accounts data bank

| August 14, 2017

Chapter
1
The
accounting world
1.Sole traders differ from other types of
trading organizations. Which of the following statements
correctly
summarizes the key characteristics of a sole trader’s business?
(a)
Liability is limited to the providers of loan finance and only the trader takes
an active part in
managing
the business.
(b)
The trader has unlimited liability and runs the business in conjunction with
the providers of
loan
finance.
(c)
The trader has unlimited liability and must have the business accounts audited.
(d)
The trader has unlimited liability, takes sole responsibility for management of
the business and
no
audit is needed.
2.Which of the following statements best
describes the purpose of financial accounting in a limited
liability
company?
(a)
To assist in the day-to-day management of the company.
(b)
To enable the business to pay the correct amount of tax.
(c)
To ensure that the business pays the correct dividend.
(d)
To help the directors discharge their obligations to the shareholders.
Chapter
2
Accounting
rules
1.A business has prepared its accounts for a
financial year and these show a profit of £500 000. The
accounts
do not include the following items:
•
a likely loss on a contract of £25 000
•
a possible Court ruling in favour of the
company which is likely to increase profits by £10 000
•
a possible Court ruling against the
company which could result in damages of between £5 000 to
£15
000.
Having
regard to the fundamental accounting concepts, which of the following revised
profit
figures
is correct when the above factors are taken in to account?
(a)
£480 000.
(b)
£460 000.
(c)
£510 000.
(d)
£475 000.
2.A company sells goods on credit valued at
£25 000 to a customer. At what point in the sales cycle
should
this sale be recognized in the accounts?
(a)
When the customer’s order is received.
(b)
When the goods are ready for dispatch to the customer.
(c)
When the goods are sent, accepted and invoiced.
(d)
When the customer pays.
Chapter
3
Recording
data
1.Exe Ltd sells goods on credit to Wy Ltd
for £3000. Which of the following accounting entries correctly
records
this transaction?
(a)
Debit sales, credit Wy Ltd £3000.
(b)
Debit Wy Ltd, credit sales £3000.
(c)
Debit cash, credit sales £3000.
(d)
Debit Wy Ltd, credit stock £3000.
2.The following items relate to the bank
account of Exe Ltd: balance at 1 January 2001 = £4500 (in
hand),
total payments in 2001 were £45 800, total receipts in 2001 were £36 900, bank
charges not yet
entered
into the bank account were £1200. What was the correct closing bank balance at
31
December 2001?
(a)
£5600 overdrawn.
(b)
£12 200 overdrawn.
(c)
£4400 overdrawn.
(d)
£13 400 overdrawn.
3.A business has the following transactions
recorded in its sales ledger for 2001:
£000
Debtors
at 1 January 2001 25
Sales
in 2001 345
Receipts
from debtors 318
Credit
notes raised in 2001 23
Which
is the correct figure for debtors at 31 December 2001?
(a)
£29 000.
(b)
£27 000.
(c)
£52 000.
(d)
£75 000.
4.A business has the following transactions
recorded in its purchase ledger:
£000
Creditors
at 1 January 2001 35
Purchases
during 2001 275
Creditors
at 31 December 2001 49
Debit
notes raised on suppliers 5
Which
is the correct figure for the total of payments to suppliers during 2001?
(a)
£221 000.
(b)
£256 000.
(c)
£284 000.
(d)
£289 000.
Accounting for Non-Accounting Students, 5th edition,Lecturer’s
Guide. © Pearson Education Limited 200199
5.A business receives a cheque from a
customer for £256 in full agreed settlement of an account which
showed
a debit balance of £270. Which of the following entries correctly records this
transaction?
(a)
Credit bank £256, credit discount received £14, debit debtor £270.
(b)
Debit bank £256, debit discount received £14, credit debtor £270.
(c)
Debit bank £256, debit discount allowed £14, credit debtor £270.
(d)
Debit bank £256, debit discount allowed £14, credit creditor £270.
100
Accounting for Non-Accounting Students, 5th edition,Lecturer’s
Guide. © Pearson Education Limited 2001
Chapter
4
Trading
entity accounts
1.Which of the following statements is
correct?
(a)
Accounting profit is the difference between cash receipts and cash paid in a
period.
(b)
Accounting profit is the total of cash sales in the year less the expenses for
the period.
(c)
Accounting profit is the difference between revenue income and expenses for the
period.
(d)
Accounting profit is the difference between revenue income and cash payments
for the period.
2.Which of the following statements is
correct in relation to a trial balance?
(a)
It shows the financial position of a business.
(b)
All the balances in the trial balance will be summarized on the business
balance sheet.
(c)
It is a list of balances and forms the starting point for the preparation of
the business accounts.
(d)
It is part of the published accounts of a business.
3.A business has the following items in its
trial balance:
£000
Trade
debtors 25
Prepayments
10
Bank
overdraft 5
Trade
creditors 8
Fixed
assets 15
Closing
stock 8
Which
of the following is the correct figure for the working capital of the business?
(a)
£42 000.
(b)
£45 000.
(c)
£50 000.
(d)
£30 000.
4.A business has the following items
extracted from its trial balance:
£000
Opening
stock 10
Purchases
25
Sales
40
Expenses
10
In
addition, its closing stock is valued at £15 000.
What
is the correct figure for the business gross profit?
(a)
£20 000.
(b)
£10 000.
(c)
£15 000.
(d)
£nil.
Questions
5, 6 and 7 use the following summary balance sheet:
£000 £000
Fixed
assets 22 Capital 20
Stocks
10 Retained profit of year 5
Debtors
20 Creditors 10
Bank
5 Long-term loan 22
57
57
5.Which is the correct figure for the net
assets of the business?
(a)
£12 000.
(b)
£25 000.
(c)
£47 000.
(d)
£57 000.
6.Which is the correct figure for the
capital employed in the business?
(a)
£20 000.
(b)
£25 000.
(c)
£47 000.
(d)
£57 000.
7.Which of the following statements
regarding the retained profit of £5000 for the year is correct?
(a)
It is the net profit of the period.
(b)
It is the net profit kept in the business after owner’s drawings.
(c)
It is the amount of surplus cash in the business.
(d)
It is the amount of profit the owner can take out of the business.
8.The following trial balance is incorrect:
£000 £000
Stock
10
Capital
15
Bank
overdraft 15
Trade
creditors 30
Fixed
assets 25
Trade
debtors 10
Cash
2
Trade
investments 13
Sales
100
Purchases
50
Operating
expenses 50
160
160
Which
of the following groups of items, if moved to the correct side of the trial balance,
will correct
it?
(a)
Capital, investments, cash, sales, purchases and operating expenses.
(b)
Capital, cash, investments.
(c)
Capital, bank overdraft.
(d)
Sales, purchases, operating expenses.

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