1 Which statement is correct?
A Carriage inwards is a credit.
B Carriage outwards is a debit.
C Purchase returns is a debit.
D Sales returns is a credit.
2 The table shows opening and closing balances for the rent receivable account.
|
start of year $
|
end of year $
|
|
rent received in advance rent due in arrears
|
4200
2000
|
1600
2400
|
During the year, $111 000 rental income was received. What is the total rent receivable for the year?
A $110 600
B $111 000
C $113 200
D $114 000
3 A non-current asset costing $206 000, with a net book value of $131 000, is revalued to $275 000. How should the revaluation be recorded?
A Dr Asset at cost $69 000
Cr Revaluation reserve $69 000
B Dr Provision for depreciation $75 000 Dr Asset at cost $69 000
Cr Revaluation reserve $144 000
C Dr Provision for depreciation $144 000 Cr Revaluation reserve $144 000
D Dr Revaluation reserve $144 000 Cr Asset at cost $69 000
Cr Provision for depreciation $75 000
4 A business buys a machine on hire purchase for $50 000.
Although it will not own the machine until it has paid the final instalment, it has made the following entries:
|
debit
|
credit
|
|
Machinery account $50 000
|
Bank account $5 000 Finance company account $45 000
|
Which accounting principle has been applied?
A going concern
B matching
C prudence
D substance over form
5 A sole trader owns a vehicle valued at $4000 for his own use and a vehicle valued at $2500 for business use.
On 1 April 2012 he sold the business vehicle. On the same date he bought a new vehicle for
$8000 for his own use and transferred his old vehicle to the business. What is the change in the value of vehicles in the business accounts?
A $1500
B $4000
C $5500
D $6500
6 Which accounting principle means that a company's financial statements are comparable from one period to the next?
A accruals
B consistency
C going concern
D materiality
7 The table shows details relating to a company's banking transactions at 31 December.
|
|
$
|
|
balance at bank as per bank statement
|
22 650
|
|
uncleared lodgements
|
3 110
|
|
unpresented cheques
|
6 290
|
|
bank credit recorded twice by bank in error
|
650
|
Which balance for cash at bank should appear in the statement of financial position at 31 December?
A $18 820
B $20 120
C $25 180
D $26 480
8 A company's accounts showed a gross profit for the year of $32 500. After the draft financial statements were prepared it was found that the opening inventory had been overstated by $2400 and the closing inventory had been understated by $3400. What is the corrected gross profit for the year?
A $26 700
B $31 500
C $33 500
D $38 300
9 A manufacturing company has the following information for the year ended 31 December.
|
|
$
|
|
purchase of raw materials
|
58 000
|
|
wages of machine operators
|
97 000
|
|
depreciation on factory plant
|
15 000
|
|
opening inventory of raw materials
|
10 000
|
|
closing inventory of raw materials
|
8 000
|
|
wages of factory supervisor
|
18 000
|
|
factory light and heating costs
|
22 000
|
What is the prime cost for the year?
A $153 000
B $157 000
C $175 000
D $212 000
10 The table shows information about four partners in a partnership.
Which partner has the greatest net reward from interest on capital and interest on drawings?
|
|
fixed capital
$
|
annual drawings
$
|
|
A B C
D
|
20 000
20 000
60 000
60 000
|
30 000
50 000
30 000
50 000
|
11 X and Y are in partnership sharing the profits equally. No goodwill account is maintained in the accounts. Z joins the partnership and pays $30 000 cash for his share of the goodwill.
Profits are to be shared equally between X, Y and Z.
What are the increases in the capital accounts on the admission of Z into the partnership?
|
|
capital accounts
|
|
X
$
|
Y
$
|
Z
$
|
|
A B C
D
|
10 000
- 15 000
-
|
10 000
- 15 000
-
|
10 000
30 000
-
-
|
12 Which statements about non-profit making organisations are correct?
1 A club or society may engage in trading activities.
2 A club or society may suffer bad debts.
3 Subscriptions are credited to the income and expenditure account in the year in which they are received.
4 The term 'excess of expenditure over income' replaces 'profit for the year'.
A 1 and 2
B 1 and 4
C 2 and 3
D 3 and 4
13 A business sells goods at cost plus 25 %.
Information for a year is shown.
|
|
$
|
|
revenue
opening inventory closing inventory
|
240 000
42 000
48 000
|
What is the total of purchases for the year?
A $180 000
B $186 000
C $192 000
D $198 000
14 The inventory records of a business show the following information for product X.
|
|
|
units
|
cost per $
|
unit
|
|
1 January
|
opening balance
|
100
|
3
|
|
3 January
|
receipts into inventory
|
50
|
4
|
|
8 January
|
inventory issued
|
120
|
-
|
What is the value of the inventory issued on 8 January using the first in first out (FIFO) method?
A $360
B $380
C $410
D $420
15 A company has an issued share capital of 200 000 6 % cumulative preference shares of $1 each fully paid and 800 000 ordinary shares of $1 each fully paid.
Assuming that the company earns no profit in the year, which statement is correct?
A Both preference and ordinary shares are paid a dividend in the year.
B The unpaid dividends for both preference and ordinary shares are carried forward to a future year.
C The unpaid preference dividend is carried forward to a future year.
D The preference shares are paid a total dividend of $12 000 in the year.
16 A company raises finance by issuing debentures. What is the effect on net current assets and short term profits?
|
|
net current assets
|
profits
|
|
A B C
D
|
decrease decrease increase
increase
|
decrease increase decrease
increase
|
17 A business finds that it is unable to pay its trade payables because of a poor cash flow.
What should it do to improve its cash flow?
A factor its trade receivables
B increase its trade receivables
C increase its inventory
D repay its overdraft
18 For some years a business has given 2 % cash discount to its customers and lost 3 % of its inventory to pilferage by staff.
On 1 January, the business changed the rate of cash discount to 5 % and introduced a new inventory control system that stopped the pilferage.
Which effect do these changes have on the gross profit to sales ratio?
|
|
change in cash discount
|
new inventory control system
|
|
A B C
D
|
decrease increase no effect
no effect
|
no effect no effect decrease
increase
|
19 The table gives information about a company.
|
|
year 1
$
|
year 2
$
|
|
revenue
|
150 000
|
200 000
|
|
cost of sales
|
105 000
|
130 000
|
|
|
45 000
|
70 000
|
|
administration and distribution expenses
|
27 000
|
47 500
|
|
profit from operations
|
18 000
|
22 500
|
|
non-current assets
|
120 000
|
110 000
|
|
net current assets
|
30 000
|
40 000
|
|
non-current liabilities
|
(50 000)
|
(10 000)
|
What happened to gross profit margin and return on capital employed in year 2?
|
|
gross profit margin
|
return on capital employed
|
|
A B C
D
|
decreased increased decreased
increased
|
decreased decreased increased
increased
|
20 A business turns over its inventory 5 times a year. Average inventory is $54 000 and sales are made at a mark-up of one-third. How much are the sales?
A $202 500
B $270 000
C $360 000
D $405 000
21 What is not included in the calculation of the liquid ratio (acid test)?
A accruals for rent
B amounts prepaid for insurance
C inventory of finished goods
D trade payables
22 The owner of a business has to decide whether to sell a particular type of product.
Which ratio is the most useful in making the decision?
A current ratio
B gross profit ratio
C return on capital employed
D trade receivables turnover
23 Which statement best describes a sunk cost?
A a cost which is irrelevant for the future
B a cost which must be matched against the revenue
C a cost which remains the same at all levels of production
D a cost which varies with the level of production
24 A business has the following costs.
raw materials $3 per unit direct labour $2 per unit
stepped costs of $5000 for every 10 000 units What is the cost of producing 15 000 units?
A $75 000
B $82 500
C $85 000
D $105 000
25 Which statement best describes fixed costs?
A costs that are constant in total over a range of output.
B costs that are the same in total over any output level.
C costs that are constant per unit as output increases.
D costs that are the same as stepped costs.
26 Which costs are classified as manufacturing overheads for a car assembly plant?
1 assembly line employees' wages
2 cost of components assembled
3 depreciation of assembly line equipment
4 production managers' salaries
A 1 and 2
B 1 and 4
C 2 and 3
D 3 and 4
27 A business has the following budget for April.
|
|
$
|
|
sales revenue
|
1 000 000
|
|
contribution
|
550 000
|
|
fixed production costs
|
275 000
|
|
fixed selling costs
|
55 000
|
What is the break-even sales revenue for April?
A $450 000
B $500 000
C $600 000
D $670 000
28 Which costing method is best suited to valuing inventory and which for deciding whether to accept an order below normal selling price?
|
|
valuation of inventory
|
decision on accepting order below normal selling price
|
|
A B C D
|
absorption costing absorption costing marginal costing marginal costing
|
absorption costing marginal costing absorption costing marginal costing
|
29 The following information is forecast for May.
|
|
units
|
|
opening inventory closing inventory
|
25 200
28 200
|
|
|
$
|
|
marginal cost profit absorption cost profit
|
100 800
120 300
|
What is the overhead absorption rate?
A $3.57
B $4.27
C $4.77
D $6.50
30 What is the purpose of a job cost sheet?
A to enable the business to recover its overheads
B to ensure the customer knows the split between materials and labour
C to inform the customer of the profit margin
D to let the business find the price for a quotation