All the questions in the quiz along with their answers are shown below.

Your answers are bolded. The correct answers have a green background while the incorrect ones have a red background. What transaction is recorded by the following journal entry? Dr Legal fees $463 Cr Creditors control $463 legal fees paid by cheque an invoice issued to a lawyer an invoice received from a lawyer a credit note received from a lawyer Which two of the following errors will be revealed by extracting a trial balance? i error of single entry ii error of commission iii error of omission iv error of transposition i and iii ii and iii iii and iv i and iv Which of the following is an application of an estimation technique? Recording non-current assets at their historical cost Depreciating motor vehicles at 20% per annum Valuing inventory on a first in first out (FIFO) basis Recording stationery expenses at invoiced cost Lance is entering an invoice in the payables day book. The invoice shows the following costs: Water treatment equipment $39,800 Delivery $ 1,100 Maintenance charge $ 3,980 Sales tax $ 7,854 Invoice total $52,734 What is the total value of capital expenditure on the invoice? $39,800 $40,900 $44,880 $52,734 When Fred's trial balance was extracted, the debit total was $400 less than the credit total. Which of the following errors could have caused this difference? a sales invoice for $200 was debited to both the sales account and the receivables control account a cheque received for $200 was entered twice in the nominal ledger a cheque to a supplier for $200 was credited to both the expense account and the payables ledger control account the purchases account had been undercast by $200 Which of the following are reasons for maintaining control accounts? i to simplify the preparation of final accounts ii to check the accuracy of postings iii to confirm the value of sales iv to assist in locating errors in posting i ii and iii i iii and iv i ii and iv ii iii and iv Joan's draft year end accounts were prepared including a prepayment for rent of $970. The prepayment should have been $1,170. When the error is corrected, how will net profit be affected? net profit will decrease by $200 net profit will increase by $200 net profit will decrease by $1,170 net profit will increase by $1,170

When posting an invoice for car repairs, $870 was entered on the correct side of the motor expenses account. The invoice was for $780. What correction should be made to the motor expenses account? Debit $90 Credit $90 Debit $1,650r Credit $1,650 The balance on Amy's receivables ledger control account in the nominal ledger is $100 more than the total of the listing of the balances on the personal accounts. Which one of the following treatments of an invoice for $100 could have caused this difference? the invoice was entirely omitted the invoice was entered on the credit side of the personal accounte the invoice was not entered in the personal account the invoice was entered twice in the personal account How should the balance on the receivables ledger control account be reported in the final accounts? as an expense as a non-current asset as a current asset as a current liability Colin allows for potential bad debts on the basis of the length of time the debt has been outstanding. The aged debtors analysis at 30 September 2003 and the allowances required are Age of debt 0 30 days 31 59 days 60 days and over $ 56,800 37,700 14,900 Allowance required 1% of balances 20% of balances 75% of balances

At 1 October 2002, Colin's doubtful debts allowance was $18,765 Which of the following should be reported in Colin's income statement for the year to 30 September 2003? a charge of $518 a credit of $518 a charge of $19,283 a credit of $19,283 Margaret checked her bank statement to the bank account in her nominal ledger and found the following reasons for the difference Which of the differences require an entry in the bank account in the nominal ledger? i some cheques have not been lodged by her suppliers ii the bank credited a personal lodgement to her business account in error iii the bank debited fees on her account

Alan prepared his draft year end accounts, but did not adjust these for a prepayment of $1,500 and an accrual of $400. How will Alan's profit and net assets be affected by including the prepayment and the accrual? Net Profit will: increase by $1,100 Net assets will: reduce by $1,100 Net Profit will: reduce by $1,900 Net assets will: increase by $1,900 Net Profit will: increase by $1,100 Net assets will: increase by $1,100 Net Profit will: reduce by $1,900 Net assets will: reduce by $1,900 In September 2003, Bridget took out a business development loan for $15,000. This is to be repaid in three equal instalments. The first instalment is due for payment on 1 January 2005. How will the outstanding balance be reported in Bridgets balance sheet at 30 November 2003? $15,000 as a current liability $5,000 as a current liability and $10,000 as a long term liability $10,000 as a current liability and $5,000 as a long term liability $15,000 as a long term liability

Adele runs a restaurant. In August 2003 she received a letter from a lawyer representing a customer who claims he suffered food poisoning after eating in the restaurant. The customer is claiming damages of $3,000. Adele offered to pay $300. Her lawyers advice is that in the event of the case going to court, she is likely to be required to pay $1,500. The solicitor also advised that the court case is unlikely to take place before April 2004.What amount should be provided for in respect of the claim in Adeles final accounts for the year ended 30 September 2003? $nil $300 $1,500 $3,000 At 30 September 2003 Pamelas inventory was valued at $6,400 and her trial balance included the following balances: Debit $ Sales Purchases Inventory at 1 October 2002 Carriage inwards Postage Wages Advertising Other expenses What is Pamelas gross profit? $4,710 $15,110 $15,450 $16,200 At 30 September 2003 Pamelas inventory was valued at $6,400 and her trial balance included the following balances: Debit $ Sales Purchases Inventory at 1 October 2002 Carriage inwards Postage Wages Advertising Other expenses 29,500 5,700 750 340 6,000 1,900 2,500 Credit $ 45,000 29,500 5,700 750 340 6,000 1,900 2,500 Credit $ 45,000

What sum will be reported as expenses in Pamelas income statement? $10,400 $10,740 $11,490 $17,190

Albert does not keep full accounting records. His last accounts show that his capital balance was $42,890. At the yearend he calculated that his assets and liabilities are: $ 41,700 9,860

Non-current assets Inventory

Receivables Payables Bank overdraft

7,695 4,174 5,537

On reviewing his calculations, you note that he did not include $258 of unpaid invoices for expenses. What is the value of Alberts closing capital? $49,286 $49,544 $60,360 $60,876 In the last twelve months, Jennas capital balance increased by $6,798. In the year her drawings totalled $14,600 and she introduced additional capital of $2,900. What is Jennas net profit or loss for the year? $4,902 loss $18,498 loss $4,902 profit $18,498 profit

In the year to 30 September 2003 Rena paid a total of $2,850 for business car expenses. This includes $350 which Rena paid from her personal funds. There was an opening accrual of $329 on the car expenses account and the closing accrual was $464. What is the charge for car expenses to be reported in Renas income statement for the year to 30 September 2003? $2,365 $2,635 $2,715 $2,985 Alec returned goods which were bought on credit from Peter for $473. How will this be recorded in Alecs general ledger? Dr Purchase returns $473 Cr Payables control account $473 Dr Payables control account $473 Cr Purchase returns $473 Dr Purchase returns $473 Cr Bank $473 Dr Bank $473 Cr Purchase returns $473 Which one of the following correctly states the accounting equation? Capital + Liabilities = Assets Assets + Liabilities = Capital Capital + Assets = Liabilities Capital Liabilities = Assets Which one of the following costs is included in the calculation of gross profit? depreciation of delivery vans salaries of general office staff carriage outwards carriage inwards Tanias year end trial balance includes the following balances: $ 12,964 43,728 5,872 28,627

Opening inventory Trade receivables Bank overdraft Trade payables

Tanias closing inventory is valued at $11,625 Based on the above figures, what is the value of Tanias current assets? $33,818 $55,353 $56,692 $61,225 Sophie has the following information about a new non-current asset which was financed by taking out a loan: serial number cost provider of loan date of purchase What information will Sophie enter in the asset register? (i) (ii) and (iii) (ii) (iii) and (iv) (i) (ii) and (iv) (i) (iii) and (iv) Terry bought a new car for $12,750. He paid for the new car by taking out a loan of $8,000 and trading in his old car. The old car originally cost $8,500 and had been depreciated by $4,148 at the time of the trade in. What is the gain on disposal of the old car? $102 $398 $602 $500 When preparing the payables ledger reconciliation for a client, you noted the following errors: an invoice for $215 from a supplier was not entered in the accounting records an invoice for $465 was recorded as $456 in the purchase day book Which of the errors will cause a difference between the balance on the control account in the nominal ledger and the total of the list of balances from the personal ledger? (i) only (ii) only both (i) and (ii) neither (i) or (ii) Bruce prepared the following payables ledger reconciliation statement: Balance on general ledger control account Payment entered twice in general ledger control account Purchase daybook overcast Total of list of balances $46,865 credit $573 credit $47,438 credit $900 debit $46,538 credit

How should the payables ledger balance be reported on the balance sheet? $46,538 as a current asset $46,538 as a current liability $46,865 as a current asset $46,865 as a current liability Which one of the following is a reason for preparing a receivables ledger reconciliation?

to calculate discounts allowed to identify overdue accounts to check the calculation of gross profit to confirm the accuracy of postings Eleanor prepared the following bank reconciliation statement: $ 12,548 (overdrawn) 3,847 16,395 5,424 10,971 540 10,431 (overdrawn)

Balance per bank statement Outstanding cheques Outstanding lodgements Bank charges Balance per general ledger

What is the correct value of the bank overdraft to be reported in the balance sheet? $12,548 $16,395 $10,971 $10,431 Which of the following correctly describe(s) why a bank reconciliation is prepared? to identify entries which have been generated by the bank, but not recorded in the cash book to identify errors in the entries in the cash book (i) only (ii) only both (i) and (ii) neither (i) or (ii) Steve is preparing his accounts for the year to 31 May 2004. On 1 July 2003 he paid $22,644 to rent a store for eighteen months from that date. What adjustment is required? a prepayment of $8,806 an accrual of $8,806 a prepayment of $13,209 an accrual of $13,209 Which one of the following correctly describes the effect of adjusting draft accounts for a prepaid expense? net profit will be increased and current assets will be reduced net profit will be reduced and current assets will be increased both net profit and current assets will be increased both net profit and current assets will be reduced You are preparing the accounts for the year to 30 April 2004 for John Moore. In March 2004 John damaged a table belonging to one of his customers. The customer asked John to pay $1,600 to replace the table. John offered $400, which he thought was enough to pay for repairing the table. The customer refused this offer. John agrees that the damage is his fault, and he has now received a formal quotation for the repairs. The quote is for $850.

What amount should be provided in respect of the claim when preparing the accounts for the year to 30 April 2004? no provision is needed $400 $850 $1,600 On 1 March 2004 Andrew took out a loan for $50,000. The loan is to be repaid in five equal annual instalments, with the first repayment falling due on 1 March 2006. How should the balance on the loan be reported on Andrews year end balance sheet as at 30 April 2004? $50,000 as a current liability $50,000 as a non-current liability $10,000 as a current liability and $40,000 as a non-current liability $40,000 as a current liability and $10,000 as a non-current liability At the start of the financial year, Wilson had a prepayment of $490 for telephone expenses. During the year he paid telephone bills with a total value of $4,784. He also received a cheque for a rebate of $215. At the end of the year he had accrued telephone expenses of $270. What amount should be charged to the income statement for the year for telephone expenses? $3,809 $4,349 $4,789 $5,329 Edwin does not keep full accounting records, but has provided the following information: -total value of sales during the year: $167,580 -all sales were at a mark up of 20% What was Edwins cost of sales for the year? $27,930 $33,516 $134,064 $139,650 At the beginning of the year a business had net assets of $89,548. During the year, the owner withdrew $17,500. At the end of the year, the net assets had a value of $95,574. What was the net profit for the year? $6,026 $11,474 $17,500 $23,526 When an extended trial balance is extended and completed and the result for the period is a profit, in which columns will the result be entered? Income statement columns debit ,Balance sheet columns credit Income statement columns credit ,Balance sheet columns debit Income statement columns debit ,Balance sheet columns debit Income statement columns credit ,Balance sheet columns credit At the end of the financial year, Mauds non-current assets cost $136,758 and had been depreciated by $34,864.

How will the non-current assets be recorded on the opening trial balance for the next financial year? $136,758 debit and $34,864 credit $136,758 credit and $34,864 debit $136,758 debit and $34,864 debit $136,758 credit and $34,864 credit Which of the following correctly calculates cost of sales? Opening inventory + Closing inventory Purchases Opening inventory Closing inventory Purchases Opening inventory + Closing inventory + Purchases Opening inventory Closing inventory + Purchases When the purchases day book was posted to the general ledger, $650 for stationery was posted to the wrong side of the stationery account. Which of the following will correct the error on the stationery account? a debit entry of $650 a debit entry of $1,300 a credit entry of $650 a credit entry of $1,300 When Yvonne checked the entries in her cash book with her bank statement seven cheques with a total value of $3,259 had not been presented at her bank. Yvonne had instructed her bank to cancel two of these cheques but did not make any entries in her cash book. The value of the cancelled cheques is $642. What entry should Yvonne make in the bank account in her general ledger to correct the balance? Debit $642 Debit $2,617 Credit $642 Credit $2,617 The closing balance on Franks bank account in his general ledger is $2,355 (debit). How should the balance be reported in Franks final accounts? as a non-current asset as a current asset as a current liability as a non-current liability Which of the following statements is/are correct? i.a separate suspense account should be opened for each error in the ledgers ii.a suspense account is sometimes opened to complete postings while more information is sought on a transaction neither (i) nor (ii) (i) only (ii) only (i) and (ii) Normas trial balance includes a suspense account with a credit balance of $280. She has discovered that a suppliers invoice for $140 was entered twice in the purchase day book. What is the balance on the suspense account after the error is corrected? nil $140 credit $280 credit $420 credit Jane has acquired a computer for use in her business. The invoice analyses the total amount due as follows: $ Basic cost of computer 2,500 Additional memory 125 Maintenance for first year 250 Total 2,875

What is the value of Janes capital expenditure? $2,500 $2,625 $2,750 $2,875 If capital expenditure is incorrectly classified as revenue expenditure, how will net profit and net assets be affected? Net profit understated Net assets understated Net profit understated Net assets overstated Net profit overstated Net assets overstated Net profit overstated Net assets understated The total of the balances on the individual suppliers accounts in Arnolds payables ledger is $81,649. The balance on the payables control account in his general ledger is $76,961. He has discovered that an invoice for $4,688 has been posted twice to the correct suppliers account and that payments totalling $1,606 which he made by standing order have been omitted from his records. What amount should be reported in Arnolds balance sheet for trade payables? $72,273 $75,355 $76,961 $81,649 Jennifer is preparing her yearend accounts and she has to deal with a prepayment for rent. Which of the following statements is correct? the prepayment will increase the charge to the income statement the prepayment will reduce the charge to the income statement the prepayment has no effect on the income statement the prepayment will only affect the income statement When he prepared his draft accounts, Ralph included $1,400 as an accrual for rent for two months. However he should have provided for only one months rent. How will Ralphs current liabilities be affected when he adjusts the accrual? reduced by $1,400 increased by $1,400 reduced by $700 increased by $700 Nigel has closing inventory which cost $38,750. This includes some damaged items which cost $3,660. It will cost Nigel $450 to repair these. He will be able to sell them for $1,500 after the repairs are completed. What is the correct value of Nigels closing inventory? $35,090 $36,140 $36,590 $38,750 When she prepared her draft accounts, Wilma included her closing inventory at a value of $21,870. She has just found out that some items valued at $2,150 had not been included in the calculation. How will net profit and net assets be affected when the inventory value is corrected? Net profit reduced by $2,150 Net assets reduced by $2,150 Net profit reduced by $2,150 Net assets increased by $2,150 Net profit increased by $2,150 Net assets reduced by $2,150 Net profit increased by $2,150 Net assets increased by $2,150 Which one of the following statements correctly describes the difference between current liabilities and noncurrent liabilities? Current liabilities are amounts which it is currently known must be paid, while non-current liabilities are amounts which might need to be paid in the long term. Current liabilities are amounts which must be paid within the next year, while non-current liabilities are amounts which must be paid in more than one year.

Current liabilities are amounts under a certain value, while non-current liabilities are amounts greater than that value. Current liabilities are amounts for which there is currently a known value, while the value of non-current liabilities requires confirmation. A few days before his year end, Colin received a claim for $30,000 following an accident caused by one of his lorries. He accepted liability and offered to pay $15,000. His offer was rejected and legal proceedings were commenced. His legal advisor told him that when the claim goes to court he will be required to pay $20,000. What amount should Colin provide in his year end accounts? no provision is required $15,000 should be provided $20,000 should be provided $30,000 should be provided At 31 October 2003 Maurices balance sheet included a provision for $35,000. He has re-assessed the provision at 31 October 2004, and has decided that at that date the provision should be $38,000. What will be the effect on Maurices income statement for the year to 31 October 2004? a debit of $3,000 a credit of $3,000 a debit of $38,000 a credit of $38,000 Which of the following statements is/are correct? i.salaries paid to partners should be charged to the income statement ii.each partners current account must have a credit balance (i) only (i) and (ii) (ii) only neither (i) nor (ii) Albert and David are in partnership, sharing profits and losses in the ratio 3:2. Under the terms of the partnership agreement, David is entitled to a salary of $8,000. The partnership income statement for the year to 30 November 2004 reported a profit of $16,000. What is Alberts share of the profit? $3,200 $4,800 $9,600 $11,200 Tina is preparing her accounts for the year to 30 September 2004 using an extended trial balance. After extending and completing the extended trial balance, the totals are: Income Statement Columns Balance Sheet Columns Dr Cr Dr Cr $ $ $ $ 148,990 136,909 149,608 161,689 What is Tinas profit or loss for the year to 30 September 2004? a profit of $12,081 a loss of $12,081 a profit of $12,699 a loss of $12,699 In the year to 31 August 2004 Jermaine received $29,860 from his customers. At 31 August 2004 he was still owed $15,865. A year earlier he was owed $16,528. What is the value of Jermaines sales for the year to 31 August 2004? $29,197 $29,860 $30,523 $45,725 Jenny has recorded the following journal entry: Debit Purchases $1,500

Credit Stationery $1,500 What is the correct narrative for Jennys journal entry? Being cash purchase of stationery Being credit purchase of stationery Being correction of error purchases originally recorded as stationery Being correction of error stationery originally recorded as purchases Which of the following items should be included in the calculation of gross profit? Carriage inwards Carriage outwards Early settlement discount allowed Early settlement discount received Which of the following correctly calculates cost of sales? Purchases + Opening inventory + Closing inventory Purchases Opening inventory + Closing inventory Purchases Opening inventory Closing inventory Purchases + Opening inventory Closing inventory Esther is recording the invoice for the purchase of a new non-current asset. As well as the basic cost of the asset, the invoice shows the following items: Delivery Installation Maintenance Which of the costs should be treated as revenue expenditure? Delivery only Installation only Maintenance only All of the costs Which of the following items should be included in current assets? i.assets which are not intended to be converted into cash ii.assets which will be converted into cash in the long term iii.assets which will be converted into cash in the near future (i) only (ii) only (iii) only (ii) and (iii) When entering invoices in the purchase day book, Elaine recorded an invoice for $126 for motor expenses as $162. The day book has been posted to the general ledger. What entry will correct the error? Debit Motor expenses $36 Credit Payables control $36 Debit Payables control $36 Credit Motor expenses $36 Debit Motor expenses $288 Credit Payables control $288 Debit Payables control $288 Credit Motor expenses $288 Consider the following statements about control accounts: control accounts can help to speed up the preparation of draft accounts by providing the balance sheet values for trade receivables and trade payables control accounts are always used in double entry bookkeeping

Which of the following combinations is correct? (i) True (ii) False (i) True (ii) True (i) False (ii) True (i) False (ii) False Tony sold a non-current asset with a net book value of $1,500 for $1,600. The cash received was correctly recorded in the bank account, but was credited to the sales account. Tony made no entries in the non-current asset accounts in the general ledger in respect of the sale. What action should be taken to ensure that the debit and credit totals of the trial balance agree? open a suspense account with a debit balance of $1,500 open a suspense account with a debit balance of $1,600 open a suspense account with a debit balance of $3,100 a suspense account is not needed as the totals will agree Tony sold a non-current asset with a net book value of $1,500 for $1,600. The cash received was correctly recorded in the bank account, but was credited to the sales account. Tony made no entries in the non-current asset accounts in the general ledger in respect of the sale. If the error is not corrected before the final accounts are prepared, how will the net profit be affected? net profit will be correct net profit will be overstated by $100 net profit will be overstated by $1,500 net profit will be overstated by $1,600 Jamie is preparing a reconciliation of the balance on the payables ledger control account in the general ledger to the total of the list of balances on the accounts in the payables ledger. He has discovered the following: i.a debit balance on a suppliers account was listed as a credit balance; ii.an invoice for $378 was entered in the purchase day book as $387. Which of the errors will require an adjustment to the payables ledger control account in the general ledger? neither (i) nor (ii) (i) only (ii) only both (i) and (ii) Jamie is preparing a reconciliation of the balance on the payables ledger control account in the general ledger to the total of the list of balances on the accounts in the payables ledger. He has discovered the following: i.a debit balance on a suppliers account was listed as a credit balance; ii .an invoice for $378 was entered in the purchase day book as $387. Which of the errors will require an adjustment to the list of balances? neither (i) nor (ii) (i) only (ii) only both (i) and (ii)

Shirley has prepared the following reconciliation of the balance on the receivables ledger control account in her general ledger to the total of the list of balances on customers personal accounts: $ Balance on general ledger control account 35,776 less: Balance omitted from list of balances 452

add: Sales day book undercast Total of list of balances

35,324 900 36,224

What is the correct balance of receivables to be reported on the balance sheet? $35,324 $35,776 $36,224 $36,676 At 31 March Sally was owed $47,744 by her customers. At the same date her doubtful debts allowance was $3,500. How should these balances be reported on Sallys balance sheet at 31 March? $44,244 as a current asset $3,500 as a current asset and $47,744 as a current liability $47,744 as a current asset and $3,500 as a current liability $51,244 as a current asset Colin made a mistake in his calculations which resulted in the value of his closing inventory at 30 April 2004 being overstated by $900. The value was calculated correctly at 30 April 2005. What was the effect of the error on the profit reported in Colins accounts for each of the two years? 2004 overstated by $900 2005 not affected 2004 overstated by $900 2005 understated by $900 2004 understated by $900 2005 not affected 2004 understated by $900 2005 overstated by $900 Kieron is an antiques dealer. His inventory includes a clock which cost $15,800. Kieron expects to spend $700 on repairing the clock which will mean that he will be able to sell it for $26,000. At what value should the clock be included in Kierons inventory? $15,100 $15,800 $25,300 $26,000 On 1 November 2004 Leah took out a business development loan of $30,000. The loan is to be repaid in 10 equal six monthly instalments. Leah made the first repayment of $3,000 on 1 May 2005. How should the outstanding balance of $27,000 be reported on Leahs balance sheet at 31 May 2005? Current liability nil, Non-current liability $27,000 Current liability $6,000 ,Non-current liability $21,000 Current liability $21,000 ,Non-current liability $6,000 Current liability $27,000 ,Non-current liability nil Darren is a second hand car dealer. If a car develops a fault within 30 days of the sale, Darren will repair it free of charge. At 30 April 2004 Darren had made a provision for repairs of $2,500. At 30 April 2005 he calculated that his provision should be $2,000. What entry should be made for the provision in Darrens income statement for the year to 30 April 2005? a charge of $500 a credit of $500 a charge of $2,000 a credit of $2,000 Ossie is completing his extended trial balance.

Into which columns should he extend the entries for closing inventory? Income statement columns debit ,Balance sheet columns debit Income statement columns debit ,Balance sheet columns credit Income statement columns credit ,Balance sheet columns debit Income statement columns credit ,Balance sheet columns credit When Ossie completed his extended trial balance the totals were: Income statement columns Balance sheet columns Debit Credit Debit Credit $ $ $ 129,685 136,894 149,212 What is Ossies profit or loss for the period? a loss of $7,209 a loss of $12,318 a profit of $7,209 a profit of $12,318 $ 142,003

Consider the following statements: Double entry bookkeeping means that two sets of records are maintained. In double entry bookkeeping we have a basic check on the accuracy of the entries as the total value of the debit entries and the total value of the credit entries should be equal. Are the statements true or false? (i) True ,True (i) True ,False (i) False ,True (i) False ,False