MULTIPLE CHOICE REVISION QUESTIONS

1.Given the following, what is the amount of Capital? Assets: Premises $20 000;
Inventory $8 500; Cash $100.Liabilities: Accounts payable $3 000; Loan from A Adams
$4 000

A.$21 100

B.$21 600

C.$32 400

D. $21 400

2.Which of the following best describes a trial balance

A. Shows the financial position of a business.

B. It is a special account.

C.Shows all the entries in the books.

D.It is a list of balances on the books.

3.What is a statement of financial position

A.A statement of the assets and liabilities of a business at a point in time in financial
terms

B.A Bank reconciliation statement is a statement.

C.A statement which shows all the debit and credit balances.

D. A list of all the assets and liabilities of a business

4.The suppliers personal account will appear in which of the following business records

A. The sales ledger

B. the purchases ledger

C.The purchases journal

D.The nominal ledger

5.A business has the following extract from its trial balance

trade receivables $9 000

bank overdraft $4 500

trade payables $6 000

inventory $6 300

What is the figure for current assets?

A.$15 300

B. $6 000

C.$19 800

D.$10 500

6.What is the function of the Suspense account

A. A way of recording transactions when the accounting treatment required is unclear.

B.A method of ensuring the trial balance will agree.

C.An account used to enable the production of the financial statements when required,
despite the presence of errors.

D. A way of focusing attention upon the corrective action required to ensure the trial
balance does agree and the integrity of the accounting system is maintained.

7.Which of the following explains the distinction between capital and revenue
expenditure
A. Capital expenditure is incurred for the purpose of trade or to maintain the earning
capacity of non-current assets, revenue expenditure results in the acquisition or
improvement of non-current assets.

B. capital expenditure results in the acquisition or improvement of non-current assets

revenue expenditure is incurred for the purpose of trade or to maintain the earning
capacity of non-current asset.

C.revenue expenditure is an expense in the statement of profit or loss and other

comprehensive income, capital expenditure is a liability in the statement of financial
position.

D.Capital expenditure is an asset in the statement of financial position, revenue

expenditure is an expense in the statement of profit or loss and other comprehensive
income.

8.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

9.An allowance for Doubtful debts 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.

10.A firm bought a machine for $3 200. It is to be depreciated at a rate of 25per cent
using the reducing balance method. What would be the remaining book value after
2years?
A.$ 1 600

B. $2 400

C.$1 800

D.$ 1 200
11) The General Journal is another name for---------------

A. the Journal

B. Sales day book

C. Purchases returns journal

D. Cash book. (2 marks)

12. The Accounting equation can be written as------------------

A. Assets=Capital - Liabilities

B. Assets=Capital+ Liabilities

C. Capital=Assets +Liabilities

D. Liabilities =Capital- Assets. (2 marks)

13. The Income Statement measures the ------------------

A. Profitability of the firm

B. Assets of the firm

C. Liabilities of the firm

D. Size of investment. (2 marks)

14. What is the purpose of the Journal --------------------

A. Recording goods returned by a customer

B. Recording credit purchases

C. Recording cash sales

D. Writing off bad debts. (2 marks)

15. In the statement of financial position Current assets are arranged in the order of---------------

A. Performance

B. Value

C. Alphabet

D. Liquidity. (2 marks)

16. Control accounts are prepared to ---------------

A. Calculate credit losses

B. Calculate errors

C. Locate errors

D. Prevent fraud (2 marks)

17. Which of the following enters into both the Debtors ledger control account and the Creditors
ledger control account

A. Cash refunded by suppliers

B. Dishonoured cheques

C. Interest charged by suppliers

D. Set off. (2 marks)

18. Turnover = MINUS

A. Sales -returns inwards

B. Sales -returns outwards

C. Purchases -returns inwards

D. Purchases -returns outwards. (2 marks)

19. Repairs to machinery of $2 300 was debited to the machinery account. This can be corrected
by--------------------------

A. Debit Machinery account $2 300 and credit Machinery repairs account by $ 2 300

B. Debit machinery account $4 600 and credit Machinery repairs account $ 4 600

C. Debit machinery repairs account $2 300 and credit Machinery account $2 300

D. Debit machinery repairs account $4 600 and credit Machinery account $4 600.

(2marks)

20. The folio column is used for -----------

A recording the amount in an account

B. Showing the account to be debited

C. showing the account to be credited

D. showing where the other account is recorded. (2 marks)

21) Capital expenditure refers to -------------

A.money used to acquire non -current asset
B.money used or spent on inventory
C.annual charges on depreciation
D.All costs of starting a business. (2 marks)

22) Which of the following is not an example of revenue expenditure -------------

A. cost of installing a new machine
B. repainting a classroom block
C. purchasing a new engine for the school bus
D. repairing the air conditioning system. (2 marks)

23. The most appropriate meaning of control account is-------------------

A an account which summarizes transactions passing through the accounts it controls
B an account that controls all transactions in a given year
C an account that summarizes cash transactions in the Cash book
D an account that summarizes the owners’ investment. (2 marks)

24. The account of credit customers are kept in the -------------

A. general ledger
B. purchase ledger
C. cash book
D. sales ledger. (2 marks)

25. A cheque may be Dishonoured for the following reasons except -----------
A. not having sufficient funds in the account
B. cheque being classified as stale
C. signature matching the one in the bank system
D. the amount in figure differs from the amount in words. (2 marks)

26. An accrued electricity in the statement of financial position is-------------------

A. a current asset
B. a non-current asset
C. capital
D. current Liabilities. (2 marks)

27. The following are entered in the sales ledger control account except
A. credit sales and cash refunded to customers
B. bad debts and cash sales
C. Discount allowed and returns outwards
D. provision for bad debts and cash sales. (2 marks)

28. The account of credit suppliers are kept in the----------

A. general ledger
B. purchases ledger
C. cash book
D. sales ledger. (2 marks)

29. We correct errors through the Journal so that we------

A. save the bookkeepers time
B. do not clutter the ledger
C. create work for the unemployed
D. provide a good record explaining the double entry records. (2 marks)

30. In the statement of financial position current assets are arranged in the order of---------------
A. permanence
B. value
C alphabet
D. liquidity (2 marks)

(31) Which of the following statements is incorrect?

(A) Assets – Capital = Liabilities

(B) Liabilities + Capital = Assets

(C) Liabilities + Assets = Capital

(D) Assets – Liabilities = Capital (2 marks)

(32) Which of the following is not an asset?

(A) Buildings

(B) Cash balance

(C) Debtors

(D) Loan from K Harris (2 marks)

(33) Given the following, what is the amount of Capital? Assets: Premises $20,000; Stock

$8,500; Cash $100. Liabilities: Creditors $3,000; Loan from A Adams $4,000

(A) $21,100

(B) $21,600

(C) $32,400

(D) $21,400 (2 marks)

(34) Which of the following best describes a trial balance?

(A) Shows the financial position of a business

(B) It is a special account

(C) Shows all the entries in the books

(D) It is a list of balances on the books (2 marks)

(35) 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. (2 marks)

(36) 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) Another figure. (2 marks)

(37) $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. (2 marks)

(38) 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. (2 marks)

(39) 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 Fixed Assets – Current Assets. (2 marks)

(40) Where there is no partnership agreement then profits and losses

(A) Must be shared in same proportion as capitals

(B) Must be shared equally

(C) Must be shared equally after adjusting for interest on capital

(D) None of these ( 2 MARKS)

41.If assets are $65 000 and liabilities are $25 000,what is the net worth of the business.
A.$30 000
B.$50 000
C.$40 000
D.$90 000

42.Which item is classified as Revenue expenditure

A.Installation costs of machinery
B.Legal fees on the purchase of premises
C.Number plates of a new motor vehicle
D.Redecorating office premises

43.The closing balances in the purchases ledger control account is $163 762.The purchases
journal has been undercast by $1 000.What is the correct closing balance on the purchases ledger
control account.
A,$162 762
B.$163 762
C.$164 762
D.$165 762
44.A firm pays its trade payables by cheque.What is the effect on assets and liabilities.
Effect upon assets effects upon liabilities
A.Reduces bank reduces trade payables
B.Increases bank increases trade payables
C.Reduces bank increases trade payables
D.Reduces bank reduces debtors

45Which accounting concept is being applied when goods taken by an owner for own use are
treated as drawings.
A. Business entity
B. B.Materiality
C. C.Realisation
D. D.Substance over form
46.Which qualitative characteristic implies that financial information should have predictive and
conformative value for users in making and evaluating economic decisions.
A.Fithful representation
B.Verifiability
C.Understandability
D.Relevance

47.Which item appears in the statement of changes in equity

A.Issue of a debenture
B.Profit on revaluation
C.Proposed dividends
D.Repayment of long term loan
REFRESH QUESTION
NB;we did this question and the other one in class ,hope you are revising, all the best.
C Moyo, a sole trader specializing in material for Asian clothing, has the following purchases
and sales for March 2019:
Mar 1 Bought from Smith Stores: silk $40, cotton $80. All less 25 % trade discount.
8 Sold to Grantley: lycra goods $28, woollen items $44. No trade discount.
15 Sold to A Henry: silk $36, lycra $144, cotton goods $120. All less 20% trade discount
23 Bought from C Kelly: cotton $88, lycra $52. All less 25% trade discount.
24 Sold to D Sangster: lycra goods $42, cotton $48. Less 10% trade discount.
31 Bought from J Hamilton: lycra goods $270. Less 331/3 % trade discount.
Required:
(a) Prepare the purchases and sales day books of C Moyo from the above. (5 marks)

(b) Post the items to the personal accounts. (5 marks)