Vreed-en-Hoop Secondary School

Mock Examination 3
Principles of Accounts

Paper1 (1:15 minutes)

Name:......................... Date:.............................

Instruction : circle the correct answer

1.A trader had an opening capital of $3 900. If his drawings were 5900 and his closing capital
was $4 860, what was his net profit?

(A) $ 900

(B) $ 960

(C)$1 860

(D) $3000

Item 2 refers to the following balances at the end of a financial period.

Motor vehicle 2.000

Payables 3.000

Receivables 2000

Capital 11 000

Building 10 000
(2)What is the TOTAL amount for the assets?

(A)12000
(B) 13000
© 14000
(D)15000

3.Ms Hoyte, a grocer, bought a computer on credit from Tan Company. In Ms Hoyte's books,
which of the following journal entries would be made for this transaction?

(A)Debit purchases account Credit Tan Company

(B)Debit computer account Credit cash

(C)Debit Tan Company Credit purchases account

(D)Debit computer account Credit Tan Company

4.During the year, a company bought stationery for $220 and used $120 worth of it. What figure
would be posted to the profit and loss account to represent the expenditure for stationery?
(A) $100

(B) $120

(C) $220

(D) $340

5. The acid test ratio indicates

(A) net current assets less inventory available to pay current liabilities

(B)current assets to pay current liabilities

(C) non-current assets to be sold to pay current liabilities

(D)an overdraft that the trader could secure to pay his current liabilities

6. Which of the following items are examples of current liabilities?

1. Mortgages

11. Accounts payable

Ⅲ. Accrued wages

(A) I and II only

(B) I and III only

(C) II and III only

(D) I, II and III

Item 7refers to the Rollowing balances from the books of J, Sammy, a sole trader, at the end of
a financial period,

Land7000

Buikling5.000

Inventory1100

Receivables500
Bank overdraft400

Payables700

Cash200

Capital (at start)10.000

Drawings300

Net profit3.000

7.The current ratio of the business (rounded to 2 decimal places) is

(A) 1.45:1

(B) 1.04:1

(C) 2.57:1

(D) 3.14:1

8.Merill Industries operates on a 40-hour work shift per week. Overtime is paid at time and a
half. Employees are paid $50 an hour. What is the gross pay of an employee who worked for 49
hours for the week?

(A) $2.000

(B) $2 225

(6) $2450

(D) $2 675
8Which of the following accounts are usually transferred to the income statement?

(A)Rent, premises, drawings

(B)Drawings, rent, purchases

(C)Commission received, rent, purchases

(D)Purchases, furniture, commission received

10. Which of the following items is/are a capital expenditure?

(A) Wages

(B)Repairs

(C)Purchase of goods

(D) Purchase of machinery

Item 11 refers to the following information about the operation of a firm.

Provision for doubtful debts on 1 January 2020 Receivables on 31 December 2020 $ 700 $25
000

The provision for doubtful debts is calculated at a rate of 2% of receivables.

11.What amount would be recorded in the provision for doubtful debts account at year end?

(A) Credit $200

(B)Debit $200

(C)Credit $500

(D) Debit $500

12.

K. Khan, a debtor of A and B Enterprises, settles his debt of $120 less 22% discount, by
cheque. How should the double entry be recorded in the books of A and B Enterprises?

(A)Dr K. Khan$117

Dr discount received$ 3

Cr bank$120

(B)Dr K. Khan$117

Dr discount allowed$ 3

Cr bank$120

(C)Dr bank$117
Dr discount allowed$ 3

Cr K. Khan$120

(D)Dr bank$117

Cr discount received$3

Cr K. Khan$120
13. Partnerships are formed for the purpose of

1. combining capital from different persons

II. benefiting from different skills and specializations

III.sharing ideas, experience and responsibilities

(A) I and II only

(B) I and III only

(C) II and III only

(D) I, II and III

14. Control accounts are kept in order to assist management in

(A) locating errors

(B) increasing profits

(C) limiting drawings

(D) limiting expenditure

Items 15-16 refer to the following statement of financial position provided for a firm as at 1
January 2019.

Bank3.000

Payables500

Receivables( I)
1000

5 500

Inventory

15.What sum of money is represented by I?

(A)- $1 000

(B) $2 000

(C) $3 000

(D) $6 000

16. Which of the following accounts is represented by II?

(A) Loan

(B) Cash

(C) Capital

(D) Liability

17.A trader received an invoice for $4 000 less 25% trade discount. Subsequently, he returned
one-eighth of the goods. What amount would be entered in his returns outwards account?

(A) $375

(B) $400

(C) $450

(D) $500
18.Mr Abel and Mrs Blue purchased goods on credit valued at $50 and $75 respectively from Mr
Kane. Another customer paid cash for goods amounting to $550. Mr Kane took goods at cost for
himself amounting to $500.

Which of the following figures represents the total in Mr Kane's sales account?
(A) $ 125

(B) $ 425

(C) $ 675

(D) $1 175

19. Which of the following accounts are nominal?

(A)Wages and rent

(B)Stock and debtors

(C)Machinery and plant

(D)Creditors and fixtures

20.Which of the following features is associated with private limited companies?

(A)They are family owned.

(B)Shares are not sold publicly.

(C)Financial statements are published.

(D)Government agencies purchase shares

24.In calculating the gross profit percentage, grons profit deild be divided by

(A) cost of goods sold

(B) net purchases

(C) net profit

(D)net sales
22. A standing order of $25 for insurance appears in the debit column of the bank statement.
This amount does not appear in the cash book. How is this item treated in order to update the
cash book?

(A) Credit the bank account with $25.

(B) Debit the bank account with $25.

(C) Add $25 to the bank statement balance.

(D) Subtract $25 from the bank statement balance.

23. Which of the following entries would NOT appear in a cash book?

(A) Payment for goods

(B) Goods sold on credit

(C)Goods sold for cheque

(D) Goods bought for cash

24. Mrs Smith does not keep proper records. She began her business with $10 000 in its bank
account. She uses her vehicle and building worth $6 000 and $15 000 respectively as part of
her business. Customers owe her $4 000. She withdrew $1 500 for personal use and owed
creditors $2.000.

What is the closing capital of the business?

(A) $25 500

(B) $28 500

(C)$31 500

(D) $33 000

25. Which of the following will result when opening inventories of raw materials are added to net
purchases of raw materials?

(A) Prime cost

(B)Production cost

©Raw material used

Item 26 refers to the following data which pertain to Tarisha Ali, an employee of a bank.

Monthly salary$3 500

Overtime$ 800
Income tax rate:

25% on every dollar above $2 000 of monthly salary

30% on overtime earned

26.The TOTAL income tax to be deducted from Tarisha Ali's salary is

(A)$ 615

(B) $ 740

(C)$ 875

(D) $1 075

27.Mr A. Jones paid $250 in cash for repairs to machinery. This transaction was entered in the
cash book and posted to the ledger. The double entry involved would be

(A)debit cash account credit repairs account

(B)debit repairs account credit cash account

(C)debit cash account credit machinery account

(D)debit A. Jones account credit cash account

28.How does an increase in bad debts affect a sole trader's financial statements?

(A)Decreases the gross profit

(B)Increases the gross profit

(C) Decreases the net profit

(D)Increases the net profit

29. Which of the following items are NOT recorded in the appropriation account?

1. Interest on loans from partners

11. Interest on capital

Withdrawals by partners
(A)I and II only

(B)I and III only

(C)II and III only

(D) I, II and III

30.Which of the following entries in a three-column cash book are contra entries?

(A) Debit cash, credit bank

(B)Debit cash, credit cash

(C(Credit cash, credit bank

(D) Debit bank, credit bank

Item 31 refers to the following information provided by a business.

Total unpresented cheques

Lodgement not entered 120

on bank statement 150

Balance per cash book560

31.What is the balance per bank statement?

(A) $120

(B) $150

(C)$340

(D) $530
nem 22 refers to the following table which shows balances on the asset accounts of the Bayroe
Club as at 30 June 2020.

Assets
N

Premises5400

Equipment1 825

Furniture 960

Bank and cash1640

Inventory and refreshments72

32.The amount of the club's accumulated fund was

(A) $1 640

(B)$4 497

(C) $8 185

(D) $9 897

33.Which of the following are a long-term liability?

(A)Creditors

(B)Debentures

(C)- Accrued wages

(D) Bank overdrafts

refers to the following information.

Debit

Insurance A/c

Credit

2020

2020
2 January

Balance b/d700

31 December

8 100

15 January

Bank8.000

31 December

Balance c/d

600

8 700

Profit & loss a/c8 700

34.What is the amount of insurance prepaid at the end of the year?

(A)$ 600

(B)$ 700

(C)$8 000

(D)$8 100
Item 35 refers to the following information.

Inventory at 1 January 20201500

Purchases during the month1200

Cost of goods sold 1 400

35.What is the inventory at the end of January?

(A) $ 300

(B) $ 500

(C) $ 700

(D) $1 300

36.Which of the following items on a statement of financial position would differ MOST in
presentation, when comparing the books of a company and the books of a sole trader?

(A) Non-current assets

(B) Current liabilities

(C)Current assets

37.A photocopying machine valued at $5 000 is depreciated at 10% using the straight line
method. What is its book value after TWO years?

(A) $4 000

(B) $4 050

(C) $4 500

(D) $4 980

38.Andina Williams is a petty cashier. If she has a float of $200 and she spends $180, how
much should she be reimbursed at the end of the period?

(A) $ 20

(B) $180

(C) $200

(D) $380
39. Which of the following is a book of prime entry?

(A)Invoice

(B)Sales ledger

(C)Sales journal

(D)Statement of financial position

40. Which of the following financial documents shows the net earnings of a business?

(A) Income statement

(B)Appropriation account

(C)Statement of financial position

(D)Receipts and payments account

41. A sole trader uses his trading account to determine

(A) surplus

(B)net profit

(C) gross profit

(D) super profit

42.In order to avoid writing numerous cheques for small amounts, a firm may set up a

(A) bank draft

(B)petty cash fund

© general journal

(D)bank standing order

43.Which of the following states the correct order of the stages in the accounting cycle, before
final accounts?

(A)Posting to ledger, journalizing, trial balance

(B)Posting to ledger, trial balance, journalizing

C) Journalizing, trial balance, posting to ledger

(D) Journalizing, posting to ledger, trial

44.According to the Partnership Act, if there is no Deed of Partnership, the amount of profit to
be received by EACH partner would be

(A)divided equally

(B)calculated at 5% of net profit

(C)calculated at 5% on capital invested

(D)divided in proportion to capital invested

45.In the books of a partnership, the salaries of the partners should be

(A)debited in the drawings account

(B)credited in the appropriation account

(C)debited in the partners' capital account

(D)credited in the partners current account

Item 46 refers to the following table which shows the summarized position of Foster and Scott
Limited at 6 March 2020.

Current liabilitiesS60000

Current assets100 000

Non-current assets 200 000

Non-current liabilities150 000

46.What was the capital of Foster and Scott Limited at 6 March 2020?

(A)$ 40 000

(B)$ 90 000

(C)$150 000
(D)$190 000
47.A mechanic starts his business with $10 000 worth of tools. What entries should he make to
record this transaction?

(A)Debit bank account

Credit capital account

(B)Debit capital account

Credit bank account

(C)Debit tools account Credit capital account

(D)Debit capital account

Credit tools account

48.The net profit of a firm was shown as $1 600. It was later discovered that discounts received
were undercast by $10 and purchases were understated by $36.

What is the correct net profit?

(A)$1 574

(B)$1 610

(C), $1 636

(D)$1 646

49.An asset purchased for $1 000 depreciates at the rate of 10% per annum using the reducing
balance method. What is the book value of the asset at the beginning of the third year?

(A) $ 800

(B) $ 810

(C)$ 900

(D) $1 190
50.R. A. David operates a small grocery. You have been asked to assist in the preparation of
the final accounts for 2020 and have been provided with the following information.
Balance at 31 December 2020

Debtors40 000

Accounts payable25 000

Bank overdraft35 000

Inventory of goods for resale80 000

Non-current assets180 000

Long-term loans130 000

What was the capital at 1 January 2021?

(A)$110 000

(B)$130 000

(C)$160 000

(D) $180 000

51.Mr Green and Mrs Black agreed to establish a partnership, Green and Black Co., and each
of them deposited $5 000 into a bank account. How should this be recorded in the books of the
partnership?

(A)Credit cash $10 000 Debit capital $10 000

(B) Debit Green and Black Co. $10000

Credit bank $10 000 each

(C)Debit partnership bank account $10 000

Credit partners' current accounts $5 000 each

(D)Debit partnership bank account $10 000

Credit partners' capital accounts $5 000 each

Items 52-53 refer to the following information for Jaco Ltd.
Jaco Ltd sells canned tomato sauce. The following inventory information was available for the
month ended 31 May 2020.

Date

Transaction

Amount

May 1 Beginning inventory40 cans @ $500 per can

4.Purchased 80 cans @ $515 per can

15 sold 100 cans @ $650 per can

20 sold 10 cans @ $650 per can

52. Using the FIFO method, what is the value of ending inventory?

(A) $ 5000

(B) $ 5 150

(C) $ 6500

(D) $20 000

53. Using the AVCO method, what is the value of ending inventory?

(A) $ 5 100

(B)$ 5 788

(C)$ 6000

(D) $24 050

54.To which account should depreciation of office machines be transferred?

(A)Trading

(B)Manufacturing

(C) Profit and loss

(D) Appropriation
55.Which of the following accounting entries should be made if goods are sold on credit?

(A)Debit cash account

Credit sales account

(B)Debit sales account

Credit cash account

(C)Debit sales account

Credit account receivable account

(D)Debit account receivable account

Credit sales account

56.Which of the following may be used to calculate the cost of production?

(A) Prime cost + factory overheads opening work in progress+closing work in progress

(B)Prime cost factory overheads opening work in progress+closing work in progress

(C) Prime cost + factory overheads opening work in progress-closing work in progress

(D) Prime cost + factory overheads + opening work in progress-closing work in progress

57.P. Amos is employed by a construction company at a rate of $7 per hour. During a week, he
worked his basic week of 40 hours. The income tax due on his pay is $20 and he is also liable
to pay national insurance contributions of 5% of his gross pay. What is his net pay?

(A)$246

(B) $260

(C) $266

(D) $280
Item 58 refers to the following information supplied by a sole trader.

Amaris One Stop Shop

Net sales 30 000

Rent expense 3.000

Discount received 2000

Gross profit 2 000

Discount allowed 4 000

What is the net profit percentage (to the nearest whole number)?

(A) 10%

(B) 17%

(C)23%

(D)37%
59.When a company declares a dividend of 15%, the dividend warrant of a shareholder owning
1 500 one-dollar ordinary shares is

(A) $ 100

(B) $ 225

(C) $1 500

(D) $1 515

60.Prime cost is $79 110, office expenses $3 000 and factory overheads $4 720. How much is
the cost of production?

(A) $ 4 720

(B) $71 390

(C) $83 830

(D) $86 830

 Vreed-en-Hoop Secondary School
Mock Examination 3
Principles of Accounts
Paper 1

Mark Sheet

1. C

2. C

3. D

4. B

5. A

6. C

7. A

8. B

9. C

10. D

11. A

12. C
13. D

14. A

15. B

16. C

17. A

18. C

19. A

20. B

21. A

22. A

23. B

24. C

25. C

26. C

27. B
28. C

29. B

30. A

31. D

32. D

33. B

34. A

35. B

36. D

37. A

38. C

39. C

40. A

41. C
42. B

43. D

44. A

45. D

46. B

47. C

48. A

49. B

50. C

51. D

52. B

53. B

54. C

55. D

56. D
57. A

58. A

59. B

60. C
Table of specification

Question Number(s) Topic Cognitive Level Number of Weight

Questions (%)
1, 3, 5, 7, 8, 9, 11, 13, Financial Knowledge & 16 27%
15, 17, 20, 24, 25, 29, Accounting Understanding
39, 50
2, 4, 6, 10, 14, 18, 22, Accounting Application & 16 27%
23, 32, 36, 38, 42, 44, Principles Analysis
46, 48, 51
16, 30, 31, 33, 35, 37, Cost Accounting Application & 10 17%
52, 53, 57, 58 Analysis
12, 19, 28, 40, 41, 45, General Knowledge & 7 12%
49 Accounting & Understanding
Taxation
26, 27, 55, 59 Payroll & Application & 4 7%
Employee Analysis
Accounting
34, 43, 47, 54, 60 Business Knowledge & 5 8%
Structure & Understanding
Operations