‘0’ LEVEL ACCOUNTS

REVISING STRATEGIES

QUESTIONS BOOKLET

PAPER 1

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 ACCOUNTS EXAM
PROGRESS EXAM SET 1
PAPER 1
TIME: 1 HOURS 30 MINUTES

ANSWER ALL QUESTIONS

1. Which of the following is an asset
A. Bank overdraft
B. Mortgage on house
C. Machinery
D. Hire purchase on cars

2. Which of the following are liabilities

A. Car
B. Cash
C. House
D. Bank overdraft

3. What is the double entry for recording purchase of a machine paid for by cheque
Debit credit
A. Cash account machinery account
B. Machinery account cash account
C. Bank account machinery account
D. Machinery account bank account

4. Some office equipment bought for use in the business is found to be unsuitable, it is
returned to the supplier and a refund is made by cheque. What is the double entry for
recording the transaction.
Debit Credit
A. Bank account office equipment account
B. Cash account office equipment account
C. Cash account capital account
D. Office equipment account cash account

5. You are qiven a typewriter which you decide to use in your business. This should be
recorded in the accounts by
Debit Credit
A. Capital account typewriter account
B. Bank account capital account
C. Typewriter account capital account
D. Typewriter account cash account

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 6. Mr Smith buys a van from City Garage for use in the business. This should be
recorded in the accounts of Mr Smith as
Debit Credit

A. Bank account motor vehicles account

B. Motor vehicles account bank account
C. City garage account motor vehicles account
D. Motor vehicles account city garage account

7. A payment by cheque to Red Office equipment in settlement of the amount owing to

them for a new typewriter supplied a few weeks ago should be recorded as follows

Debit Credit
A. Red Office equipment account Bank account
B. Red Office equipment account Typewriter account
C. Typewriter account Row office equipment account
D. Bank account Row office equipment account

8. Johnson buys goods for resale on credit from Adams. This should be recorded in the
accounts of Johnson by:
Debit Credit
A. Johnson account purchases account
B. Purchases account Adams account
C. Purchases account Johnson account
D. Adams account purchases account

9. The purchase of a car by a garage on credit from Leyhall for resale should be recorded
by
Debit Credit
A. Car account leyhall’s account
B. Purchases account bank account
C. Puchases account leyhall’s account
D. Car account bank account

10. Huges sells goods to Lewis , a cheque being received immediately. This should be
recorded in the accounts of Lewis by
Debit Credit
A. Lewis account sales account
B. Purchases account bank account
C. Bank account sales account
D. Purchases account huges account

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 11. Smith has bought goods on credit from Robinson. Smith returns some of the goods to
Robinson. This should be recorded in the accounts of smith by
Debit Credit
A. Smiths account returns inwards account
B. Returns outwards account smith’s account
C. Returns inwards account robinson’s account
D. Robinson’s account returns outwards account

12. Scott has sold goods on credit to Fairfield. Fairfield returns some of the goods to
Scott. This should be recorded in the accounts of Scott by
Debit Credit
A. Returns inwards account Fairfield account
B. Scott’s account returns outwards account
C. Fairfield’s account returns outwards account
D. Returns inwards account scott’s account

13. The bank account in a firm’s double entry book keeping system appears as follows
Bank Account
1991 $ 1991 $
May 1 capital 2 000 May 10 Purchases 250
May 20 sales 200 May 12 typewriter 125
May 25 purchases 125

The balance of this account is

A. A debit balance of $1700
B. A credit balance of $1700
C. A debit balance of $2200
D. A credit balance of $ 500

14. A debit balance of $425 on P Ross’s account in the books of B. Harris means that
A. P Ross owes B Harris $425
B. P Ross has paid B Harris $425
C. B. Harris owes P Ross $425
D. B. Harris has paid P. Ross $425

15. Which one of the following accounts has normally a credit balance
A. Capital account
B. Returns outwards account
C. Sales account
D. Purchases account

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 16. Which one of the following normally has a credit balance
A. Returns inwards account
B. Sales account
C. Machinery account
D. Cash account.

17. The correct heading for a trial balance is..

A. The trial balance of…. As at…
B. The trial balance for the period ended…
C. The trial balance as at..
D. The trial balance of… for the period ended

18. When preparing a trial balance, which one of the following is recorded on the credit
side
A. Cash
B. Capital
C. Returns inwwards
D. Office equipment

19. When preparing a trial balance, which one of the following is recorded on the debit
side
A. Bank overdraft
B. Returns outwards
C. Capital
D. Purchases

20. Rent paid in cash should be recorded in double entry accounts by

Debit Credit
A. Rent paid account bank account
B. Cash account rent paid account
C. Capital account cash account
D. Rent paid account cash account

21. Commission received by cheque should be recorded in the double entry by

Debit Credit
A. Capital account commission received account
B. Bank account commission received account
C. Commission received account bank account
D. Cash account commission received account

22. Which of the following accounts has debit balances

A. Capital
B. Mortgage loan
C. Cash
D. Trade payables

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 23. Which of the following is a current asset
A. Inventory
B. Land and Buildings
C. Fixtures and fittings
D. Computers and equipment

24. Which of the following statements is incorrect?

A .Assets – Capital = Liabilities
B. Liabilities + Capital = Assets
C.Liabilities + Assets = Capital
D.Assets – Liabilities = Capital

25. Which of the following is a liability?

A.Machinery
B. Bank overdraft
C.Motor Vehicles
D.Cash at Bank

26. Which of the following best describes the meaning of ‘Purchases’?

A. Items bought
B. Goods bought on credit
C. Goods bought for resale
D. Goods paid for

27. Which of the following should not be called ‘Sales’?

A. Office fixtures sold
B. Goods sold on credit
C. Goods sold for cash
D. Gods sold for cash and credit

28. Which of the following is correct?

A. Profit does not alter capital
B. Profit reduces capital
C. Capital can only come from profit
D. Profit increases capital

29. Which of the following business transactions is an example of purchases?

A. Bought an office desk on credit from Zimbabwe Furnishers for $875
B. Bought stationary for resale from Tonderai Booksellers for $550
C. Sold an old van on credit to R. Dondoor $720
D. Sold goods on credit to K. Tavengwe for $720

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 30. Which of the following is true about rent receivable?
A. It is a liability to the business
B. Is an expense of a business
C. It is nominal account with a credit balance
D. It is a nominal account with a debit balance

31. Which of the following is both a book of original entry and also part of the ledger?
A. Purchases book
B. Cash book
C. Journal
D. Sales day book

32. Which transaction is recorded in the purchases ledger?

A. Cheque paid to a creditor
B. Cash purchases
C. Cheque received from a debtor
D. Purchase of fixed assets

33. A trial balance is prepared in order to

A. Balance off ledger accounts
B. Correct errors in the ledger
C. Draw up a suspense account
D. Prove the arithmetic accuracy of ledger accounts

34. Which component of a computer manipulates accounting information

A. The central processing unit
B. The input device
C. The output device
D. Mouse

35. Which of these best describes non-current assets?

A. Are bought to be used in the business
B. Are items which will not wear out quickly
C. Are expensive items bought for the business
D. Are of long life and are not bought specifically for resale.

36. A debit balance of $100 in a cash account shows that

A. There was $100 cash in hand
B. Cash has been overspent by $100
C. $100 was the total of cash paid out
D. The total of cash received was less than $100.

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 37. Sales invoices are first entered in
A.The Cash Book
B. The Purchases Journal
C.The Sales Account
D.The Sales Journal.

38. An alternative name for a Sales Journal is

A.Sales Invoice
B. Sales Day Book
C. Daily Sales
D. Sales Ledger.

39. The total of the Purchases Journal is transferred to the

A.Credit side of the Purchases Account
B. Debit side of the Purchases Day Book
C. Credit side of the Purchases Book
D. Debit side of the Purchases Account.

40. The total of the Returns Outwards Journal is transferred to

A.The credit side of the Returns Outwards Account
B. The debit side of the Returns Outwards Account
C.The credit side of the Returns Outwards Book
D.The debit side of the Purchases Returns Book.

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 ACCOUNTS EXAM
PROGRESS EXAM SET 2
PAPER 1
TIME: 1 HOURS 30 MINUTES

ANSWER ALL QUESTIONS

1. What is the effect of the following transactions in the financial statements?
Owner took goods worth $550 for own use
Increase Decrease
A. Purchases by $550 drawings by $550
B. Drawings by $550 sales by $550
C. Drawings by $550 purchases by $550
D. Sales by $550 drawings by $550

2. Net profit is calculated in the

A. Trading account
B. Profit and loss account
C. Trial balance
D. Balance sheet.

3. Which of the following does not appear in the income statement?

A. Commission received
B. Interest earned
C. Rent received
D. Trade receivables

4. The credit entry for net profit is on the credit side of

A. The trading account
B. The profit and loss account
C. The drawings account
D. The capital account.

5. Which of these best describes a balance sheet?

A. An account proving the books balance
B. A record of closing entries
C. A listing of balances
D. A statement of assets.

6. The descending order in which current assets should be shown in the balance sheet is
A. Inventory, Trade receivables, Bank, Cash
B. Cash, Bank, Trade receivables, Inventory
C. Trade receivables, Inventory, Bank, Cash
D. Inventory, Trade receivables, Cash, Bank.

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 7. Which of these best describes fixed assets?
A. Are bought to be used in the business
B. Are items which will not wear out quickly
C. Are expensive items bought for the business
D. Are of long life and are not bought specifically for resale.

8. Carriage inwards is charged to the trading account because

A. It is an expense connected with buying goods
B. It should not go in the balance sheet
C. It is not part of motor expenses
D. Carriage outwards goes in the profit and loss account.

9. Given figures showing: Sales $8,200; Opening stock $1,300; Closing stock $900;
Purchases $6,400; Carriage inwards $200, the cost of goods sold figure is
A. $6,800
B. $6,200
C. $7,000
D. $7,900

10. The costs of putting goods into a saleable condition should be charged to
A. Trading account
B. Profit and loss account
C. Statement of financial position
D. None of these.

11. Suppliers’ Personal Accounts are found in the

A. Nominal ledger
B. General ledger
C. Purchases ledger
D. Sales ledger.

12. The Sales Day Book is best described as

A. Part of the double entry system
B. Containing customers’ accounts
C. Containing real accounts
D. A list of credit sales.

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 13. Which of the following are personal accounts?
(i) Buildings
(ii) Wages
(iii) Debtors
(iv) Creditors

A. (i) and (iv) only

B. (ii) and (iii) only
C. (iii) and (iv) only
D. (ii) and (iv) only.

14. The software used on computers to process accounting data is

A. Datel
B. Pastel
C. Prestel
D. Windows 2007

15. Which of the following is not a hardware peripheral?

A. Mouse
B. Key board
C. Printer
D. Pastel

16. Bank overdraft is classified as

A. Current asset
B. Current liability
C. Non-current assets
D. Non-current liability

17. A debit balance of $100 in a cash account shows that

A. There was $100 cash in hand
B. Cash has been overspent by $100
C. $100 was the total of cash paid out
D. The total of cash received was less than $100.

18. $50 cash taken from the cash till and banked is entered
A. Debit cash column $50: Credit bank column $50
B. Debit bank column $50: Credit cash column $50
C. Debit cash column $50: Credit cash column $50
D. Debit bank column $50: Credit bank column $50.

19. A credit balance of $200 on the cash columns of the cash book would mean
A. We have spent $200 more than we have received
B. We have $200 cash in hand
C. The bookkeeper has made a mistake
D. Someone has stolen $200 cash.

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 20. What is the other name for subsidiary book?
A. Invoices
B. Source documents
C. Book of prime entry
D. Ledgers

21. Discounts received are

A. Deducted when we receive cash
B. Given by us when we sell goods on credit
C. Deducted by us when we pay our accounts
D. Deducted by our trade payables when we pay our accounts..

22. Revenue is the flow of money resulting from the

A. Purchase of goods
B. Sales of goods
C. Purchases of assets
D. Transfer of goods

23. Identify a set with assets only

A. Cash at bank, wages accrued
B. Debtors, rent receivable prepaid
C. Rent receivable due, advertising prepaid
D. Stock of stationery, income paid in advance

24. Sales invoices are first entered in

A. The Cash Book
B. The Purchases Journal
C. The Sales Account
D. The Sales Journal.

25. The total of the Sales Journal is entered on

A. The credit side of the Sales Account in the General Ledger
B. The credit side of the General Account in the Sales Ledger
C. The debit side of the Sales Account in the General Ledger
D. The debit side of the Sales Day Book.

26. Which of the following is correct?

A. Profit does not alter capital
B. Profit reduces capital
C. Capital can only come from profit
D. Profit increases capital

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 27. An alternative name for a Sales Journal is
A. Sales Invoice
B. Sales Day Book
C. Daily Sales
D. Sales Ledger.

28. Entered in the Purchases Journal are

A. Payments to suppliers
B. Trade discounts
C. Purchases invoices
D. Discounts received.

29. The total of the Purchases Journal is transferred to the

a. Credit side of the Purchases Account
b. Debit side of the Purchases Day Book
c. Credit side of the Purchases Book
d. Debit side of the Purchases Account.

30. Liabilities which are repayable after one year are called
A. Current liabilities
B. Loans
C. Non-current liabilities
D. Trade liabilities

31. The total of the Returns Outwards Journal is transferred to

A. The credit side of the Returns Outwards Account
B. The debit side of the Returns Outwards Account
C. The credit side of the Returns Outwards Book
D. The debit side of the Purchases Returns Book.

32. Given the following, what is the amount of Capital?

Assets: Premises $20,000; Stock $8,500; Cash $100.
Liabilities: Creditors $3,000; Loan from Adbel $4,000
A. $21,100
B. $21,600
C. $32,400
D. $21,400

33. Depreciation is
A. The amount spent to buy a fixed asset
B. The salvage value of a fixed asset
C. The part of the cost of the fixed asset consumed during its period of use by the firm
D. The amount of money spent in replacing assets.

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 34. A firm bought a machine for $3,200. It is to be depreciated at a rate of 25 per cent
using
the Reducing Balance Method. What would be the remaining book value after 2
years?
A. $1,600
B. $2,400
C. $1,800
D. $6 400

35. A firm bought a machine for $16,000. It is expected to be used for 5 years then sold
for
$1,000. What is the annual amount of depreciation if the straight line method is used?
A. $3,200
B. $3,100
C. $3,750
D. $3,000.

36. At the Statement of financial position date the balance on the Accumulated Provision
for Depreciation Account is
A. Transferred to Depreciation Account
B. Transferred to Profit and Loss Account
C. Simply deducted from the asset in the Balance Sheet
D. Transferred to the Asset Account.

37. In the trial balance the balance on the Provision for Depreciation Account is
A. Shown as a credit item
B. Not shown, as it is part of depreciation
C. Shown as a debit item
D. Sometimes shown as a credit, sometimes as a debit.

38. If an accumulated provision for depreciation account is in use then the entries for the
year’s depreciation would be
A. Credit Provision for Depreciation Account, debit Profit and Loss Account
B. Debit Asset Account, credit Profit and Loss Account
C. Credit Asset Account, debit Provision for Depreciation Account
D. Credit Profit and Loss Account, debit Provision for Depreciation Account.

39. When the final accounts are prepared, the Bad Debts Account is closed by a transfer
to the
A. Statement of financial position
B. Profit and Loss Account ‘
C. Trading Account
D. Provision for Doubtful Debts Account.

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 40. A Provision for Doubtful Debts is created
A. When trade receivables become bankrupt
B. When trade receivables cease to be in business
C. To provide for possible bad debts
D. To write off bad debts.

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 ACCOUNTS EXAM
PROGRESS EXAM SET 3
PAPER 1
TIME: 1 HOURS 30 MINUTES

ANSWER ALL QUESTIONS

1. A trader prepares financial statements each year to
A. Calculate the amount owing to creditors
B. Calculate the cash drawing
C. Check the bank statement balance
D. Make decisions about the future

2. What is a benefit of using computers in bookkeeping and accounting

A. Anyone with a computer can access the information
B. It is cheap to install
C. Large quantities of information can be stored
D. Staff require special training

3. Which of the following best describes purchases?

A. Items bought
B. Goods bought on credit
C. Goods bought for resale
D. Goods paid for

4. A debit balance of $100 in a cash account shows that

A. There was $100 cash in hand
B. Cash has been overspent by $100
C. $100 was the total of cash paid out
D. The total cash received was less than $100

5. Why does a business prepare a trial balance?

A. To calculate the profit or loss
B. To check the arithmetical accuracy of the ledger
C. To check the cash and bank balances
D. To show the financial position of the business

6. What is the accounting equation?

A. Assets=capital-liabilities
B. Capital=assets +liabilities
C. Capital=assets –liabilities
D. Liabilities=capital +assets

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 7. Which is recorded in the sales ledger?
A. Cash sales
B. Cheques paid to a creditor
C. Cheque received from a debtor
D. Sale of non current assets

8. Where is the total of the purchases journal posted?

A. Credit side of the income statement
B. Debit side of the income statement
C. Credit side of the purchases account
D. Debit side of the purchases account

9. The Journal is
A. Part of the double entry system
B. A supplementary to the cashbook
C. Not part of the double entry system
D. Used when other journals have been mislaid.

10. When the final accounts are prepared the Bad Debts Account is closed by a transfer to
the
A. Statement of financial position
B. Income statement
C. Provision for bad debts account
D. Suspense account

11. Capital expenditure is

A. The extra capital paid by the proprietor
B. The costs of running the business on a day to day basis
C. Money spent on buying an asset or adding value to it
D. Money spent on buying a non current asset

12. Which item affects gross profit?

A. carriage outwards
B. Discounts allowed
C. Discounts received
D. Carriage inwards

13. On 1 January 2009 there was a credit balance on the wages account of $2 000. Wages
paid during the year amounted to $48 000. On 31 December 2009 wages totalling $3
500 remained unpaid. How much should be transferred from the wages account to the
income statement (profit and loss account) for the year ended 31 December 2009?

A $42 500 B $46 500 C $49 500 D $53 500

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 14. Given figures showing: Sales $8 200, Opening inventory $1 300, Closing inventory
$900, Purchases $6 400, carriage inwards $200, the cost of goods sold is
A. $6 800
B. $6 200
C. $7 000
D. $7 900

15. When preparing final accounts, what affects gross profit?

A. Discount allowed
B. Carriage inwards
C. Discounts received
D. Goods taken by owner for personal use

16. A business’s bank statement showed an overdraft of $8 500. A cheque, $400 paid to a
supplier has not been presented for payment. What will be the bank statement balance
after this cheque has been paid by the bank?
A $8 100 credit B $8 100 debit
C $8900 credit D $8 900 debit

17. A bank reconciliation statement is a statement

A. Sent by the bank when the account is overdrawn
B. Drawn up by us to verify our cash book balance with the bank statement
balance
C. Drawn up by the bank to verify the cashbook
D. Sent by the bank when we have made an error

18. Which of the following is a nominal account?

A. Capital
B. Furniture
C. Stationery
D. Stock

19. A debit balance in a bank account represents

A. Accruals
B. Bank overdrafts
C. Cash at bank
D. Prepayments

20. A provision for bad debts account is created

A. When debtors become bankrupt
B. When debtors cease to be in business
C. To provide for possible bad debts
D. To write off bad debts

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 21. Dube purchased a motor vehicle. She also paid for the cost of delivering the vehicle,
insurance and fuel for the vehicle. Which would be included in Dube’s income
statement?
A. Delivery cost, fuel, insurance
B. Delivery cost, fuel, insurance, motor vehicle
C. Delivery cost, motor vehicle
D. Fuel, insurance

22. Working capital is a term meaning

A. The amount of capital invested by the proprietor
B. The excess of the current assets over the current liabilities
C. The capital less drawings
D. The total of Non Current Assets-Current Assets

23. A computer costing $100 000 is depreciated by the straight line method at 25% per
annum. What will be the net book value at the end of year 3?
A. Nil
B. $25 000
C $50 000
D $75 000

24. Depreciation is
A. The amount to buy a fixed asset
B. The salvage value of a fixed asset
C. The part of the cost of the fixed asset consumed during its period of use by the
firm
D. The amount of money spent in replacing assets

24. James was late paying an invoice issued by Henry. Henry charged James interest on
the overdue amount. Which entry would be made in Henry’s control account?

A. Credit purchases ledger control account

B. Credit sales ledger control account
C. Debit purchases ledger control account
D. Debit sales ledger control account

25. What is the source of entries in an updated cash book?

A. Bank statement
B. Check stub
C. Reconciliation statement
D. Statement of account

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 26. Which statement describes a non current asset?

A It can be turned into cash relatively easily

B It is acquired for use rather than resale
C It is a shot term asset
D Is value is frequently changing

27. Sibanda does not keep a full set of financial records. Which is not used to calculate his
total credit sales?
A Debtors cheque dishonoured
B. Discount allowed
C. Provision for doubtful
D. Returns inwards

28. Which is used to calculate the current ratio but not the acid test ratio?
A. Bank overdraft
B. Cash at bank
C. Inventory
D. Trade receivables

29. Walter provided the following information.

Revenue $150 000
Expenses $25 000

The mark up is 25%. What is the profit for the year?

A. $5 000
B. $12 500
C. $30 000
D. $37 500

30. Given that cost of goods sold $16 000 and margin of 20%, then sales figure is
A $20 160
B. $13 600
C $21 000
D. $20 000

31. If opening inventory is $3 000, closing inventory $5 000, sales $40 000 and margin
20% then stock turn is
A. 8 times
B. 7.5 times
C. 5 times
D. 6 times

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 32. If accounts payable at 1 January 2016 were $2 500, accounts payable at 31 December
2016 $4 200 and payments to creditors $32 000 then purchases for 2016 are
A $30 300
B. $33 700
C. $31 600
D. $64 000

33. Given opening capital of $16 500, closing capital as $11 350 and drawings were $3
300, then
A. Loss for the year was $1 850
B. Profit for the year was $1 850
C. Loss for the year was $8 450
D. Profit for the year was $8 450

34. If the totals of a trial balance does not agree, the difference must be entered in
A. The income statement
B. A suspense account
C. A nominal account
D. The capital account

35. Which of these errors would be disclosed by the trial balance?

A. Cheque $95 from C Gobo entered in his account as $59
B. Selling expenses have been debited to sales account
C. Credit sales of $300 entered both in double entry accounts as $30
D. A purchase of $250 was omitted completely from the books.

36. The descending order in which current assets should be shown in the statement of
financial position is
A. Inventory, Accounts receivable, Bank, Cash
B. Cash, bank, Inventory, Accounts receivable
C. Accounts receivable, inventory, Bank, cash
D. Inventory, Accounts receivable, Cash, Bank

37. Which of the following is correct?

A. Profit does not alter capital
B. Profit reduces capital
C. Capital can only come from profit
D. Profit increases capital.

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 38. Given a purchases invoice showing 5 items of $80 each, less trade discount of 25%
and cash discount of 5%, if paid within the credit period, your cheque would be made
out for
A. $285
B. $280
C. $260
D. none of these

39. Given desired cash float of $200, if $146 is spent in the period, how much will be
reimbursed at the end of the period?
A. $200
B. $54
C. $254
D. $146

40. The capital structure of SM Limited Company is as follows:

200 000, 10% preference shares of $2 each
100 000 ordinary shares of $1.50 each
What is the total share capital?
A. $300 000
B. $350 000
C. $190 000
D. $550 000

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 ACCOUNTS EXAM
PROGRESS EXAM SET 4
PAPER 1
TIME: 1 HOURS 30 MINUTES

ANSWER ALL QUESTIONS

1. Which of the following is an external user of accounting information?
A. Accountant
B. Managers
C. Government
D. Board of directors

2. The advantage of sole proprietorship is

A. Less capital is required to start the business
B. There is unlimited liability
C. There is poor decision making
D. No sharing of losses

3. Which of the following is not recorded in the general journal?

A. Purchase of stationery on credit for office use $1 500
B. Sold old computer on credit to Mudzimba for $500
C. Bought goods on credit $450 from ABC suppliers
D. Bad debts written off $300

4. Which of the following items is a set of input devices?

A. Mouse, key board and speakers
B. Speakers, visual display and key board
C. Touch pad, key board and mouse
D. Printer, speakers and monitor

5. Which component of a computer manipulates accounting information?

A. The input device
B. The output device
C. The storage device
D. The central processing unit

6. Which of the following accounts is found in the nominal ledger?

A. Cash account
B. Sales account
C. Receivables account
D. Payables account

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 7. Randal enterprises bought a computer $400. The transaction was treated as revenue
expenditure.
What is the effect on profit?
A. Overstated by $400
B. Overstated by $800
C. Understated by $400
D. Understated by $800

8. The account prepared to help locate errors in individual ledgers is a

A. Control account
B. Suspense account
C. Sales account
D. Purchases account

9. The total sales returns journal is posted to

A. The debit side of sales returns account
B. The debit side of receivables account
C. The credit side of the sales returns account
D. The credit side of the receivables account

10. What is the double entry for goods withdrawn at selling price by the owner for use?
A. Debit purchases account Credit drawings account
B. Debit drawings account Credit purchases account
C. Debit drawings account Credit sales account
D. Debit sales account Credit drawings account

11. The following information is available in the books of Samson on 1 January 2016:

Rent account $4 000 Cr

During the year 2016, the following transactions took place.

April 24: Paid rent by cash $16 000.
Sept 21: Paid rent by cheque $20 000
On 31 December 2016, prepaid rent was $3 500.

What amount of rent is transferred to the income statement?

A. $36 500
B. $43 500
C. $36 000
D. $28 500

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 12. A credit balance in the packaging materials represents
A. Unused packaging materials
B. Packaging materials used during the year
C. Packaging materials purchased during the year
D. Unpaid packaging materials

13. Which of the following errors is not revealed by a trial balance?

A. Purchase of goods on credit $13 000 from Choga was entered in purchases
account only
B. Carriage inwards amounting to $1 000 was entered in carriage outwards in error
C. A sale of goods on cash $550 was correctly entered in the sales account, but
incorrectly entered in the cash book as $505
D. A sales ledger debit balance of E. Kuda $1 200 was omitted in the trail balance
figure

14. Which of the following is part of prime cost of production?

A. Depreciation on plant and machinery.
B. Factory consumables
C. Hire of a special plant
D. Factory supervisor’s wages and salaries

15. The following information is provided by a trader:

$
Cost of raw materials consumed 33 000
Selling and distribution expenses 12 000
Factory wages: Direct 10 000
: Indirect 10 400
Closing inventory of work in progress 13 000

What is the cost of production?

A. $78 400
B. $65 400
C. $53 400
D. $40 400

16. Which entry is entered both in purchases ledger control account and in sales ledger
control account?
A. Bad debts written off
B. Contra
C. Returns inwards
D. Cash refunds from creditors

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 17. Which of the following items reduces the bank statement?
A. Interest received
B. Stop order
C. Dividends received
D. Credit transfer

18. The following information was obtained from the books of Junior Chitivha on 31 July
2016.
$
Cash book balance 12 000 Dr
Cheques not yet credited 6 000
Service fees 9 200
Unpresented cheques 4 500

What is the bank statement balance?

A. $1 300
B. $4 300
C. $2 800
D. $10 500

19. What is the double entry for increase in provision for discount allowed?
A. Debit discount allowed account, credit profit and loss account
B. Debit profit and loss account, credit discount allowed
C. Debit provision for discount allowed, credit profit and loss account
D. Debit profit and loss account, credit provision for discount allowed

20. Gundani had debtors/receivables amounted to $50 000 on 31 December 2016. He

declared debtors/receivables amounting to $2 000 as bad debts. He created provision
for doubtful debts equal to 8% of debtors.
What is amount of net debtors in statement of financial position (balance sheet) on 31
December 2016?
A. $48 000
B. $46 000
C. $44 160
D. $50 000

21. Which method of depreciation is suitable for calculating depreciation on crates and
small tools of the business?
A. Revaluation method
B. Straight line method
C. Reducing balance method
D. Fixed installment method

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 22. The following balances were extracted from the books of a trader on 31 December
2016: $
Computers at cost 78 000 DR
Provision for depreciation on 1 January 2016 18 000 CR

The computers are to be depreciated at the rate of 12% per annum on cost.
What is the net book value of computers on 31 December 2016?
A. $68 640
B. $25 200
C. $52 800
D. $50 640

23. A trader provided the following information:

$
Total trade receivables on 1 January 2016 20 400
Total trade receivables on 31 December 2016 17 200
Credit sales 98 500
Cash refunds from receivables 4 500
Receipts from receivables 79 000

What was the amount of returns inwards?

A. $123 400
B. $27 200
C. $96 200
D. $18 200

24. The following information was provided by a trader.

$
Cost of goods consumed 87 000
Inventory at 31 December 2016 12 000
Returns inwards 10 000
Gross loss 5 000

What is the turnover?

A. $80 000
B. $70 000
C. $85 000
D. $75 000

25. Which error causes an increase in the gross profit?

A. Opening inventory overstated
B. Closing inventory understated
C. Purchases recorded before deduction of trade discount.
D. Sales invoice omitted from the sales journal

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 26. Money used to carry out the day to day business operations is
A. Borrowed
B. Capital employed
C. Capital invested
D. Working capital

27. Inventory of unused packaging materials was not included in the income statement
end the end of the year. The accounting concept applied was
A. Prudence concept
B. Accrual concept
C. Matching concept
D. Going concern concept

28. The disadvantage of a partnership business is that

A. They conflict of interests
B. More capital is raised
C. They is sharing of ideas
D. Quality decisions are made

29. The following information is provided by Tengwe Academy Football Club on 1

January 2016.
$
Motor vehicles, at cost 77 000
Office equipment, at cost 16 000
Subscriptions due 15 900
Payables 17 000
Receivables 18 000
Bank overdraft 10 000
Insurance prepaid 11 000

What is the accumulated fund on 1 January 2016?

A. $105 000
B. $79 100
C. $110 900
D. $123 000

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 30. The following information relates to a trader.
$
Sales 130 000
Returns inwards 30 000
Mark up is 25%

What is the cost of goods sold?

A. $104 000
B. $97 500
C. $75 000
D. $80 000

31. When a business is purchased as going concern, the value of assets taken over is
A. Credited to the business purchases account
B. Credited to goodwill account.
C. Debited to the business purchases account
D. Debited to the goodwill account

32. Musendo and Power are in the partnership. Power is entitled to a monthly salary of
$12 000. During the year ended 31 December 2016 he has been not paid salary for
November and December.

What amount for salary would be entered in the profit and loss appropriation account
and credited to Power’s current account?

Appropriation account Current account

A. $144 000 $144 000
B. $144 000 $24 000
C. $144 000 $120 000
D. $120 000 $144 000

33. What is the double entry for partner’s interest on drawings?

A. Debit Current account Credit Appropriation account
B. Debit Current account Credit Profit and loss account
C. Debit Appropriation account Credit Current account
D. Debit Profit and loss account Credit Current account

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 34. The following account was prepared in the ledger of Gamanya on 31 December 2016:

Capital account
2016 $ 2016 $
Dec 31 Drawings 14 000 Jan 1 Balance b/d 20 000
Profit & loss account 16 000 Dec 31 Cash 21 000
Balance c/d 13 000 Furniture 2 000
43 000 43 000

What is the meaning of the entry “Furniture”?

A. Furniture brought into business by the proprietor
B. Furniture taken from the business for private use
C. Furniture disposed by the proprietor
D. Furniture purchased by the proprietor

35. Which of the following is classified under reserves in the statement of financial
position of a joint stock company?
A. Debenture interest
B. Preference share dividends
C. Ordinary share dividends
D. Retained profits

36. The order of priority which a company must give to payment of interest and dividends
is
A. Debentures interest, ordinary dividends, preference dividends
B. Debentures interest, preference dividends, ordinary dividends
C. Ordinary dividends, preference dividends, debentures interest
D. Preference dividends, ordinary dividends, debentures interest

37. The capital structure of SM Limited Company is as follows:

200 000, 10% preference shares of $2 each
100 000 ordinary shares of $1.50 each
What is the total share capital?
A. $300 000
B. $350 000
C. $190 000
D. $550 000

38. Which of the following is the correct double entry for loss on disposal of non-current
(fixed) assets
A. Debit Profit and loss account Credit Asset account
B. Debit Asset account Credit Profit and loss account
C. Debit Disposal account Credit Profit and loss account
D. Debit Profit and loss account Credit Disposal account

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 39. A purchase invoice shows an amount list price of $18 000. Trade discount given was
25% and 10% cash discount allowed.
How much was entered in the purchases journal?
A. $13 500
B. $12 150
C. $18 000
D. $16 200

40. The capital structure of SM Limited Company is as follows:

200 000, 10% preference shares of $2 each $400 000
100 000 ordinary shares of $1.50 each $150 000
What is the total share capital?
A. $300 000
B. $350 000
C. $190 000
D. $550 000

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