FA1 : RECORDING FI NANCIAL

TRANSACTIONS
SALES AND SALES RECORDS

95 A business sold goods to the value of $500 (net) to Harper. What would be the debit to
Harper #s account if sales tax is payable at a rate of 17.5%?
A $412.50
B $500.00
C $587.50
D $606.06

96A summary of the transactions of Ramsgate, who is registered for sales tax at 17.5%, shows
the following for the month of August 20X9.

Outputs $60,000 (exclusive of sales tax) 70500

Inputs $40,286 (inclusive of sales tax)

At the beginning of the period Ramsgate owed $3,400 to the taxation authorities, and during the
period he has paid $2,600 to them.

At the end of the period the amount owing to the taxation authorities is:
A $3,700 Output is liability/input is asset
B $3,930 Tax nature is credit so b/f is credit
C $4,400
D $5,300.

97In which book of prime entry would the sales tax on credit sales be recorded?

A Sales day book

B Purchases day book
C Cash receipts book
D Cash payments book

98In which books of prime entry would the following transactions be entered?

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

1 KAPLAN PUBLISHING
 MULTIPLE-CHOICE QUESTIONS :
SECTION 2
99 The sales revenue account is:

A Credited with the total of sales made, including sales tax

B Credited with the total of sales made, excluding sales tax
C Debited with the total of sales made, including sales tax
D Debited with the total of sales made, excluding sales tax

100In which book of prime entry would the sales tax on cash sales be recorded?

A Sales day book

B Purchases day book.
C Cash book
D Journal

101A business sold goods that had a net value of $600 to Lucid pic. What entries are
required to record this transaction if sales tax is payable at 17.5%?

A Dr Lucid pic $600J Dr sales tax $105, Cr Sales $705

B Dr Lucid pic $705, Cr sales tax $105, Cr Sales $600
C Dr Lucid p!c $600, Cr sales tax $105, Cr Sales $600
D Dr Sales $600, Dr sales tax $105, Cr Lucid pic $705

102A sales tax registered business sends out a sales invoice for goods with a list price of
$1,239.77. A trade discount of 10% is given and a settlement discount of 5% offered. The
goods rated for sales tax at 17.5%. What is the sales tax charged cm _ the invoice?

A $185.50
B $195.26
C $205.03
D $207.19

103 Scott is preparing an invoice for a machine. Its list price is $12,000 + sales tax at - 17.5%.
A discount of 2% is offered, but only if payment is made within 30 days. How much sales tax
should be shown on the invoice?

A $2,l00
B $2,058
C $1,787
D $1,751

KAPLAN PUBLISHING 2
 MULTIPLE-CHOICE QUESTIONS :
104 SECTION 2
Which of the following transactions is a credit transaction?

A Sale of goods for cash

B Sale of goods and receipt of a cheque
C Sale of goods with payment due in 60 days
D Receipt of a cheque for goods sold 40 days ago

105 Megan was invoiced for $100 less 5% trade discount and a settlement discount of 2.5%.
Megan's supplier is not registered for sales tax.

If Megan pays the invoice late, how much will she pay?
A $92.50
B $92.63
C $95.00
D $7.50

106 A sale is made for $423 inclusive of sales tax at 17.5%. What is the entry to the sales
account?

A Debit $360
B Credit $360
C Debit $423
D Credit $423

107 Cash of $282 was received from a receivable that had purchased goods on credit for $240
plus sales tax at 17.5%. What is the double entry for this receipt?

A Debit cash $282 Credit sales $240 Credit sales tax $42
B Debit cash $282 Credit sales $282
C Debit cash $282 Credit receivables $240 Credit sales tax $42
D Debit cash $282 Credit receivables $282

KAPLAN PUBLISHING 3
 MULTIPLE-CHOICE QUESTIONS :
SECTION 2
108 What does a debit balance on the sales tax account represent?

A An amount of sales tax owing to the tax authorities

B A sales tax expense to be written off in the profit and loss account
C An amount of sales tax due from the tax authorities
D Sales tax income to be included in the statement of comprehensive income

109 At the start of a month, accounts receivable owed $4,529. During the month total sales
were $16,540 of which 40% were for cash. Cash was received from receivables of
$7,231 during the month.

What was the balance of accounts receivable at the end of the month?
A $1,836
B $3,914
C $5,144
D $7,222

110 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

111 During a three-month period, a business made sales of $69,200 plus sales tax at 17.5%.
The balance on the receivables account at the start of the period was $5,329 and at the
end of the period $4,771.

How much cash was received from receivables during the period?
A $68,642
B $69,758
C $80,752
D $81,868

KAPLAN PUBLISHING 4
 MULTIPLE-CHOICE QUESTIONS :
SECTION 2
112 Settlement discounts allowed on invoiced amounts are normally posted to the personal
ledger from:

A The journal
B The cash book
C The purchase daybook
D The sales day book.

113 Victoria sells materials to Fraser for $240 plus sales tax. Fraser manufactures goods
from these materials and sells them to a customer, Helen, for $360 plus sales tax.
Victoria and Fraser are sales tax registered traders and the goods rate of sales tax is
17.5%.

How much sales tax is paid to the taxation authorities by each party to the transactions?

A Victoria pays $42

Fraser pays $63
B Fraser pays $42
Helen pays $63
C Victoria pays $42
Fraser pays $21
D Fraser pays $42
Helen pays $21

114 A business has an opening balance on the sales tax account showing an amount owing
to the taxation authorities of $3,210. During the period there were standard rated
outputs of $12,400, excluding sales taxr and standard rated inputs of $11,280, including
sales tax. During the period $2,890 was paid to the taxation authorities. The standard
rate of sales tax is 17.5%.

What is the balance on the sales tax account at the end of the period?
A $170
B $810
C $2,720
D $3,700

115 Which of the following will help to reduce overdue balances in receivables ledger
accounts?

A Improved debt collection methods

B An increase in the bank overdraft facility
C Credit customers paying invoices more slowly
D An increase in credit facilities to customers

KAPLAN PUBLISHING 5
 MULTIPLE-CHOICE QUESTIONS :
SECTION 2

116 Charles sells goods for $1,200 and buys goods for $810. Both transactions include sales
tax at 17.5% in the prices given. How much will Charles pay to the tax authorities in
respect of these two transactions?

A $58.09
B $68.25
C $178.72
D $210.00

117 On 1 February the credit balance on Josh_s Sales tax account was $2,400. During the
month, sales tax on sales was $1,050, sales tax on purchases and other expenses was
$900 and a repayment of sales tax was received of $200. What was the credit balance on
the sales tax account at 28 February?

A $2,050
B $2,350
C $2,450
D $2,750

118 Output tax is:

A Sales tax on purchases

B Sales tax on sales
C Payments to the tax authorities
D Repayments from the tax authorities.

119 Who normaily suffers the cost of sales tax?

A The first supplier in the chain of supply

B The manufacturer
C The retailer
D The consumer

120 During a month a business made sales of $24,600 and purchases of $15 r200 exclusive of
sales tax. The business is registered for sales tax and both sales and purchases are
subject to sales tax at 17.5%. What is the balance on the sales tax account at the end of
the month if the opening balance was zero?

A A debit balance of $1,645

B A credit balance of $1,645
C A debit balance of $11,045
D A credit balance of $11,045

KAPLAN PUBLISHING 6
 MULTIPLE-CHOICE QUESTIONS :
SECTION 2

121 During a three-month period a business made the following sales and purchases:

Sales $34,800 (exclusive of sales tax at 17.5%)

Purchases $30,785 (inclusive of sales tax at 17.5%)

What is the balance on the sales tax account at the end of the three-month period if the
opening balance was zero?

A $598
B $703
C $1,505
D $8,600

122 During a three-month period a business made sales of $72,145, including sales tax at
17.5%, and purchases of $54,200, excluding sales tax at 17.5%. There was an amount
due to the taxation authorities at 17.5% at the start of the three-month period totalling
$1,354.

What was the balance on the sales tax account at the end of the three-month period?
A $94
B $1,260
C $2,614
D $4,669

123 Sales tax on a credit sale is recorded:

A By the supplier when the invoice is issued and by the customer when the invoice is received

B By the supplier when the invoice is issued and by the customer when the payment is
made to the supplier

C By the supplier when the cash payment is received and by the customer when the invoice is
received

D By the supplier when the cash payment is received and by the customer when the
cash payment is made.

124 A business must charge sales tax on its sales if:

A It is a limited company
B It sells goods and services
C It's a registered trader
D It has been trading for more than one year.
125 Which of the following would be appropriate to be written off as an irrecoverable debt?

A A cash sale
B A credit sale made within the last month
C A credit sale over the organisation’s credit limit made in the last week

KAPLAN PUBLISHING 7
 MULTIPLE-CHOICE QUESTIONS :
SECTION 2

D A credit sale within the organisation's credit limit and outstanding for a year
126 Where is a credit note first recorded in a manual book-keeping system?

A In an aged receivables analysis

B In a sales day book
C In a sales returns day book
D In the sales ledger

127 What is the purpose of an aged receivables analysis?

A To monitor the time receivables are outstanding

B To list irrecoverable debts
C To hold receivables temporarily
D To calculate credit limits

128 What is the purpose of coding in a computerised accounting system?

A It authorises transactions
B It identifies appropriate accounts for posting
C It records credit limits for accounts receivable
D It transfers ledger balances automatically

129 Which of the following entries is used to record an irrecoverable debt?

A Dr Account receivable Cr Irrecoverable debts
B Dr Irrecoverable debts Cr Account receivable
C Dr Profit and loss account Cr Irrecoverable debts

D Dr Irrecoverable debts Cr Profit and loss account

130 Why would you not send a statement to an account written off
irrecoverable debt?

A Doing so would advise the receivable there is no need to pay

B Doing so would encourage the receivable to pay
C It is against the law of contract to do so
D It is against data protection legislation to do so
131 An account receivable is for $800. The customer is experiencing severe difficulties and
has agreed to return goods costing $600. The supplier decides to write off the remaining
amount. What is the double entry to record this?

A Dr Account receivable $800; Cr Sales returns $600; Cr Irrecoverable debts $200

B Dr Irrecoverable debts $200; Dr Bank $600; Cr Sales returns $800
C Dr irrecoverable debts $200; Dr Sales returns $600; Cr Account receivable $800
D Dr Sales returns $800; Cr Irrecoverable debt $200; Cr Bank $600

KAPLAN PUBLISHING 8