CAT multiple-choice questions by a student accountant writer 22 Dec 2004 Take your pick A selection of multiple-choice practice Questions are published below from CAT Scheme Papers 1 and 2. The answers are printed on page 66. Paper 1, Recording financial transactions Question 1 Hywel purchases goods on credit with a list price of $100. The supplier gives Hywel a trade discount of 15% and also offers a cash discount of 10% for payment within 30 days. What is the amount that Hywel will debit to his purchases account? A $115.00 B $85.00 C $76.50 D $75.00 Question 2 Which of the following best describes an invoice? A A document produced by a purchaser detailing items purchased B A document produced by a seller detailing items sold C A document produced by a seller following the return of goods D A document produced by a seller listing monthly transactions Question 3 The following is a summary of the petty cash transactions for a week: Income $ Expenditure $ Opening balance 500 Travelling expenses 150 Sale of stamps 10 Subsistence expenses 250 Sale of paper 50 Petty cash is maintained using the imprest system.
What sum should be reclaimed by the cashier at the end of the week? A $150 B $340 C $400 D $500 Question 4 Which of the following is a current liability? A Closing inventory B Opening inventory C Petty cash D Bank overdraft Question 5 Which of the following errors will become apparent when drawing up a trial balance? A A credit purchase was completely omitted from the accounting records B A credit sale was recorded as a cash sale C The payment of wages was debited to the rent account instead of the wages account D A cash sale was recorded correctly in the sales account and credited in the bank account Question 6 Carion sells the following goods for cash during January: Net price $ Sales tax $ 5 Jan To Maurice 386 68 19 Jan To Harris 715 125 28 Jan To Merton 430 75 What are the correct entries in Carion's general ledger? A Dr sales $1,799, Dr sales tax $268, Cr cash $2,067 B Dr cash $2,067, Cr sales $1,799, Cr sales tax $268 C Dr sales $1,531, Dr sales tax $268, Cr cash $1,799 D Dr cash $1,779, Cr sales $1,531, Cr sales tax $268 Question 7 Annabel's cash book shows her to be $2,030 overdrawn. A bank reconciliation, however, shows that a standing order payment for $365 had been entered in the cash book twice, and that a dishonoured customer's cheque for $275 had been debited in the cash book rather than credited.
What is Annabel's true overdraft position? A $1,845 B $1,940 C $2,120 D $2,215 Question 8 An employee is paid $4.50 hourly, and works Monday to Friday inclusive for eight hours daily, Saturday four hours at time-and-a-half, and Sunday five hours at double time. What is the weekly gross pay of the employee? A $220.50 B $229.50 C $243.00 D $252.00 Question 9 Iwan's payables ledger showed that $2,300 was owed to suppliers at the start of the week. During the week Iwan made purchases of $3,900 although he paid $900 of this in cash. He also paid suppliers $1,000 by cheque. What is the closing balance on his payables ledger? A $4,000 B $4,300 C $5,200 D $6,100 Question 10 What business transaction would result in the following double entry being posted? Dr Cash Cr Sales A The purchases of goods for resale on credit B The receipt of cash from a credit customer C A cash sale D The banking of petty cash Paper 2, Information for management control
Question 11 Which of the following defines cost classification? A The process of grouping costs according to their common characteristics B The allotment of items of cost to cost centres C The sum of all costs incurred D The use by several companies of the same costing methods Question 12 A sales representative earns a basic salary of $10,000 per annum, a guaranteed end-of-year bonus of $5,000 and 5% commission on the value of sales. What cost classification is appropriate for the sales representative's salary? A Direct cost B Product cost C Semi-fixed cost D Prime cost Question 13 Which would be the most appropriate basis for re-apportioning the cost of a factory canteen to production departments? A The number of direct operatives B Floor space occupied by production departments C Total employees in production departments D Wages paid to direct operatives Question 14 The occupancy rates for a hotel over a two-year period are shown below: Year 1 Qtr 1 Qtr 2 Qtr 3 Percentage of bedrooms occupied 60% 75% 90% Qtr 4 60% Year 2 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Percentage of bedrooms occupied 65% 85% 95% 55% Which statement is correct? A The occupancy rate for Year 1 is higher than Year 2 for quarters 3 and 4 B The occupancy rate for Year 2 is higher than Year 1 for quarters 1, 2 an d 3 C The occupancy rate for Year 2 is higher than Year 1 for all four quarters D The occupancy rate for Year 1 is higher than Year 2 for quarters 1, 2 and 3
Question 15 Western Limited makes four products, which are shown below: Alpha Beta Delta Sigma Contribution per unit $18 $30 $48 $13 Material X per unit (kgs) Sales demand (units) 2 100 4 50 8 25 1.6 125 There is only 200kg of Material X Which product should Western make? A Alpha B Beta C Delta D Sigma Question 16 Which of the following indicates the effect of an unfavourable variance? A When a business has more profit as a result B When a business has less profit as a result C When a business has more sales as a result D When a business has more stock as a result Question 17 What is a computer's working memory known as? A ROM (read-only memory) B RAM (random access memory) C CD-ROM (compact disc read-only memory) D Virtual memory Question 18 Why are PINs used? A To restrict access by unauthorised personnel B To increase the capacity of the computer C To ensure employees perform their work correctly D None of the above Question 19 Which of the following factors is least important when planning a written report? A Finding an ornate font for the title B Following a logical structure C Giving clear recommendations or options for action D Giving references to previous reports on the same subject
Question 20 Pad Limited has the following results: Sales $100,000 Cost of sales ($20,000) Gross profit $80,000 Expenses ($30,000) Net profit $50,000 What is the net profit margin (profit to sales ratio)? A 50% B 80% C 62.5% D 200% Answers Paper 1 Q1-B, Q2-B, Q3-B, Q4-D, Q5-D, Q6-D, Q7-D, Q8-D, Q9-B, Q10-C Paper 2 Q11-A, Q12-C, Q13-C, Q14-B, Q15-A. Q16-D, Q17-B, Q18-A, Q19-A, Q20-A