2021 25 000
transfer to general reserve on 31 December 2021 12 000
total equity on 31 December 2021 558 000
A $46 000 B $58 000 C $83 000 D $95 000
27 Which group contains only items included in the prime cost of a manufacturer?
A direct expenses, depreciation of factory machinery, royalties

B direct wages, factory supervisor’s wages, factory insurance
C factory overheads, raw materials, direct expenses
D raw materials, royalties, direct labour
A decrease $800
B decrease $11 600
C increase $800
D increase $11 600

10
29 A trader does not keep full accounting records but was able to provide the following information.
capital at 1 January 2021 26 000

capital at 31 December 2021 37 000
drawings made during year 6 500
During the year, $9500 was withdrawn from the owner’s private bank account to purchase a
motor vehicle to be used by the business.
A $8000 B $11 000 C $14 000 D $17 500

A $29 200 B $31 200 C $32 000 D $32 800
31 Jerry started his business on 1 January 2022 with no opening inventory. On 19 April 2022, a fire
destroyed all his inventory.
Jerry provided the following information for the period 1 January 2022 to 19 April 2022.
revenue $30 200

purchases $25 600
gross margin 25%
What was the value of inventory destroyed on 19 April 2022?
A $1800 B $2950 C $3450 D $5750
© UCLES 2022 0452/11/M/J/22

11

capital 120 000
A 14.12% B 16.00% C 17.14% D 20.00%
33 Which actions could a clothing retailer take to improve his rate of inventory turnover?
1 increase the selling prices of all clothing

2 offer discounts on last year’s designs
3 pay clothing suppliers as quickly as possible
A 1 and 3 only B 1, 2 and 3 C 2 only D 3 only
34 A trader is considering selling goods on credit to a new customer.
What could be calculated from the customer’s financial statements to indicate the time normally
taken to pay for goods purchased on credit?
A current ratio
35 Which accounting policy requires that the information in financial statements is free from
significant errors and bias?
A comparability
B consistency
C reliability
D understandability
© UCLES 2022 0452/11/M/J/22

2
1 What is prepared by a book-keeper?
A appropriation account
B cash book
C income statement
D statement of financial position
2 Which item is an asset?
A an amount owing by credit customers

B an amount owing to credit suppliers
C interest accrued on bank loan
D rent received in advance from tenant
3 Fatima required additional finance for her business and borrowed funds from Ali. This was
deposited into the business bank account.
How should Fatima record this?
A bank Ali (loan)

B bank Ali (trade payable)
C Ali (loan) bank
D Ali (trade payable) bank
4 On 1 March, a business owed its suppliers $9500. During March, the following transactions took
place.
goods purchased on credit 10 000

goods returned to suppliers 200
cheques paid to suppliers 8 900
cash discounts received 100
How much did the business owe its suppliers on 31 March?
A $800 B $1000 C $10 300 D $10 500
© UCLES 2022 0452/12/F/M/22

3
5 Which document from a supplier reduces the amount owed by a customer?
A credit note
B debit note
C invoice
6 What is recorded in a petty cash book?
A all cash transactions

B cash purchases and expenses only
C purchases of all small value items
D small cash transactions
7 Jacob settled the account of Ahmed, a credit supplier. He made the following entries on the credit
side of his cash book.
discount cash bank

$ $ $
Ahmed 5 195
Which entries did Jacob make on the debit side of Ahmed’s account?
A bank 195
B bank 200
C bank 195
discount allowed 5
D bank 195
discount received 5
8 The total of the debit column of a trial balance was more than the total of the credit column.
One account balance had been entered in the wrong column.
Which one was it?
A cash
B discount received
C drawings
D irrecoverable debts

4
9 Davi prepared the following journal entry to correct an error.
debit credit
$ $
Samir 40
Samuel 40
Which error was being corrected?
A Cash paid to Samir had been credited to Samuel.

B Cash received from Samuel had been debited to Samir.
C Goods bought from Samir had been credited to Samuel.
D Goods sold to Samir had been debited to Samuel.
10 A suspense account was opened with a credit balance of $840.
Which error caused this?
A A cheque for $420 received from a customer was debited to his account.
B Discounts allowed, $420, was debited twice in the discounts allowed account.
C Goods costing $420, taken by the owner of the business for own use, were credited to his
drawings account.
D Rent received, $420, was credited twice in the rent receivable account.
11 A trader calculated her profit for the year at $14 800. The following errors were then discovered.
No entry had been made for $200 wages accrued.

The insurance expense included a prepayment of $90.
What is the correct profit for the year?
A $14 510 B $14 690 C $14 910 D $15 090
12 Jack’s cash book showed an overdrawn balance at bank of $2600. Comparing the cash book
with the bank statement, it was discovered that direct debits of $200 had not yet been recorded
by Jack. He then updated his cash book.
What was the bank balance in Jack’s updated cash book?
A $2400 credit
B $2400 debit
C $2800 credit
D $2800 debit
© UCLES 2022 0452/12/F/M/22

5
13 Which item is debited in a sales ledger control account?
A cash discount
B contra entry
C interest on overdue account
D provision for doubtful debts
14 Leroy provided the following information for May.
May 1 balance owing to credit suppliers 420

31 credit purchases 590
returns to credit suppliers 110
cheques paid to credit suppliers 291
discount received from credit suppliers 9
interest charged by a credit supplier 5
What was the balance on his purchases ledger control account on 1 June?
A $595 B $605 C $613 D $623
15 Which item should be treated as capital expenditure?
A the annual depreciation on office premises

B the cost of building an office extension
C the cost of repairing office equipment
D the purchase of a new computer for resale
16 On the last day of the financial year, Khalid purchased office fittings, $900. This was incorrectly
recorded as office expenses, $90.
Khalid does not charge depreciation in the year of purchase.
What was the effect on the profit for the year?
A overstated by $810
B overstated by $990
C understated by $90
D understated by $900

6
17 Aggie is a trader. She uses the following methods of depreciation for different types of
non-current asset.
straight-line at 20% per annum

reducing balance at 25% per annum
revaluation
On 1 January year 1, Aggie purchased small items of equipment costing a total of $2400 and
fittings costing $8000.
On 31 December year 2, Aggie estimated that the equipment was worth 70% of its original cost.
The statement of financial position showed the net book value of equipment as $1680 and fittings
as $4800.
Which depreciation methods has Aggie used?
equipment fittings
A reducing balance straight-line

B revaluation reducing balance
C revaluation straight-line
D straight-line revaluation
18 Abeo prepares financial statements to 31 December each year.
Abeo bought machinery for $40 000 on 1 January year 1. He charges depreciation on machinery
at 20% per annum using the reducing balance method. Depreciation is charged in the year of
purchase but not in the year of disposal.
On 1 January year 3, the machinery was sold for $22 000.
Which journal entry records the profit or loss on disposal of the machine?
debit credit
$ $
A disposal of machinery 2000

B disposal of machinery 3600
disposal of machinery 2000
disposal of machinery 3600
© UCLES 2022 0452/12/F/M/22

7
19 Why would a business record the amount owing by a credit customer as an irrecoverable debt?
A The customer has gone out of business.

B The customer has liquidity problems.
C The customer is making a loss.
D The customer is not satisfied with the goods.
20 Anji maintains a provision for doubtful debts at 5% of the trade receivables at the end of each
financial year. At the start of the financial year, the trade receivables were $2000. At the end of
the financial year, the trade receivables were $4500.
Which entry would be made in the income statement for the financial year?
A $125 as an expense
B $125 as an income
C $325 as an expense
D $325 as an income
21 Which businesses do not prepare a trading account section of an income statement?
1 furniture store
2 insurance company
3 newsagent
4 toy shop
5 window-cleaner

non-current liabilities 21 000
What was the capital of the business?
A $10 000 B $22 000 C $31 000 D $43 000

8
23 A trader bought a machine for use in the business. He paid a part of the cost in cash and agreed
to pay the remaining part in 15 months’ time.
In addition to the non-current assets, which items in the statement of financial position will
increase as a result of this transaction?
current current non-current

assets liabilities liabilities
A
B
C
D
24 What is the purpose of a partnership appropriation account?
A to calculate partners’ salaries

B to record partners’ drawings
C to show the distribution of profits between partners
D to show the movement on partners’ capital accounts
25 James is a partner in a business. He made a loan to the business and received loan interest.
What is the double entry in the books of the partnership for the loan interest James has received?
debit credit
A bank account James current account

B interest on loan account bank account
C interest on loan account James current account
D James current account bank account
26 A limited company whose capital consisted of ordinary shares ceased trading and was not able to
pay its debts.
A Shareholders would have to pay a proportion of the debt based on the number of shares
owned.
B Shareholders would have to pay a proportion of the debt based on the value of shares
owned.
C Shareholders would have to sell their personal possessions to pay the debts of the company.
D Shareholders would lose the money that was paid when the shares were first purchased.
© UCLES 2022 0452/12/F/M/22

9
27 A limited company was formed on 1 June 2021.
On that date, the company issued 500 000 $1 shares. Shareholders were asked to pay 60% of
the cost immediately, with the remainder being payable by 1 June 2022.
By 1 August 2021, all shareholders had paid what was due at that date.
What was the share capital of the company on 1 August 2021?
called-up capital paid-up capital

$ $
A 200 000 300 000

B 300 000 300 000
C 500 000 300 000
D 500 000 500 000
28 There are 120 members of a sports club. The annual subscription is $60.
At the beginning of the year, no members had paid in advance and no members had
subscriptions outstanding.
At the end of the year, 7 members had not paid and 3 members had paid in advance.
Which amount was shown for subscriptions in the income and expenditure account?
A $6600 B $6960 C $7200 D $7800
29 What is shown in a manufacturing account?
1 cost of material consumed

2 purchases of finished goods
3 cost of production
4 cost of sales
A 1 and 2 only
B 1 and 3 only
C 1, 2 and 3 only
D 1, 2, 3 and 4

10
30 Tarek produced a statement of affairs at 31 December year 1 and at 31 December year 2.
During year 2, his long-term loan increased by $3000 and his net current assets decreased by
$1000. Depreciation for the year was $500.
By how much did the total of Tarek’s capital decrease?
A $2500 B $3500 C $4000 D $4500
31 Wayne provided the following information.
$ $
revenue 12 800
purchases 10 500
11 500
closing inventory 1 600 9 900
gross profit 2 900
What was Wayne’s gross profit margin?
A 22.66% B 25.22% C 27.62% D 29.29%
32 A trader provided the following information for the year ended 31 December.
total cash and credit purchases of goods for re-sale 150 000
cash purchases of goods for re-sale 17 000
credit purchases of non-current assets 25 000
His trade payables at that date were $8000.
What was the trade payables turnover?
A 17 days
B 20 days
C 22 days
D 24 days
© UCLES 2022 0452/12/F/M/22

11
33 A trader decided to reduce her level of inventory in order to reduce the storage costs.
Sales quantity and selling price were not affected.
How did this affect profit for the year and the rate of inventory turnover?
profit for rate of inventory

the year turnover
34 Azim and Bashir are both sole traders. They provided the following information.
Azim Bashir
$ $
profit for the year ended 31 December before interest 17 200 15 000
long-term loan at 31 December – 12 500
capital at 31 December 86 000 25 000
What was Azim’s return on capital employed?
A double Bashir’s
B half of Bashir’s
C one-third of Bashir’s
D three times Bashir’s
35 Stephanie’s major competitor has invested in a new machine for making goods more cheaply.
Stephanie knows this will affect her sales but did not record this in her accounting records.
Which accounting principle is Stephanie applying?
A going concern
B materiality
C money measurement
D prudence
© UCLES 2022 0452/12/F/M/22

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2

1 Which statements about book-keeping and accounting are correct?

1 Accounting is performed periodically rather than daily.

A 1, 2 and 4 B 1 and 3 C 2, 3 and 4 D 2 and 4 only

2 What increases owner’s capital?

A bank loan extended from five to ten years

3 William paid $500 in cash to Sonia for rent.

How did Sonia record this?

account debited account credited

A cash rent receivable

at 30 April 2020 at 30 April 2021

machinery at cost 30 000 42 000

How much did he owe them on 30 April 2021?

A $6000 B $13 000 C $17 000 D $32 000

© UCLES 2021 0452/12/M/J/21

What does this mean?

A Shula had paid $100 to Yasmin.

What was the total of the credit note issued by Nazneen?

A $15.36 B $16.00 C $19.20 D $20.00

7 Jameel sold goods on credit.

Where did he first record the invoice he issued?

8 Which statements about a three-column cash book are correct?

1 It contains ledger accounts for bank and cash.

A 1 and 2 B 1 and 3 C 2 and 3 D 3 only

9 Which statement is not true about a trial balance?

A It is a list of ledger account balances at a certain date.

© UCLES 2021 0452/12/M/J/21 [Turn over

10 Which error is an error of original entry?

Which journal entry corrects this error?

12 Jamal’s bank statement at 1 May 2021 showed a bank overdraft of $1460.

What was the cash book balance on 1 May 2021?

13 What is included in a purchases ledger control account?

© UCLES 2021 0452/12/M/J/21

A $11 810 B $11 890 C $12 110 D $12 190

15 Which statements about capital expenditure are correct?

1 It is money spent on day-to-day business operations.

A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4

gross profit $ profit for the year $

17 Why does a business provide for depreciation on non-current assets?

What was the net decrease in the cash balance?

A $3700 B $5100 C $11 700 D $13 100

© UCLES 2021 0452/12/M/J/21 [Turn over

A It was expected it would be used in the next few months.

Which entry did Shilpa make on 31 March 2021?

A income statement Tahir

21 How should inventory be valued?

22 James is an accountant and operates as a sole trader.

Which items would not appear in his statement of financial position?

A 1 and 2 B 1 and 3 C 2 only D 2 and 3

© UCLES 2021 0452/12/M/J/21

23 Zaha is a consultant who receives fees from clients.

How would Zaha calculate his profit for the year?

A fees received – cost of sales

B fees received – cost of sales + expenses

24 What is added to owner’s capital to calculate capital employed?

25 What is an advantage of forming a partnership?

A Decisions have to be recognised by all partners.

profit for the year 20 000

What was Ben’s share of the residual profit?

A $5500 B $10 000 C $13 000 D $14 500