Revision Exercise 7 EPSCAN A

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1 Revision Exercise 7 EPSAN A 18. Which of the following statements about accounting are correct? (1) There are other financial statements apart from balance sheet and income statement. (2) Accounting is all about the recording of transactions and the preparation of financial statements. (3) Managers of the company are not the only users of financial statements. A. (1) and (2) only B. (1) and (3) only. (2) and (3) only D. (1), (2) and (3) Name : lass : lass No : B 19. Which of the following about books of original entry and ledgers is correct? A. After entering transactions in the ledger, the bookkeeper will record them in the books of original entry. B. Returns outwards journal can also be called as sales return day book.. Only returns of goods that are previously sold on credit are recorded in the returns inwards journal. D. ash book is both a book of original entry and a double-entry account. D 20. Billy sent a cheque to Sam, a supplier, for the settlement of his account. 7 months later, it was still unpresented by Sam. The ledger entries regarding the unpresented cheque in the books of Billy should be: A. Dr Sam r Bank B. Dr Sam r Purchase. Dr Bank r Sam D. No entries is required 21. Which of the following violates accounting concepts? (1) Depreciation method can be changed if it can better reflect the view of a firm. (2) Only cash taken by the owner for personal use should be recorded as drawings. (3) That a customer pays a deposit for goods which will be delivered next accounting year is included in the sales of this financial year. (4) An investment should never be recorded at market value in the balance sheet. A. (1) and (4) only B. (2) and (3) only. (3) and (4) only D. (2), (3) and (4) only D 22 Which of the following will NOT appear in the income statement? A. ost of goods sold B. Packing expenses. Drawings D. arriage inwards Page 1

2 Refer to the following information for question 23 24: AB o Trial Balance as at 31 May 2013 Dr r $ $ apital 19,980 ash 2,500 Bank overdraft 2,780 Accounts receivable 450 Accounts payable 550 Sales 18,000 Purchases 10,800 Discounts allowed 560 Premises 28,000 ommissions received 870 arriage outwards 550 Returns outwards ,630 51, The total of debit balances should always equal the total of the credit balance because A. assets are recorded in the trial balance B. the business entity concept states that only transactions affecting the business are recorded.. each debit entry is followed by a corresponding credit entry. D. all transactions are entered twice. 24 What should the correct totals of debit and credit balances be? A. Total of debit balances = Total of credit balances = $42,860 B. Total of debit balances = Total of credit balances = $42,100. Total of debit balances = Total of credit balances = $45,860 D. None of the above A 25 Which of the following have been correctly classified under the two types of assets? Non-current assets urrent assets A. Premises Inventory B. Land and buildings Fixtures and fittings. Inventory Bank D. Accounts receivable Inventory A 26 On 1 January 201X, Matthew, a cotton trader, returned the furniture previously bought on credit from a supplier. In which of the following book of original entry should the above transaction be recorded? A. Purchases journal B. Returns outwards journal. General journal D. ash book Page 2

3 27 The owner of the company took goods with a saleable value of $500 from the company for private use. The company has a gross profit ratio of 25%. What should the double entry be? The Journal Details Dr r $ $ Drawings [$500 x (1 25%)] 375 Purchases Which of the following will NOT be included in the income statement? A. ompensation paid to customers for default products B. Insurance premium. Insurance claim receivable D. Postal expenses Refer to the following information for question 29 30: The following is the information related to Panic ompany at the year ended 31 December 20X2: Panic ompany Income Statement for the year ended 31 December 20X2 $ Sales 325,750 Less: ost of goods sold Opening inventory 27,135 Add: Purchases?? Less losing inventory 19,850? Gross profit? Less: Operating expense Salaries 105,000 Electricity 54, ,450 Net profit? 29. If the net profit ratio is 12%, find the value of purchases. Net profit = Sales x 12% = 325,750 x 12% = 39,090 Gross profit = 39, ,450 = 198,540 ost of goods sold = 325, ,540 = 127, ,210 = 27,135 + Purchases 19,850 Purchases = 127, ,850 27,135 = $119, If the opening capital is $205,000 and the cash drawings and inventory drawings are $27,000 and $15,552 respectively. Find the return on capital employed. losing capital = 205, ,090 27,000 15,552 = 201,538 ROE = 39,090 / (205, ,538) 2 = 39,090 / 203,269 = 19.2% Page 3

4 2015 Part 1 (20 marks) Answer ALL questions in this part. 2. (a) Explain the consistency principle in accounting. (b) A firm bought a motor van for business use and paid $175,000 from its bank account. The list price of the motor van was $200,000 and a discount of $25,000 was given by the vendor. State the amount to be recorded for the motor van in the books of the firm. Explain your answer with a relevant accounting principles or concept. (a) The consistency principle: The accounting treatment of similar items should be the same in an accounting period and from one period to another (b) $175,000 $Historical cost concept The motor van should be recorded at the actual cost to the business, that is, the net price after deducting discount (a) Tony is the sole owner of a toy trading business. State the book of original entry for the recording of (b) each of the following transactions of Tony s business: (i) (ii) (iii) Sold toys to customers on credit Received a credit note for toys returned Paid salaries to office clerks by autopay From the accounts for recording the transactions in (a), identify one example for each of the following types of ledger accounts. (i) Real account (ii) Nominal account (a) (i) Sales journal (ii) Returns outwards journal (iii) ash book (b) (i) accounts receivable / Debtors / ash at bank (ii) sales / returns outwards / office salaries Page 4

5 6. Sunshine Department Store had the following financial information for the year ended 31 December 2013: $ arriage inwards 9,000 Inventory, 1 January ,000 Inventory, 31 December ,000 Purchases 120,000 Rent and rates 48,000 Returns inwards 2,000 Sales 268,000 Sundry expenses 30,000 (a) Prepare an income statement for Sunshine Department Store for the year ended 31 December Two managers of the same rank, David and Ellen, together supervise all the ship assistants. One day, an assistant in the sportswear section took sick leave and David assigned a newly employed assistant to take her place. He asked her to serve customers in the section for the rest of the day. At noon, Ellen asked this assistant to deliver a document to a supplier. (b) (i) (ii) What principle of effective management has been violated in the above case? Suggest two problems that might arise when the principle in (i) is violated. (a) Sunshine Department Store Income Statement for the year ended 31 December 2013 $ $ $ Sales 268,000 Less Returns inwards (2,000) 266,000 Less ost of goods sold: Opening inventory 80,000 Add Purchases 120,000 arriage inwards 9, , ,000 Less losing inventory (60,000) (149,000) Gross profit 117,000 Less Expenses: Rent and rates 48,000 Sundry expenses 30,000 78,000 Net profit 39,000 (b) (i) Unity of command (ii) ontradictory instructions will cause confusion to the subordinates Unclear chain-of-command / line of authority will cause conflicts between the managers Page 5

Principles of Accounts. Comprehensive Worksheet. Class 9. 2 nd Term

Principles of Accounts. Comprehensive Worksheet. Class 9. 2 nd Term Principles of Accounts Comprehensive Worksheet Class 9 2 nd Term The City School / PAF Chapter/ Comprehensive Worksheet/May 2018/ Accounts Class 9 Page 1 of 8 Topics for 2 nd Term 1. Statement of profit