Practice Question paper MCQ Paper 1
Questions
1. Which of the following entries is recorded in the debit column of the cash book?
A) Payment to a supplier
B) Cash withdrawn by owner
C) Sale of goods for cash
D) Dishonoured cheque
2. What is recorded in the sales returns journal?
A) Cash refunds given to customers
B) Goods returned by customers on credit
C) Goods bought for resale
D) Goods sold for cash
3. Which document is used to prepare the purchases journal?
A) Debit note
B) Credit note
C) Invoice received
D) Receipt
4. A payment of rent was entered in the ledger as $1,200 instead of $2,100. What type of error is
this?
A) Error of omission
B) Error of commission
C) Error of original entry
D) Compensating error
5. The cash book is both:
A) a ledger and journal
B) a trial balance and journal
C) a journal and income statement
D) a ledger and balance sheet
6. What would appear on the credit side of the bank column of the cash book?
A) Cash withdrawn for office use
B) Cheque received from debtor
C) Bank loan received
D) Cheque paid to supplier
7. A business has opening inventory $4,000, purchases $15,000 and closing inventory $5,000. What
is the cost of goods sold?
A) $16,000
B) $14,000
C) $24,000
D) $20,000
8. Which of the following best describes a suspense account?
A) Used to correct errors of principle
B) Used to record cash sales
C) Temporary account to correct trial balance differences
D) Used to record depreciation
9. Which book of prime entry would record the return of goods to a credit supplier?
A) Sales journal
B) Purchases returns journal
C) Purchases journal
D) Sales returns journal
10. What is the purpose of control accounts?
A) To record petty cash
B) To track trial balance errors
C) To reduce the number of ledger entries
D) To correct overdrawn accounts
11. What type of error is not revealed by the trial balance?
A) Single-sided entry
B) Reversal of entries
C) Partial omission
D) Arithmetical error
12. A club receives subscriptions in advance. How is this recorded in the final accounts?
A) Added to income
B) Deducted from assets
C) Added to capital
D) Shown as a current liability
13. A credit sale of $600 was completely omitted. What is the correction journal entry?
A) Dr Sales $600 Cr Debtors $600
B) Dr Debtors $600 Cr Sales $600
C) Dr Sales $600 Cr Cash $600
D) Dr Suspense $600 Cr Sales $600
14. What is the effect of recording cash sales as credit sales?
A) Overstates assets
B) Overstates expenses
C) No effect on profit
D) Understates cash
15. Which item is not included in the income and expenditure account of a club?
A) Life membership received
B) Subscriptions due but unpaid
C) Sale of old newspaper
D) Purchase of equipment
16. A trader’s sales ledger control account has a debit balance. This means:
A) Customers owe the business
B) The business owes suppliers
C) An expense has occurred
D) A loan has been received
17. If capital is $25,000, liabilities are $7,000, then assets equal:
A) $18,000
B) $32,000
C) $25,000
D) $7,000
18. A cheque received from a customer was later dishonoured. What is the correct journal entry?
A) Dr Bank Cr Sales
B) Dr Customer Cr Bank
C) Dr Bank Cr Customer
D) Dr Sales Cr Customer
19. What is the correct classification for cash in hand in a statement of financial position?
A) Non-current liability
B) Non-current asset
C) Current asset
D) Expense
20. An incomplete records system typically lacks:
A) A bank account
B) A capital account
C) Full double entry
D) Control accounts
Numerical Questions:
1. A trader's cash at bank was $4,200. During the month, she received $1,600 and paid $2,300.
What is the closing balance?
A) $2,900 B) $3,500 C) $6,500 D) $5,800
2. Opening capital was $15,000. Drawings during the year were $2,000. Profit for the year was
$4,500. What is the closing capital?
A) $17,000 B) $21,500 C) $19,500 D) $13,000
3. Total purchases for the year were $24,000. Purchase returns were $2,500. What is the net
purchases?
A) $21,500 B) $26,500 C) $24,000 D) $22,500
4. A business has:
Opening inventory: $5,000
Purchases: $18,000
Closing inventory: $7,000
What is the cost of goods sold?
A) $16,000 B) $20,000 C) $24,000 D) $19,000
5. Subscription received during the year: $10,000
Outstanding at start: $500
Outstanding at end: $1,200
What is the subscription income for the year?
A) $10,700 B) $9,300 C) $11,700 D) $8,800
6. A debtor owes $1,500. He is given a 10% cash discount. How much will be received in full
settlement?
A) $1,500 B) $1,350 C) $1,400 D) $1,250
7. Total credit sales: $40,000
Bad debts: $2,000
Provision for doubtful debts: 5% of remaining debtors
Debtors balance = $10,000
What is the new provision?
A) $500 B) $400 C) $480 D) $520
8. A sales ledger control account shows:
Opening balance: $12,000
Credit sales: $30,000
Receipts: $25,000
Sales returns: $2,000
What is the closing balance?
A) $15,000 B) $19,000 C) $20,000 D) $17,000
9. Club paid for rent $4,000. At year-end, rent due is $500. What is the rent expense shown in the
income and expenditure account?
A) $3,500 B) $4,000 C) $4,500 D) $4,400
10. A cheque for $680 received from a debtor was recorded as $860. What is the amount of the
correction needed?
A) $180 debit
B) $180 credit
C) $680 debit
D) $860 credit
