228 test bank for financial and management accounting an introduction 4th edition

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228 Test Bank for Financial and Management Accounting An Introduction 4th Edition Pauline Weetman Multiple Choice Questions If a business pays a cheque for stationery, the bookkeeping entries are: A) Debit Purchases Credit Bank B) Debit Bank Credit Stationery C) Debit Stationery Credit Bank D) Debit inventory (stock) Credit Bank Identify the account to which you would post the following transaction recorded in the Cash Account: £4 000 paid to Ricky Nelson, the landlord, as rent for the premises used for business purposes A) Ricky Nelson a/c B) landlord's account C) rent account If a trial balance, extracted from the double entry system of a sole trader, shows that total debits equals total credits then: A) the books are correct B) no errors will have been made in posting the transactions of the business C) the business is profitable D) an equal debit for every credit will have been posted and the accounts correctly added A 'T' account is: A) an abbreviation for the telephone account B) an account for all customers whose names begin with the letter T C) the ledger account found between the Sugar account and the Milk account D) a simple representation of a ledger account, forming the letter 'T' A business registered for Value Added Tax has to maintain a VAT account, crediting it with the "output tax" and debiting it with the "input tax" calculated at 17.5 / 117.5 of the transaction value In respect of the transaction listed below, identify whether you would account for the VAT element by debiting or crediting the VAT account or neither:Acquisition of motor vehicles A)neither B)debit C) credit Which of the following statements is correct? A trial balance: A) lists the balances in all the accounts maintained on a double entry basis B) is prepared by a business on the last day of its accounting period C) proves the accuracy of the accounting records D) lists all entries made for accounting for business transactions Jayantha commenced business on January 20x6 with a capital in cash of £10 000 During the year ending on 31 December 20x6 he paid £12 000 for furniture, £92 400 for purchasing goods for sale and £31 450 for various expenses He received £139 250 by sale of goods Identify Jayantha’s capital as at 31 December 2001 in the following situation: Jayantha had sold out all goods purchased during the year and wishes to write off a tenth of the cost of furniture as depreciation A) £24 200 B) £10 000 C) £24 400 Which of the following errors would have caused a difference in the trial balance? A)recording a sale of £30 000 as £3 000 in the Cash Book and £3 000 in the Sales Account B)posting payment of £21 000 for stationery as £12 000 to the Stationery account C)not accounting for £15 000 paid for purchasing goods for sale D)posting to Motor vehicles account £600 paid for servicing vehicles Which of the following reflects the effect on the accounting equation of a purchase of an item of plant and equipment, for cash? A) assets increase: ownership interest decreases B) assets unchanged: ownership interest unchanged C) assets decrease: ownership interest increases D) assets decrease: ownership interest unchanged Identify whether the balance brought down, at the year end, in the named account would be on the debit side or credit side of that account Shop fittings a/c A) debit B) credit Every entry in a ledger should have: A) date and description B) amount C) date, description and amount D) description and amount Identify whether the account stated below would represent an Asset, Liability, Income or Expenditure: Buildings account A) liability B) income C) expenditure D) asset Which of the following is the correct terminology for the right hand side of a ledger account? A) positive B) debit C)credit D) negative Identify the year-end balance that would be brought down in the following account on 31 December 20x6, taking into account the stated transaction: Office Equipment account: The balance in the account on December 20x6 was £218 400 In December four personal computers were bought for staff use, paying £4 500 for each unit A) £200 400 B) £236 400 C) £218 400 A sale of £7 800 to Peter Blowes has been posted to Paul Blowes To correct this the journal entry should require which of the following: A) debit Sales account and credit Paul Blowes with £15 600 B) debit Sales account and credit Paul Blowes account with £7 800 C) debit Peter Blowes account and credit Sales account with £7 800 D) debit Peter Blowes account and credit Paul Blowes account with £7 800 The effect of a transaction was that it reduced both the assets and the liabilities of a business by £100 000 Which of the following is that transaction likely to be: A) introduction of additional capital by the owner B) repayment of a loan C) disposal of an asset D) sale of goods When preparing a bank reconciliation statement, the balance as shown in the bank statement is reconciled with: A) the bank's account in the business's payables (creditors)' ledger B) the bank balance as shown in the previous balance sheet C) the bank balance as shown in the bank’s ledger D) the bank balance as shown in the business's cash book The source documents for entries made in the Return Outwards Journal are: A) copies of Credit Notes issued to customers B) Credit Notes issued by suppliers C) purchase invoices D) copies of sales invoices Identify the year-end balance that would be brought down in the following account on 31 December 20x6, taking into account the stated transaction: Ruth Jones' Loan account: A loan of £60 000 was obtained from Ruth on January 20x5, on an agreement that it will be settled in six annual instalments of £10 000 each commencing from 31 December 20x5 The agreement is being complied with A) £40 000 B) £60 000 C) £50 000 M Biggs bought several lots of inventory (stock) throughout a period for the following amounts £1 100, £2 200, £3 300, £4 400 He made sales on credit throughout this period of £1 100, £2 200, £3 300, £4 400 He sells inventory (stock) at cost plus 25% His closing inventory (stock) at the end of the period is valued at: A) 200 B) 300 C) zero D) 400 The Cashier has recorded the following transaction in a Cash Book, entering the receipts on the debit side and the payments on the credit side Identify which side of the named account would be posted by the Bookkeeper Advertising account : £240 paid for advertising the availability of mobile phones A) debit B) credit Identify whether the balance brought down, at the year end, in the named account would be on the debit side or credit side of that account Stationery account A) credit B) debit Identify whether the posting of the transaction to the account named would increase or reduce the balance in that account: Receipt of a Loan from Kingsley Perera (Perera's Loan account) A) increase B) reduce A machinery acquired at a cost of £225 000, expected to be in use for five years, with no salvage value, is to be depreciated equally over its useful life Annual depreciation then is: A) £22 500 B) £45 000 C) £112 500 D) £80 000 The total of credit sales found within a sales ledger control account comes from: A) the sales day book B) the sales ledger C) the trial balance D) the cash book Which of the following source books (books of prime entry) will not be required in a 'cash' business? A) Sales Ledger B) Nominal Ledger C) Petty Cash Account D) Bank Account If the net assets of a business totalled £540 000 and its liabilities totalled £316 800, its total assets on that date would amount to: A) £223 200 B) £856 800 C) £633 600 D) £540 000 Having placed in a Suspense account the difference in the trial balance, it is found that the difference arose because a pre-paid rent of £12 000 has been brought down as a credit balance in the Rent account To correct this error which of the following entries should the journal require: A) Debit Suspense account and credit Rent account with £24 000 B) Debit Rent account and credit Suspense account with £24 000 C) Debit Rent account and credit Suspense account with £12 000 D) Debit Rent account with £24 000 The Cashier has recorded the following transaction in a Cash Book, entering the receipts on the debit side and the payments on the credit side Identify which side of the named account would be posted by the Bookkeeper Interest account : £2 000 paid as interest on Dave's Loan A) credit B) debit Which of the following events will an accountant normally not record? A) paying a bill that has been owing for years B) receiving an invoice for goods purchased, but not paying for them yet C) providing a service to a customer to be paid for in the next accounting period D) agreeing to hire a new employee who will start work in the next accounting period For the purpose of establishing the accuracy of the individual personal ledger balances, a business maintains, on a memorandum basis, a Sales Ledger Control account (S.L.Cont) and a Purchases Ledger Control account (P.L.Cont) Identify the account and its side in which you will enter Return outwards during the month: S.L.Cont P.L.Cont Neither; Dr Cr Dr Cr a b c d e A) b B) c C) a D) d E) e For the purpose of establishing the accuracy of the individual personal ledger balances, a business maintains, on a memorandum basis, a Sales Ledger Control account (S.L.Cont) and a Purchases Ledger Control account (P.L.Cont) Identify the account and its side in which you will enter the dishonouring ('bouncing') of a cheque received from a customer S.L.Cont P.L.Cont Neither; Dr Cr Dr Cr a b c d e A) d B) c C)e D) a E) b Identify whether the balance brought down, at the year end, in the named account would be on the debit side or credit side of that account Bank Loan a/c A) credit B) debit If a business commenced the day with £14 200, paid out £58 900 during the day and has £22 900 by the end of the day, it should have received during the day: A) £1 400 B) £67 600 C) £50 200 D) £21 800 Identify whether the balance brought down, at the year end, in the named account would be on the debit side or credit side of that account Advertising a/c A) credit B) debit Before inserting a closing balance, accounts representing assets or expenses are likely to have: A)an equal amount of debit and credit entries B)only credit entries C)more debit entries than credit entries D)more credit entries than debit entries Which of the following reflects the effects on the accounting equation of a payment to trade payables (creditors)? A) assets decrease: liabilities decrease B) assets decrease: ownership interest decreases C) assets increase: liabilities decrease D) assets decrease: ownership interest increases Identify the account to which you would post the following transactions recorded in the Cash Account:£2 500 paid for a steel cabinet to securely lock up the books of account A) furniture account B) accounts safe a/c C) b D) c E) e A business registered for Value Added Tax has to maintain a VAT account, crediting it with the "output tax" and debiting it with the "input tax" calculated at 17.5 / 117.5 of the transaction value In respect of the transaction listed below, identify whether you would account for the VAT element by debiting or crediting the VAT account or neither: Acquisition of office equipment A) debit B)neither C)credit If a supplier's invoice for £112 000 is posted to the Supplier’s account as £12 000, the effect on the trial balance would be: A) total of the credit side will exceed that of the debit side by £100 000 B) total of the debit side will exceed that of the credit side by £112 000 C) total of the debit side will exceed that of the credit side by £100 000 D) the trial balance will balance 228 Free Test Bank for Financial and Management Accounting An Introduction 4th Edition Pauline Weetman Multiple Choice Questions - Page A business registered for Value Added Tax has to maintain a VAT account, crediting it with the "output tax" and debiting it with the "input tax" calculated at 17.5 / 117.5 of the transaction value In respect of the transaction listed below, identify whether you would account for the VAT element by debiting or crediting the VAT account or neither: Acquisition of machinery A) debit B) credit C) neither A new business purchased goods for £117 000 and sold 80% of them for £240 000 Its gross profit for the period is: A) £75 000 B) £146 400 C) £123 000 D) £240 000 Which of the following statements is incorrect in relation to accounting for a Credit Note received from a supplier? A) enter the particulars in a Purchases Returns Day Book B) post the amount on the Credit Note to the debit of the supplier’s personal account C) debit the amount of the Credit Note to the Purchases account D) post periodical total of amounts on Credit Notes to the credit of Returns Outwards a/c Identify whether the account stated below would represent an Asset, Liability, Income or Expenditure: Depreciation account A) Income B) Expenditure C) Asset D) Liability Identify whether the balance brought down, at the year end, in the named account would be on the debit side or credit side of that account Motor Van a/c A) debit B) credit Which of the following transactions would cause £50 000 increase in both total assets and total liabilities of a business: A) acquisition of a computer for office use for £50 000 on credit terms B) payment of £50 000 in part settlement of a loan obtained by the business C) collection in full of a debt of £50 000 due to the business D) payment of staff salary of £50 000 If an account has debit entries totalling £600 and credit entries totalling £500, its closing balance is said to be: A) a debit balance of £100 B) a credit balance of £100 C) a debit balance of £1 100 D) a credit balance of £1 100 The following are business transactions of a retailer:Purchased 150 items at cost £4 each for cash Delivered 110 items to customers for cash at a selling price of £6.50 per item What is the amount of total sales of the retailer? A) £715 B) £600 C) £440 D) £875 Which of the following statements is incorrect? To keep proper control of the cash held by a business: A) every entry in the Cash account should be substantiated by an appropriate voucher B) difference between amounts received and paid should agree with amount in hand C) every receipt and payment of cash should be recorded as soon as it happens D) the cash book entries should be in pencil so that any mistakes can be corrected The list of balances in all the accounts remaining after nominal accounts have been closed by transfer of their balances to the Profit and Loss account is called: A) statement of Affairs B) the List of balances C) the balance sheet D) the Trial balance An accounting period is: A) the period between commencement of business and the day it closes down B) the calendar year consisting of 365 days C) successive periods of twelve months commencing from the day the business started D) a regular period in terms of which a business opts to report its performance and position £2 400 paid for staff training has been posted in error to the Advertising account Which of the following would be an appropriate description of this accounting error: A) error of principle B) error of commission C) double entry error D) error of omission Jayantha commenced business on January 20x6 with a capital in cash of £10 000 During the year ending on 31 December 20x6 he paid £12 000 for furniture, £92 400 for purchasing goods for sale and £31 450 for various expenses He received £139 250 by sale of goods Identify Jayantha’s capital as at 31 December 2001 in the following situation:Unsold goods remaining in hand on 31 December 20x6 had cost £24 550 and Jayantha wishes to write off the cost of his furniture equally over six years A) £48 950 B) £36 950 C) £47 950 For the purpose of establishing the accuracy of the individual personal ledger balances, a business maintains, on a memorandum basis, a Sales Ledger Control account (S.L.Cont) and a Purchases Ledger Control account (P.L.Cont) Identify the account and its side in which you will enter the sum of amounts owed to all suppliers at commencement of a month:S.L.Cont P.L.Cont Neither Dr Cr Dr Cr a b c d e A) e B) b C) d D) c E) a Before inserting a closing balance, accounts representing liabilities, capital or income are likely to have: A) more credit entries than debit entries B) more debit entries than credit entries C) only credit entries D) an equal amount of debit and credit entries A payment of £15 000 has been posted to Jerry Blake's loan account, whereas £3 000 of this amount was paid as interest on the loan To correct this error the journal entry would require which of the following: A) debit Interest on loan account and credit Jerry Blake's Loan a/c with £3 000 B) debit Cash account and credit Jerry Blake's Loan a/c with £3 000 C) debit Jerry Blake's loan a/c and credit Interest on loan account with £3 000 D) debit Interest on loan account and credit Jerry Blake's loan a/c with £15 000 The Capital account in the Ledger records A) an Expenditure B) an asset C) a liability D) an income In a trial balance produced at the end of a financial period, closing inventory (stock) is usually found: A) it is not shown at all B) on the credit side C) on the debit side D) as a note after the trial balance has been produced Identify whether the posting of the transaction to the account named would increase or reduce the balance in that account: Acquisition of a vehicle for business use (Motor vehicle account) A) increase B) reduce An invoice for £16 500 from Kensington Traders, for goods purchased for sale, has not been posted to the supplier's account The difference in the trial balance has been placed in a Suspense account A journal entry requiring which of the following is needed for correcting this error A) debit Purchases account and credit Kensington Traders with £33 000 B) debit Suspense account and credit Kensington Traders with £16 500 C) debit Purchases account and credit Kensington Traders with £16 500 D) debit Kensington Traders and credit Suspense account with £16 500 Identify the year-end balance that would be brought down in the following account on 31 December 20x6, taking into account the stated transaction: Sales account: Sales made until December 20x6 were £208 450 Sales in December were £54 250 £4 250 was refunded in December to a customer who returned the goods sold to him in November A) £158 450 B) £262 700 C) £258 450 Which of the following will not increase an owner's capital account? A) capital introduced B) Owner's Drawings C) Net Profit D) a lottery win paid into the business by the owner Accounting entries for recording payment of a telephone bill are: A) debit Cash account and Credit Telephone account B) credit Cash Account and Debit Telephone expenses account C) debit Capital and Credit Cash D) credit Cash account and Debit Office Equipment account If a business sells goods for resale on credit terms to ABC, the bookkeeping entries are: A) debit inventory (stock) Credit ABC's account B) debit Sales Credit ABC's account C) debit ABC's account Credit Sales D) debit Bank Credit ABC’s account Which of the following summarizes the accounting equation: A) Assets = Liabilities - Owner's Capital B) Liabilities = Assets + Owner's capital C) Assets - Liabilities = Owner's Capital D) Owner’s Capital = Assets + Liabilities Is an error of principle: A) a transaction that is not recorded in accordance with the Companies Acts B) a transaction that is not recorded in accordance with the Accounting Standards C) a transaction recorded in the wrong type of account D) a transaction posted on the opposite side of an account The invoice relating to the acquisition on credit of Office Equipment for £24 500 from Globe Ltd was entered in the Purchases Journal To correct this error, which of the following needs to be done? A) journal entry: Debit Office Equipment a/c and credit Purchases a/c with £24 500 B) journal entry: Debit Office Equipment a/c and credit Globe Ltd a/c with £24 500 C) journal entry: Debit Globe Ltd a/c and credit Office Equipment a/c with £24 500 D) no journal entry is needed An advantage of maintaining daybooks is: A) fewer entries are made into the general ledger B) fewer invoices need to be entered C) fewer payments need to be made D) no entries need be made into the ledgers Identify whether the posting of the transaction to the account named would increase or reduce the balance in that account: Recovery of the cost of a personal call made by an employee (Telephone account) A) increase B) reduce Prepaid expenses require an adjustment to be made to the double entry accounts as follows: A) debit relevant expense account with prepayment before balancing off account; credit income statement B) credit relevant expense account with prepayment before balancing off account; debit income statement C) credit relevant expense account with prepayment before balancing off account; debit prepayment to same account after balancing off D) debit relevant expense account with prepayment before balancing off account; credit prepayment to same account after balancing off Identify whether the account stated below would represent an Asset, Liability, Income or Expenditure: Motor Van a/c A) Expenditure B) Liability C) Income D) Asset Which of the following should be the first action when making a prime entry for a transaction? A) enter the transaction in the appropriate book of prime entry B) post the transactions to the appropriate Ledger accounts C) decide on the Ledger account to be debited and the one to be credited D) study the voucher to identify the nature of the transaction Which of the following economic actions increases the amount of ownership interest? A) the provision of a service to a customer, on credit B) a payment for a motor vehicle C) a purchase of raw material, on credit D) a payment to trade payables (creditors) If an amount paid for servicing vehicles has been posted in error to Motor Vehicles account the journal entry necessary to correct this error should require which of the following: A) debit Motor vehicles account and credit Vehicle maintenance account B) debit Vehicle maintenance account and credit Cash account C) debit Cash account and credit Motor vehicles account D) debit Vehicle maintenance account and credit Motor Vehicles account If a credit sale of £15 400 to Peter Smith had been entered in the Sales Day Book as £14 500, the journal entry for correcting the error should require which of the following: A) debit Sales account and credit Peter Smith’s account with £900 B) debit Peter Smith’s account and credit Sales account with £900 C) debit Cash account and credit Sales account with £900 D) debit Peter Smith’s account and credit Cash account with £15 400 An alternative name for a total account is: A) purchases account B) sales account C) control account D) summary account For the purpose of establishing the accuracy of the individual personal ledger balances, a business maintains, on a memorandum basis, a Sales Ledger Control account (S.L.Cont) and a Purchases Ledger Control account (P.L.Cont) Identify the account and its side in which you will enter an amount owed to a customer because, in the previous month he had returned goods after settling the full amount receivable from him: S.L.Cont P.L.Cont Neither Dr Cr Dr Cr a b c d e A) e B) c C) b D) a E) d The following are business transactions of a retailer: Purchased 150 items at cost £4 each for cash Delivered 110 items to customers for cash at a selling price of £6.50 per item What is the total 'cost of goods sold' for the retailer? A) £440 B) £600 C) £715 D) £875 If a business buys goods for resale on credit terms from XYZ, the bookkeeping entries are: A) debit inventory (stock) Credit XYZ's account B) debit Purchases Credit XYZ's account C) debit XYZ's account Credit Purchases D) debit Bank Credit XYZ's account Which of the following statements is correct: If a business acquires a vehicle for £36 000, making a down payment of £15 000 and undertaking to pay the remainder in six monthly instalments: A) net assets will not change B) net assets will decrease by £21 000 C) net assets will increase by £21 000 D) net assets will increase by £36 000 B/d and c/d stand for: A) beginning date and closing date B) bank divided by receivables (debtors) and payables (creditors) divided by receivables (debtors) C) brought down and carried down D) balance down and carried down If a sole trader operating as a florist purchases a van for £19 500 for business use, paying by cheque, when completing his double entry accounts, he will: A) credit van account and debit bank account B) debit van account and credit cash account C) debit purchases account and credit bank account D) debit van account and credit bank account Given that opening receivables (debtors) are £12500, sales invoices £64800, sales credits £2500, and receipts from receivables (debtors) amounted to £62900, closing receivables (debtors) should total? A) £11900 B) £13100 C) £16900 D) £1900 A supermarket pays a supplier, Goldman Ltd, the amounts owed in cash The entries in the supermarket's accounts should be: A) Debit: Cash, Credit: Purchases B) Debit: Cash, Credit: Goldman Ltd C) Debit: Goldman Ltd, Credit: Cash D) Debit: Purchases, Credit: Cash When attempting to identify accounting errors the trial balance can be relied on to detect which of the following errors? A) posting to the wrong side of any account B) amounts posted to the correct side of a wrong account C) transactions not accounted for D) all accounting errors The Sales Day book's daily total has been ascertained as £312 400 whereas it should have been £422 400 The effect of this error on the trial balance would be: A) the trial balance will balance B) total of the credit side of the trial balance will exceed that of the debit side by £220 000 C) total of the debit side of the trial balance will exceed that of the credit side by £110 000 D) total of the credit side of trial balance will exceed that of the debit side by £110 000 Identify the account to which you would post the following transaction recorded in the Cash Account: £100 000 received as capital from Pam Saunter, the owner of the shop A) Investment account B) Capital account C) Owner’s account For the purpose of establishing the accuracy of the individual personal ledger balances, a business maintains, on a memorandum basis, a Sales Ledger Control account (S.L.Cont) and a Purchases Ledger Control account (P.L.Cont) Identify the account and its side in which you will enter payments made to suppliers : S.L.Cont P.L.Cont Neither Dr Cr Dr Cr a b c d e A) d B) a C) e D) c E) b Which one of the following statements is correct: Where accounting records are maintained on an accruals basis: A) expenditure should be accounted for only to the extent it has been paid for B) income should be accounted for only when received C) income should be accounted on accruals basis and expenditure on payments basis D) income and expenditure relating to the accounting period should be fully accounted for even if income is still to be received and expenditure is yet to be paid for ... Stationery account : £53 paid for various items of stationery A) credit B) debit 228 Free Test Bank for Financial and Management Accounting An Introduction 4th Edition Pauline Weetman Multiple Choice Questions... the bank' s account in the business's payables (creditors)' ledger B) the bank balance as shown in the previous balance sheet C) the bank balance as shown in the bank s ledger D) the bank balance... Test Bank for Financial and Management Accounting An Introduction 4th Edition Pauline Weetman Multiple Choice Questions - Page In a trial balance produced at the end of a financial period, opening