Accountancy Learning Academy (ALA). AFD. FA1. Ch7,8. Test paper.

1. Which of the following statements is/are correct?

1. Creditor control account is also known account
payable control account
2. Creditor control account is also referred to as
purchase ledger control account
3. Creditor control account is also called purchase
ledger account
a. 1 and 3 are correct
b. 3 and 2 are correct
c. 1 and 2 are correct
2. A contra entry of $1000 between sales ledger and
purchase ledger was omitted from creditor control
account. Which of the following is the correct
adjustment in a creditor control account?
a. $1000 should be credited
b. $1000 should be debited
c. No adjustment required
3. What will be debited, if business bought goods on
credit from Mr. Ali?
a. Purchases account (Right Answer)
b. Mr. Ali account
c. Cash account
d. Sales account
4. Business transactions are recorded:a. in chronological order
b. weekly
c. at the end of the month
5. A creditor control account is a kind of _______ since it
can be used to proved the arithmetic correction of
accounting record
a. Purchases account
b. Creditor account
c. Trial balance
d. Expense account
6. The total of purchases return is entered on the which
side of a creditor control account?
a. Debit side
b. Credit side
c. No accounting treatment required
7. Discount received is entered on the which side of a
creditor control account?
a. Debit side
b. Credit side
c. No accounting treatment required
8. Generally, the total amount purchases is taken from
which book of account for the purpose of preparing
Creditor control account?
a. Cash book
b. Bank statement
c. Purchase day book
d. Purchases ledger accounts
9. A creditor control account contains the following
transaction:
Bank = $100
Purchases=$200
Discount received = $100
Balance c/d = $300
Work out the balance b/d
a. $100
b. $200
c. $300
d. $500
10. Control accounts are most commonly used for which
of the following purposes?
a. Preparing cash flow statement
b. Making entries in other accounts

c.

Accumulating the total balances of related

accounts
d. Detecting errors in accounting records
11. Bad debts written off during a period of accounting
are entered in which side of a control account?
a. Debit side of creditor control a/c
b. Credit side of creditor control a/c
c. Debit side of debtor control a/c
d. Credit side of debtor control a/c
12. An account receivable was charged with the interest
of $500, but no entry was made in the debtor control
account. What would be the adjustment in the debtor
control account?
a. $500 will be credited in the debtor control a/c
b. $500 will be debited in the debtor control a/c
c. $1000 will be credited in the debtor control a/c
d. $1000 will be debited in the debtor control a/c
13. A check for $200 was received from Mr. Z (a debtor)
and was presented to bank but the bank has
dishonored it. Identity the correct treatment of check
in a debtor control account?
a. Debit control account with $200
b. Credit control account with $200
c. Credit sales ledger control a/c with $200
d. No treatment in control accounts
14. Payment of $500 was received from debtors. Which
of the following statements is correct?
1. Debit account receivable control account with
$500
2. Credit account receivable control account with
$500
3. Debit account payable control account with $500
4. Credit account payable control account with $500
a. 1 is correct
b. 2 is correct
c. 3 is correct
d. 4 is correct
15. The purpose of a purchase ledger control account is
to ensure that:
a. All errors in the writing up of the purchases
system are detected.
b. Most errors in the writing up of the purchases
system are detected.
c. The purchases figure in the financial statements
is correct
d. The trade receivables figure in the financial
statements is correct
16. A debit balance may appear on a purchase ledger
account when:
a. The business has received a refund from a
supplier.
b. The business has underpaid a supplier
c. The business has returned the goods after paying
for them
d. The customer has overpaid his account
17. M. Brown has an account in the sales ledger of J. Holt.
J. Holt purchases 100 of goods from M. Brown on
credit. The double entry to post this is:
a. Dr: Purchases account
Cr. Sales control account
b. Dr. Sales control account
Cr. M. Browns account (sales ledger)
c. Dr. Purchases account
Cr. Purchase ledger control account

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Accountancy Learning Academy (ALA). AFD. FA1. Ch7,8. Test paper.

d. Dr. Purchases account
Cr. M. Browns account (sales ledger)
18. A company allows discounts to its customers for early
payment. The double entry to post the discounts is:
a. Dr. Discount allowed account
Cr. Customers account
b. Dr. Discounts allowed account
Cr. Sales account
c. Dr. Sales account
Cr. Customers account
d. Dr: Sales account
Cr. Bank account
19. A credit entry of 50 on A's account in the books of B
could have arisen by
a. A buying goods on credit from B
b. B paying A 450
c. B paying A 450
d. A returning goods to B
20. In the accounts of X, which of the following double
entries is the correct way to record goods returned by
Y, a credit customer?
a. Dr Sales Cr. Ys account
b. Dr. Returns inward Cr. Ys account
c. Dr. Sales Cr. Xs account
d. Dr. Xs account Cr. Returns inward
21. Which of the following statements is not the purpose
of a sales ledger control account?
a. A sales ledger control account provides a check
on the arithmetic accuracy of the personal ledger.
b. Control accounts deter fraud
c. A sales ledger control account helps locate errors
in the trial balance
22. This of the following best describes the meaning of
Purchases?
a. Goods bought for resale
b. Goods bought on credit
c. Asset purchases
d. Goods paid for
23. Suppliers personal accounts are found in the:
a. General ledger
b. Sales ledger
c. Purchases ledger
d. Cash Book
24. Discounts received are:
a. Given by us when we sell goods on credit
b. Deducted by us when we pay our accounts
c. Deducted when we receive cash
d. None of these
25. The total of the Purchases Journal is transferred to
the:
a. Debit side of the Purchases Day Account in the
Purchases Ledger
b. Debit side of the Purchases Account in the
General Ledger
c. Credit side of the Purchases Account in the
Purchases Ledger
d. Credit side of the Purchases Account in the
General Ledger
26. Which of the following items could appear on the
credit
side of a Debtors ledger control account?
1. Cash received from customers
2. Bad debts written off
3. Increase in allowance for doubtful debts
4. Discounts allowed
5. Sales

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6. Credits for goods returned by customers

7. Cash refunds to customers
a. (1), (2), (4) and (6)
b. (1), (2), (4) and (7)
c. (3), (4), (5) and (6)
d. (5) and (7)
27. Which of the following is the correct journal entry to
record a credit note issued to customer for goods
returned?
a. Debit Sales returns Credit Cash
b. Debit Cash Credit Sales returns
c. Debit Trade receivables Credit Sales returns
d. Debit Sales returns Credit Trade receivables
28. In June 2008 Laura bought goods for $12,000. She
paid $11,000 of this by cheque and agreed a 30 day
credit period for the balance. She intends to buy
more goods for $13,000in July 2008.
What value should be reported for Lauras payables
at 30 June 2008?
a. $25,000
b. $14,000
c. $13,000
d. $1,000
29. Avalon gives his customers individual trade discounts
from the list price and a general 5%cash discount for
all invoices settled within 7 days of issue. A new
customer, Nolava negotiates a 25% trade discount.
His transactions during June are: June 12 Buys goods
with a 5,000 list price June 15 Returns goods with a
1,000 list price as faulty June 16 Pays half of the net
balance on his account. How much does Nolava owe
Avalon at the end of June?
a. 1,425
b. 1,500
c. 2,000
d. 2,850
30. Manish buys goods on credit from Lisa but finds that
some of them are faulty.
What document would Manish return to Lisa with the
faulty goods?
a. Statement
b. Debit note
c. Sales invoice
d. Purchase invoice
31. Which item will appear as a debit balance in the
ledger accounts?
a. Capital
b. Bank overdraft
c. Creditors
d. Stock
32. Which one of the following is the correct posting from
the purchase day book?
a. Dr General ledger purchase account, Cr
Suppliers accounts in purchase ledger
b. Dr General ledger purchase account, Cr Cash
book
c. Dr Suppliers accounts in purchase ledger, Cr
General ledger purchase account
d. Dr Cash book, Cr General ledger purchase accoun
t
33. Jonathan sends a debit note to one of his suppliers.
In which of Jonathans books of prime entry would
this be recorded?
a. Sales
b. Purchases
c. Sales returns
d. Purchase returns
34. In which books of prime entry would the following
transactions be entered?

Accountancy Learning Academy (ALA). AFD. FA1. Ch7,8. Test paper.

A credit sale for 387 and a cash sale of 200 less
10% discount for cash payment.
a. The cash book and sales day book
b. The petty cash book and sales day book
c. The purchase day book and sales day book
d. The journal and cash book
35. Khan bought goods for $220, less 20 % trade
discount, on credit from Aziz. Khan later returnedhalf
of these goods. Aziz entered the returns in his sales
returns journal. How will Aziz post this transaction to
Khans ledger account?
a. credit $88
b. debit $88
c. credit $110
d. debit $110
36. Which document is issued by a supplier when a
customer returns goods?
a. credit note
b. debit note
c. invoice
d. statement
37. 25 items are sold at $10 each with trade discount at
20 % and cash discount is 2 % if accounts are settled
within 7 days. How much would be recorded in the
sales journal?
a. $196
b. $200
c. $245
d. $250
38. What is called the system of recording transactions
based on dual concept?
a. auditing
b. double account system
c. double entry system
d. single entry system
39. What is the alternative name of returns outward?
a. carriage inwards
b. carriage outwards
c. purchases returns
d. sales Returns
40. Why should a sole trader record all the financial
information about her business?
a. because she is required to do so by law
b. because she needs to pay her creditors on time
c. so that she can prepare final accounts
d. so that she knows how much her debtors owe her
41. The information for preparing a Control account is
obtained from:
a. The General Journal
b. The books of prime entry
c. The Cash Book
d. The Ledger
42. Which of the following will not appear in the Trade
Receivables Control account:
a. Amounts received from credit customer
b. Credit Sales
c. Bad debts written off
d. Cash sales
43. Which of the following will not appear in the Purchase
Ledger Control account:
a. Discount allowed
b. Credit purchases
c. Amounts paid to trade creditors
d. Returns outwards
44. The periodical totals of the Returns Inwards Day Book
are:
a. Debited to the Trade Receivable Control account
b. Credited to the Trade Payables Control account
c. Debited to the Trade payables Control account

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d. Credited to the Trade Receivables Control account

45. The periodical totals of the Discount Column on the
receipt side of the Cash Book are:
a. Debited to the Trade Payables Control account
b. Credited to the Trade Payables Control account
c. Credited to the Trade Receivables Control account
d. Debited to the Trade Receivables Control account
46. Offset by contra is accounted for by:
a. A debit in the Sales Ledger Control and a credit in
the Purchases Ledger Control accounts
b. A debit and a credit respectively in the account of
the particular customer appearing in the Sales
Ledger and in the Purchases Ledger.
c. A debit in the purchase Ledger Control and a
credit in the Sales Ledger Control accounts
d. A combination of entries stated in (a) above as
well as in (d) below
47. As at 1 August 2012 the Trade Receivables ledger
had 216,400 debit balances and 11,450 credit
balance. Credit sales in August were 582,550 and
sales returns 31,600. 498,200 has been received
from credit customers. Identify the debit balance by
the month end assuming that the only additional
information is Discount allowed was 14,400 and
credit balances by month end were 19,750
a. 166,600
b. 263,050
c. 254,750
48. Which of the following is NOT correct? Select correct
option:
a. Decrease in Assets will be credit
b. Decrease in Liabilities will be debit
c. Decrease in Expenses will be debit
d. Decrease in Revenue will be debit
49. Which of the following is a FIRST product of
accounting cycle? Select correct option:
a. Voucher
b. General Journal
c. General Ledger
d. Financial Statements
50. The process of transferring journal entry information
to the ledger is called: Select correct option:
a. Journalizing
b. Posting
c. Balancing
d. Analyzing

Answers:

s.n
o
1 c
2 b
3 a

s.n
o
26 a
27 d
28

Accountancy Learning Academy (ALA). AFD. FA1. Ch7,8. Test paper.

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