QUESTIONS

3 Double entry bookkeeping I 46 mins

3.1 Which one of the following can the accounting equation can be rewritten as?
A Assets + profit – drawings – liabilities = closing capital
B Assets – liabilities – drawings = opening capital + profit
C Assets – liabilities – opening capital + drawings = profit
D Assets – profit – drawings = closing capital – liabilities (2 marks)

3.2 A trader's net profit for the year may be computed by using which of the following formulae?
A Opening capital + drawings – capital introduced – closing capital
B Closing capital + drawings – capital introduced – opening capital
C Opening capital – drawings + capital introduced – closing capital
D Opening capital – drawings – capital introduced – closing capital (2 marks)

3.3 The profit earned by a business in 20X7 was $72,500. The proprietor injected new capital of $8,000
A
during the year and withdrew goods for his private use which had cost $2,200. C
If net assets at the beginning of 20X7 were $101,700, what were the closing net assets?
C
A
B
$35,000
$39,400 A
C $168,400
D $180,000 (2 marks)
G
3.4 The profit made by a business in 20X7 was $35,400. The proprietor injected new capital of $10,200
during the year and withdrew a monthly salary of $500. L
If net assets at the end of 20X7 were $95,100, what was the proprietor's capital at the beginning of the O
year?
$_________ (2 marks)
B
A
3.5 A sole trader took some goods costing $800 from inventory for his own use. The normal selling price of
the goods is $1,600. L
Which of the following journal entries would correctly record this?
DEBIT CREDIT
$ $ B
A Inventory account
Purchases account
800
800
O
B Drawings account 800 X
Purchases account 800
.
C Sales account
Drawings account
1,600
1,600 C
D Drawings account 800 O
Sales account 800 (2 marks)
M
3.6 A business can make a profit and yet have a reduction in its bank balance. Which ONE of the following
might cause this to happen?
A The sale of non-current assets at a loss
B The charging of depreciation in the statement of profit or loss
C The lengthening of the period of credit given to customers
D The lengthening of the period of credit taken from suppliers (2 marks)

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3.7 The net assets of Altese, a trader, at 1 January 20X2 amounted to $128,000. During the year to
31 December 20X2 Altese introduced a further $50,000 of capital and made drawings of $48,000. At
31 December 20X2 Altese's net assets totalled $184,000.
What is Altese's total profit or loss for the year ended 31 December 20X2?
A $54,000 profit
B $54,000 loss
C $42,000 loss
D $58,000 profit (2 marks)

3.8 Jones Co has the following transactions:

1 Payment of $400 to J Bloggs for a cash purchase
2 Payment of $250 to J Doe in respect of an invoice for goods purchased last month
What are the correct ledger entries to record these transactions?
A DEBIT Cash $650
CREDIT Purchases $650
B DEBIT Purchases $650
CREDIT Cash $650
C DEBIT Purchases $400
DEBIT Trade Payables $250
CREDIT Cash $650
D DEBIT Cash $650
CREDIT Trade Payables $250
CREDIT Purchases $400 (2 marks)

3.9 T Tallon had the following transactions:

1 Sale of goods on credit for $150 to F Rogit
2 Return of goods from B Blendigg originally sold for $300 in cash to B Blendigg
What are the correct ledger entries to record these transactions?
A DEBIT Receivables $150
DEBIT Sales Returns $300
CREDIT Sales $150
CREDIT Cash $300
B DEBIT Sales $150
DEBIT Cash $300
CREDIT Receivables $150
CREDIT Sales Returns $300
C DEBIT Receivables $450
CREDIT Sales $150
CREDIT Sales Returns $300
D DEBIT Sales Returns $300
DEBIT Sales $150
CREDIT Cash $450 (2 marks)

3.10 Which of the following documents should accompany a return of goods to a supplier?
A Debit note
B Remittance advice
C Purchase invoice
D Credit note (2 marks)

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 QUESTIONS

3.11 Which of the following are books of prime entry?

1 Sales day book
2 Cash book
3 Journal
4 Purchase ledger
A 1, 2 and 3 only
B 1, 2 and 4 only
C 3 and 4 only
D All of them (2 marks)

3.12 In which book of prime entry will a business record debit notes in respect of goods which have been
sent back to suppliers?
A The sales returns day book
B The cash book
C The purchase returns day book A
D The purchase day book (2 marks)
C
3.13 A company's motor vehicles at cost account at 30 June 20X6 is as follows:
C
MOTOR VEHICLES – COST
$ $
A
Balance b/d 150,500 Disposal 85,000
Additions 120,950 Balance c/d 186,450
271,450 271,450 G
What opening balance should be included in the following period's trial balance for motor vehicles – cost L
at 1 July 20X6?
A $271,450 DEBIT
O
B $271,450 DEBIT B
C $186,450 CREDIT
D $186,450 DEBIT (2 marks) A
3.14 A company's trade payables account at 30 September 20X1 is as follows: L
TRADE PAYABLES ACCOUNT
$
21,600 Balance b/d
$
14,000
B
Cash at bank
Balance c/d 11,900 Purchases 19,500 O
33,500 33,500

What was the balance for trade payables in the trial balance at 1 October 20X0?
X
A $14,000 DEBIT
.
B $14,000 CREDIT C
C $11,900 DEBIT
D $11,900 CREDIT (2 marks) O
3.15 Which of the following would be recorded in the sales day book? M
A Cash received
B Sales invoices
C Credit notes received
D Trade discounts (2 marks)

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3.16 Identify, by indicating the relevant box in the table below, whether each of the following statements is
true or false.
A debit records an increase in True False
liabilities.
A debit records a decrease in True False
assets.
A credit records an increase in True False
liabilities.
A credit records an decrease in True False
capital.
(2 marks)

3.17 How is the total of the purchases day book posted to the nominal ledger?
A Debit purchases, Credit cash
B Debit payables control, Credit purchases
C Debit cash, Credit purchases
D Debit purchases, Credit payables control (2 marks)

3.18 Which one of the following statements about an imprest system of petty cash is correct?
A An imprest system for petty cash controls small cash expenditures because a fixed amount is paid
into petty cash at the beginning of each period.
B The imprest system provides a control over petty cash spending because the amount of cash held
in petty cash at any time must be equal to the value of the petty cash vouchers for the period.
C An imprest system for petty cash can operate without the need for petty cash vouchers or receipts
for spending.
D An imprest system for petty cash helps with management of small cash expenditures and reduces
the risk of fraud. (2 marks)

3.19 Which one of the following provides evidence that an item of expenditure on petty cash has been
approved or authorised?
A Petty cash voucher
B Record of the transaction in the petty cash book
C Receipt for the expense
D Transfer of cash from the bank account into petty cash (2 marks)

(Total = 38 marks)

4 Double entry bookkeeping II 43 mins

The following information is relevant for Questions 4.1 and 4.2.

On 1 May 20X9 Marshall's cash book showed a cash balance of $224 and an overdraft of $336. During the
week ended 6 May the following transactions took place.
May 1 Sold $160 of goods to P Dixon on credit.
May 1 Withdrew $50 of cash from the bank for business use.
May 2 Purchased goods priced at $380 from A Clarke, on credit, less 15% trade discount.
May 2 Repaid a debt of $120 owing to R Hill, taking advantage of a 10% settlement discount. The
payment was by cheque.
May 3 Sold $45 of goods for cash.
May 4 Sold $80 of goods to M Maguire on credit, offering a 121/2% discount if payment made within
7 days. Marshall expects Maguire to take up this discount.
May 4 Paid a telephone bill of $210 by cheque.

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 QUESTIONS

May 4 Purchased $400 of goods on credit from D Daley.

May 5 Received a cheque from H Larkin for $180.
May 5 Sold $304 of goods to M Donald on credit.
May 5 Purchased $135 of goods from Honour Co by cheque.
May 6 Received a cheque from D Randle for $482.
May 6 Purchased $100 of goods on credit from G Perkins.

4.1 What is the total of the sales day book?

534
$_____ (2 marks)

4.2 What is the total of the purchases day book?

823
$_____ (2 marks)

4.3 Smith Co has the following transactions:

1 Purchase of goods on credit from T Rader: $450
A
2 Return of goods purchased on credit last month to T Rouble: $700 C
What are the correct ledger entries to record these transactions? C
A DEBIT Purchases
DEBIT Purchase Returns
$450
$700
A
CREDIT Cash $450
CREDIT Trade Payables $700
B DEBIT Purchases $450 G
L
DEBIT Trade Payables $700
CREDIT Purchase Returns $1,150
C DEBIT Purchases
DEBIT Trade Payables
$450
$250
O
CREDIT Purchase Returns $700 B
D DEBIT Purchase Returns $700
DEBIT Purchases $450 A
CREDIT Trade Payables $1,150 (2 marks)
L
4.4 Mew Ling has the following transactions:
1
2
Receipt of cash from R Singh in respect of an invoice for goods sold three weeks ago
Receipt of cash from S Kalu for cash sales B
What are the ledger entries required to record the above transactions? O
A DEBIT Cash X
CREDIT Sales
B DEBIT Cash .
CREDIT Sales
CREDIT Trade Receivables
C
C DEBIT Sales
CREDIT Cash
O
D DEBIT Trade Receivables M
DEBIT Sales
CREDIT Cash (2 marks)

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4.5 How is the total of the sales day book recorded in the nominal ledger?
DEBIT CREDIT
A Receivables Receivables
Ledger Control Account
B Receivables Receivables
Control Account Ledger
C Sales Receivables
Control Account
D Receivables Sales
Control Account (2 marks)

4.6 Identify, by indicating the relevant box in the table below, whether each of the statements is true or false.
A debit entry in the cash book True False
will increase an overdraft in the
accounts.
A debit entry in the cash book True False
will increase a bank balance in
the accounts.
(2 marks)

4.7 An accountant has inserted all the relevant figures into the trade payables account, but has not yet
balanced off the account.
TRADE PAYABLES ACCOUNT
$ $
Cash at bank 100,750 Balance b/d 250,225
Purchases 325,010

Assuming there are no other entries to be made, other than to balance off the account, what is the
closing balance on the trade payables account?
A $474,485 DEBIT
B $575,235 DEBIT
C $474,485 CREDIT
D $575,235 CREDIT (2 marks)

4.8 You are given the following information:

Receivables at 1 January 20X3 $10,000
Receivables at 31 December 20X3 $9,000
Total receipts during 20X3 (including cash sales of $5,000) $85,000
What are sales on credit during 20X3?
A $81,000
B $86,000
C $79,000
D $84,000 (2 marks)

4.9 A business sells $100 worth of goods to a customer, the customer pays $50 in cash immediately and
will pay the remaining $50 in 30 days' time.
What is the double entry to record the purchase in the customer's accounting records?
A DEBIT cash $50, CREDIT payables $50, CREDIT purchases $50
B DEBIT payables $50, DEBIT cash $50, CREDIT purchases $100
C DEBIT purchases $100, CREDIT payables $50, CREDIT cash $50
D DEBIT purchases $100, CREDIT cash $100 (2 marks)

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 QUESTIONS

4.10 Tin Co purchases $250 worth of metal from Steel Co. Tin Co agrees to pay Steel Co in 60 days' time.
From the list of tokens below, identify the tokens needed to record the correct entries in Steel Co's
books.

TOKEN DEBIT ENTRY CREDIT ENTRY

Sales $250 Debit entry
Receivables $250 Credit entry
Purchases $250
Payables $250
Cash $250
(2 marks)

4.11 The following totals appear in the day books for March 20X8. A
Sales day book
$
40,000 C
Purchases day book
Returns inwards day book
20,000
2,000
C
Returns outward day book 4,000 A
Opening and closing inventories are both $3,000. What is the gross profit for March 20X8?
A $22,000
B $24,000 G
C
D
$20,000
$18,000 (2 marks)
L
O
4.12 William's trial balance at 30 September 20X5 includes the following balances:
Trade receivables $75,943
B
Receivables allowance $4,751 A
How should these balances be reported in William's statement of financial position as at
30 September 20X5? L
A An asset of $71,192
B
C
An asset of $75,943 and a liability of $4,751
A liability of $71,192
B
D A liability of $75,943 and an asset of $4,751 (2 marks) O
4.13 A trial balance is made up of a list of debit balances and credit balances. X
Which of the following statements is correct? .
A Every debit balance represents an expense. C
B Assets are represented by debit balances.
C Liabilities are represented by debit balances. O
D Income is included in the list of debit balances. (2 marks)
M
4.14 At 30 November 20X5 Jenny had a bank loan of $8,500 and a balance of $678 in hand in her bank
account.
How should these amounts be recorded on Jenny's opening trial balance at 1 December 20X5?
A DEBIT $7,822
B CREDIT $7,822
C CREDIT $8,500 and DEBIT $678
D DEBIT $8,500 and CREDIT $678 (2 marks)

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4.15 Bert has extracted the following list of balances from his general ledger at 31 October 20X5:
$
Sales 258,542
Opening inventory 9,649
Purchases 142,958
Expenses 34,835
Non-current assets (carrying amount) 63,960
Receivables 31,746
Payables 13,864
Cash at bank 1,783
Capital 12,525
What is the total of the debit balances in Bert's trial balance at 31 October 20X5?
A $267,049
B $275,282
C $283,148
D $284,931 (2 marks)

4.16 At 31 October 20X6 Roger's trial balance included the following balances:
$
Machinery at cost 12,890
Accumulated depreciation 8,950
Inventory 5,754
Trade receivables 11,745
Trade payables 7,830
Bank overdraft 1,675
Cash at bank 150
What is the value of Roger's current assets at 31 October 20X6?
A $17,649
B $17,499
C $15,974
D $13,734 (2 marks)

4.17 Which ONE of the following statements does NOT describe a way in which an effective accounting
system facilitates the provision of useful accounting information?
A By requiring authorisation in line with organisational policies
B By processing and recording transactions in accordance with accounting rules
C By preventing transactions from being processed inaccurately
D By enabling transactions to be recorded as necessary to permit preparation of financial
statements (2 marks)

4.18 Which of the following statements is/are TRUE or FALSE?

1 Cash purchases are recorded in the purchases day book.
2 The sales day books is used to keep a list of invoices received from suppliers.
A Both statements are TRUE
B Both statements are FALSE
C Statement 1 is TRUE and statement 2 is FALSE
D Statement 1 is FALSE and statement 2 is TRUE (2 marks)

(Total = 36 marks)

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