WORLD ACCOUNTING & FINANCE ACADEMY

FA1 Mock

1) Kevin operates his petty cash with an imprest of $120. At the end of one particular week he had
vouchers in the petty cash tin of $17.45, $32.16 and $21.94. In order to restore the petty cash balance
what transaction should Kevin make?

A) Dr Bank $48.45 Cr Petty cash $48.45

B) Dr Bank $71.55 Cr Petty cash $71.55
C) Dr Petty cash $71.55 Cr Bank $71.55
D) Dr Petty cash $48.45 Cr Bank $48.45

2) The following statements relate to the trade payables control account:

(1) It is used to record transactions with credit suppliers

(2) Amounts posted to it are part of the double entry system of accounting

Which of the above statements are correct?

A) Statement 1 only
B) Neither statement
C) Both statements
D) Statement 2 only

3) Mark was owed $496.70 from Trevor. He subsequently found out that Trevor had gone bankrupt and
could not pay. He therefore wanted to write off Trevor's debt.

What would be the correct double entry to write off Trevor's debt?

A) Dr Irrecoverable debts $496.70 Cr Sales $496,70

B) Dr Receivables $496.70 Cr Irrecoverable debts $496.70
C) Dr Receivables $496.70 Cr Receivables $496.70
D) Dr Sales $496.70 Cr Receivables $496.70
4) The trade receivables control account has a balance of $4,214. The total on the list of individual
customer balances is $4,890. Which of the following would explain the difference?

A) A customer owing $676 has been omitted from the list of customer balances
B) The sales day book is understated by $676
C) A contra with the payables ledger for $676 has been accounted for in the list of customer
balances but not accounted for in the control account
D) An irrecoverable debt of $676 has been written off a customer's individual account t not yet
been written off the control account

5) Dorien owns a shop and rents out the flat above the shop.

What is the correct double entry to account for the rent she receives?

A) Dr Sales Cr Cash
B) Dr Cash Cr Rental income
C) Dr Rental income Cr Cash
D) Dr Cash Cr Sales

6) Brian issues a document to a customer indicating that the amount owed is being reduced for sales
returns.

What is this document?

A) Debit note
B) Credit note
C) Delivery not
D) Advice note

7) Desmond is performing a control account reconciliation between the trade payables control account
and the list of suppliers' balances. He finds that a purchase day book total has been understated by
$3,000.

Where will the error need to be corrected to ensure the two balances reconcile?
 A) List of suppliers' balances only
B) Both the control account and the list of suppliers' balance
C) Control account only
D) None

8) The balance on the trade payables control account should be equal which other figure in the
accounting system?

A) The balance on the trade receivables control account reconciled for items in
B) The balance on the trade receivables control account
C) The total of the balance on the individual suppliers account
D) The total of the balances on the individual customers' accounts

9) Which of the following accounts would show a credit balance?

Account 1: Total Dr $400 Total Cr $200

Account 2: Total Dr $200 Total Cr $100

Account 3: Total Dr $300 Total Cr $300

Account 4: Total Dr $200 Total Cr $300

A) Account 4 only
B) Accounts 3 and 1
C) Account 1 and 2
D) Account 2 and 3

10) Which of the following should be reported in the statement of profit or loss?

A) Receivables
B) Revenue
C) Non-current asset
D) Payables
11) Warren is a window cleaner. He cleaned Millie's windows and she paid him $10 in cash.

What kind of transaction is this?

A) Purchase of goods by Warren

B) Sale of goods by Warren
C) Purchase of a service by Millie
D) Sale of service by Millie

12) Which of the following would be classified as revenue expenditure?

(1) Rental income

(2) Purchase of machine

(3) Purchase of goods for resale

(4) Employees' wages

A) 1 and 3
B) 3 and 4
C) 2 and 4
D) 1 and 2

13) In error Tarik posted goods he purchased for his own use into the business purchases account.

Which of the following journals will correct this error?

A) Dr Purchases Cr Drawings
B) Dr Sales Cr Drawings
C) Dr Drawings Cr Purchases
D) Dr Drawings Cr Sales

14) Arthur sold goods to Meabh for $5,400. He subsequently realised he has overcharged Meabh by
$200. Which of the following documents would Arthur issue to correct this overcharge?

A) Debit note
B) Credit note

C) Invoice

D) Remittance advice

15) When the trial balance was prepared the following two ledger accounts were omitted and a
suspense account had to be created to make it balance:

A) $860 Dr

B) $10,700 Dr

C) $10,700 Cr

D) 860 Cr

16) What is the correct double entry to write off an irrecoverable receivables balance?

A) Dr Trade payables Cr Irrecoverable debt expense

B) Dr Trade receivables Cr Irrecoverable debt expense
C) Dr Irrecoverable debt expense Cr Trade receivables
D) Dr Irrecoverable debt expense Cr Trade payables

17) Fatima has made an error in posting a sales return from the sales returns day book to the general
ledger. Which book of prime entry should be used to record the correction of the error?

A) Sales return day book

B) Journal
C) General ledger
D) Sales day book

18) Which of the following is correct?

A) Liabilities+ Capital = Assets

 B) Assets+Capital = Liabilities
C) Capital - Liabilities = Assets
D) Assets+ Liabilities = Capital

19) Cash sales of $15,800 have been correctly entered in the cash account but entered as $18,500 in the
sales account. What is the double entry to correct this transaction?

A) Dr Sales $2,700 Cr Sales $2,700

B) Dr Suspense account $2,700 Cr Sales $2,700
C) Dr Sales $2,700 Cr Cash $2,700
D) Dr Cash $2,700 Cr Suspense account $2,700

20) Which of the following entries correctly records a purchase of materials on credit?

A) Dr Materials Cr Cash book payments

B) Dr Purchase day book Cr Materials
C) Dr Materials Cr Purchase day book
D) Dr Cash book payments Cr Materials

21) At the start of the year Bharvinder had an interest free loan of $20,000. During the year he repaid
$10,000. Which parts of the accounting equation will change as a result of the loan repayment?

A) Liabilities and profit

B) Assets and liabilities
C) Capital and liabilities
D) Capital and assets

22) Alvin received a supplier statement from Darcy showing Alvin owed Darcy $21,980. Alvin's records
showed he only owed Darcy $20,140. Which of the following could be responsible for the discrepancy?

A) Darcy has performed a contra against a balance she owes to Alvin

 B) Alvin has made a payment not yet received by Darcy
C) Darcy has already recorded a settlement discount relating to an invoice Alvin has no paid
D) Darey has issued a credit note to Alvin which he has not yet received

23) In Khalid's cash payments book for the month of May the trade payables column totalled $7,400.

What does this amount represent?

A) The amount owed to Khalid's suppliers at the end of

B) The amount paid to Khalid's suppliers during May
C) The discounts received from Khalid's suppliers in M.
D) The amount invoiced by Khalid's suppliers in May

24) Which of the following would appear on a supplier's statement?

(1) Invoices issued during the period

(2) Trade discounts given during the period

(3) Credit notes issued during the period

(4) Payments made during the period

A) 1 , 3 and 4 only
B) 1, 2, 3 and 4
C) 2 and 3 only
D) 1 and 4 only

25) Which of the following correctly represents the accounting equation?

A) Capital $49,000 Assets $22,000 Liabilities $27,000

B) Capital $22,000 Assets $27,000 Liabilities $49,000
 C) Capital $49,000 Assets $27,000 Liabilities $22,000
D) Capital $27,000 Assets $49,000 Liabilities $22000

26) The total of the discounts column in the cash received book is $140. How should this be posted in
the ledger?

A) Cr Discounts received $140

B) Cr Discounts allowed $140
C) Dr Discounts received $140
D) Dr Discounts allowed $140

27) The trade receivables control account shows a balance of $13500 but the list of customer balances
shows a total of $10800.

Which of the following could explain the difference?

A) A credit note of $2,700 has been correctly treated in the customer's individual account not
entered into the control account
B) The trade receivables column of the cash receipts book is overstated by $2,700
C) The sales day book is overcast by $2,700
D) A customer balance of $2,700 has been omitted from the list of balances

28) Esther received $4,418 from a customer to whom she had sold goods on credit for $3,760 plus sales
tax of $658. What is the double entry for this receipt in the accounts of Esther?

A) Dr Accounts receivable $4,418 Cr Cash $4,418

B) Dr Cash $3,760 Cr Sales $3,760

C) Dr Sales $3,760 Cr Cash $3,760

D) Dr Cash $4,418 Cr Accounts receivable $4,418

29) Which of the following are valid reasons for preparing an aged receivables analysis?

(1) It is part of the double entry system

(2) To identify receivables which need to be followed up to ensure payment

(3) To help calculate allowances for irrecoverable debts

(4) To ensure the trial balance balances

A) 2 and 3
B) 1 and 4
C) 1 and 3
D) 2 and 4

30) The following is an extract from a ledger account:

Cash

$$ $$

9 Oct Cash 1270 26 Oct Cash 587

19 Oct Cash 1959

30 Oct Cash 1035

What is the closing balance on this account?

A) Credit balance of $3,677

B) Debit balance of $3,677
C) Credit balance of $4,264
D) Debit balance of $4,264

31) Joanna makes regular payments to a specific charity. The cash goes straight from her account and
the charity cannot amend the amount paid. What method of payment is Joanna using?

A) Standing order
B) Petty cash payment
C) BACS payment
 D) Direct debit

32) When performing a bank reconciliation which of the following would require adjustments to the
cash book balance?

(1) Direct credit not yet accounted for

(2) Unpresented cheques

(3) Outstanding lodgements

(4) Interest received not accounted for

A) 2 and 3
B) 1 and 4
C) 1 and 3
D) 2 and 4

33) Which of the following checks should the petty cashier make prior to paying out petty cash?

(1) That the claim is supported by appropriate documentation

(2) That the claim has been authorised by an appropriate signature

(3) The credit rating of the business receiving the payment

(4) That the amount is within the petty cash limit

A) 1 and 2 only
B) 3 and 4
C) 2 and 3
D) 1, 2 and 4

34) The bank statement of Hugo showed a debit balance of $12,800. The bank reconciliation showed
there were outstanding lodgements of $3,400 and unpresented cheques of $4,700. What is the correct
amount of cash that should be recorded in Hugo's accounts?
 A) $11,500 Dr
B) $14,100 Cr
C) $14,100 Dr
D) $11,500 Cr

35) Manfred runs his own business and operates an imprest system of petty cash maintaining a float of
$200. At the end of November there is cash of $37.20 and vouchers of $162.80. How much will Manfred
need to pay into petty cash to maintain the float?

A) $3720

B) $16280

C) $12560

D) $200

36) The following is extracted from the trial balance at the year end:

Capital 9,000

Sales 32,000

Purchases 26,000

Trade receivables 23,000

Inventory14,000

Trade payables12,000

Bank overdraft

What is the figure for the bank overdraft?

A) $10,000
B) $28,000
 C) $22,000
D) $12,000

37) Eddy has purchased a van paying by cheque. Eddy uses account codes in his ledgers. His account
codes include:

Bank 2150

Motor Vehicles 4270

Purchases 3820

Which of the following is the correct double entry to record this transaction?

A) Dr 4270 Cr 2150
B) Dr 2150 Cr 4270
C) Dr 3820 Cr 2150
D) Dr 2150 Cr 3820

38) A transaction has been recorded in the ledger of Samir as follows:

Equipment

19 Oct Bank 16,800

Bank

19 Oct Equipment 16,800

What was the transaction?

A) Banking of the proceeds from the sale of equipment

B) Receipt of a bank loan to purchase equipment
C) Purchase of equipment on credit
D) Purchase of equipment paid for by cheque

39) The following information for wages and salaries has been taken from the accounts of Roman:

Wages and salaries (gross) 65708

Income tax 15,770

Employer's pension contributions 5257

Employee's pension contribution 3,942

There are no statutory or non-statutory deductions other than the above. What is the Roman's total
wages and salaries expense?

A) $90677
B) $65708
C) $70965
D) $74907

40) Jan is employed at an annual salary of $18,720. She is contracted to work 30 hours per week. If
overtime has to be worked the first seven hours of overtime in any week are not paid for. Any overtime
in excess of seven hours in a week is paid for at double time.

During one week Jan worked 12 hours of overtime. What will be Jan's overtime pay for the week?

A) $480
B) $120
C) $288
D) $60

41) Jasminder had correctly recorded a wages and salaries expense of $32,000 in her accounts. She only
has two employees who each earn a gross salary of $14,000 per annum. Which of the following could
explain the difference between the gross salaries and total wages and salaries in the accounts?

A) Pension contributions paid by Jasminder on behalf of her employee

B) Employee pension contributions

C) Employee income tax payments

D) Jasminder's drawings

42) Velma sent an invoice to Marion for goods purchased. Velma subsequently issued a debit note to
Marion.

Which of the following would explain the issue of the debit note?

A) Packing and posting costs payable by the customer were omitted from the i
B) Marion has refused some of the goods as they were faulty
 C) The invoice should have been sent to a customer called Maureen not Mario
D) The invoice was incorrectly totalled and overstated by $500

43) Bob bought $2,000 of goods from Harvey on 1 November 20X7. He agreed to pay Harvey on 31
January 20X8. What kind of transaction is this from Harvey's point of view?

A) Credit purchase
B) Credit sale
C) Cash purchase
D) Cash sale

44) Which of the following items would appear on opposite sides of the trial balance?

A) Motor vehicles and inventory

B) Sales and capital
C) Trade payables and expenses
D) Trade receivables and purchases

45) Alfredo runs his own business maintaining receivables and payables control accounts as part of his
accounting system. When preparing the trial balance which one of the following errors would require
the creation of a suspense account?

A) $250 of motor vehicle repairs is posted to the motor vehicles account

B) The purchase day book is overstated by $420
C) A bank overdraft of $880 is recorded as a positive cash balance
D) Alfredo's drawings of $320 have been recorded as wages and salaries

46) Jenny has trade receivables of $82,320 at the start of November. During November she had the
following transactions:

Cash sales 35,200

Cash receipts from customers 96420

Credit sales 38,170

Irrecoverable debts written of 2,00

What is the balance on Jenny's trade receivables at the end of November?

A) $23870
B) $59070
C) $32240
D) $56270

47) Xena buys goods from Alex for $20,800 on credit. She subsequently returns goods worth $3,100 and
pays him $9,200. In Xena's ledger what is the balance with Alex as a result of these transactions?

A) $26,900 Dr

B) $8,500 Dr

C) $8,500 Cr

D) $26,900 Cr

48) Rodger is registered for sales tax which is charged at 17.5%. A customer is invoiced for goods with a
list price of $240,000. The customer is given a trade discount of 25% and a settlement discount of 5% is
given if the invoice is paid within 21 days. How much sales tax should be included on the invoice?

A) $31500
B) $29925
C) $39900
D) $42000

49) What is the purpose of a journal?

 A) To record all individual transactions entered into the sales day
B) To record unusual movements between accounts
C) To record the purpose of all transactions made in the accounts
D) To record when all transactions were made between accounts

50) Which of the following are valid reasons for having a formal document retention policy?

(1) To help minimise costs associated with maintaining business records

(2) To ensure that all business records are kept for the maximum time possible

(3) To help locate business records

(4) To ensure the trial balance balances

A) 2 and 3
B) 2 and 4
C) 1 and 4
D) 1 and 3