QUIZ 1

ACC101

2012/S1

Faculty of Management and Computing

Financial Accounting ACC101 Quiz 1 Duration: 1 hour 30 minutes Saturday, 3rd March 2012

Instructions to candidates: 1. Answer ALL the questions. 2. You may use non-programmable calculators. 3. Your answers must be presented in an appropriate format for the required accounts or other necessary workings. 4. You are reminded of the necessity for good English and orderly presentation in your answers.

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ACC101

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1. Which of the following is NOT an asset (A) Machinery (B) Cash in hand (C) Bank overdraft (D) Inventory

2. Which of the following statements is incorrect? (A) Assets = Liabilities + Capital (B) Capital = Assets Liabilities (C) Assets Liabilities = Capital (D) Capital Assets = Liabilities

3. What is credited in the cash book? (A) Bank charges (B) Cheques received (C) Discount allowed (D) Trade discount

4. Which of the following is a liability? (A) Cash at bank (B) Furniture & fittings (C) Land and buildings (D) Loan from P. Turner

5. Given the following, what is the amount of owners equity? Assets: Land and building $50,000; Inventory $2,000; Cash $5,000. Liabilities: Bank overdraft: $3,000; Creditors $4,000. (A) $50,000 (B) $56,000 (C) $64,000 (D) $128,000
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ACC101

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6. Which of the following is NOT a book of prime entry?

(A) Petty cash book (B) Sales day book (C) Cheque book (D) Purchases day book

7. An increase for which of the following accounts gives rise to a credit?

(A) Machinery (B) Inventory (C) Creditors (D) Debtors

8. Which of the following is NOT a qualitative characteristic of accounting?

(A) Understandability (B) Relevance (C) Reliability (D) Going concern

9. A trial balance is made up of a list of debit balances and credit balances. Which of the following statements is correct?

(A) Every debit balance represents an expense (B) Assets are represented by debit balances (C) Liabilities are represented by debit balances (D) Income is included in the list of debit balances

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10. According to IAS 2: Inventories, which of the following should NOT be included in valuing the inventories of an entity? (1) Labour costs (2) Transport costs to deliver goods to customers (3) Administrative overheads (4) Depreciation on factory machine

(A) All four items (B) 1 only (C) 2 and 3 only (D) 2, 3, and 4 only

11. Elizabeth is trying to value her inventory. She has the following information available: Details Selling price Cost incurred to date Cost of work to complete it Selling costs per item $ 34 20 12 1

What is the net realisable value of Elizabeths inventory?

(A) $35 (B) $22 (C) $21 (D) $33

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QUIZ 1

ACC101

2012/S1

12. Who issues International Financial Reporting Standards?

(A) The IFRS Advisory Committee (B) The stock exchange (C) The International Accounting Standards Board (D) The government

13. Which accounting concept should be considered if the owner of a business takes goods from inventory for his own personal use?

(A) The prudence concept (B) The accruals concept (C) The going concern concept (D) The business entity concept

14. Adam started his business on 1 January 2011 with a capital of $50,000. During the year 2011, he made a total net profit of $12,500. He also introduced an additional capital of $20,000. On 31 December 2011, he withdrew $10,500 from the business. What is the closing capital of the business?

(A) $72,000 (B) $62,500 (C) $60,500 (D) $50,000

15. Which of the following statements is true?

(A) A debit records an increase in liabilities (B) A debit records a decrease in assets (C) A credit records an increase in liabilities (D) A credit records a decrease in capital
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16. According to IAS 2 Inventories, which TWO of the following costs should be included in valuing the inventories of a manufacturing company? 1. Carriage inwards 2. Carriage outwards 3. Depreciation of factory plant 4. General Administrative overheads (A) 1 and 3 (B) 1 and 4 (C) 2 and 3 (D) 2 and 4 17. An alternative name for a Sales Journal is: (A) Sales Invoice (B) Sales Day Book (C) Daily Sales (D) Sales Ledger 18. What is the closing balance on the following account as at 31 March 1999?

(A) $225 debit (B) $300 debit (C) $225 credit (D) $300 credit 19. If the total debits exceed the total credits in a T-account, does the account have a debit or a credit balance? (A) Debit balance (B) Credit balance 20. Does a debit balance brought down in the Cash T-account represent an asset or a liability? (A) An asset (B) A liability (20 x 2 = 40 marks)
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QUIZ 1

ACC101

2012/S1

21. The following transactions are from the books of Marco, for the month of December 2011. Dec 1. Deposited 6,000 in a business bank account Dec 3. Bought goods on credit from Brian, cost 2,100 Dec 5. Cash sales 19,000 Dec 7. Paid rent by a cheque 250 Dec 10. Sold goods on credit to Diana 250 Dec 14. Paid wages 5,000 Dec 17. Bought furniture for cash 1,000 Dec. 20. Obtained a loan from Prince 20,000 Dec 22. Paid an insurance premium of 1,650 Dec 30. Withdrew 550 for personal use Required: (1) State the books of original entries for the above transactions (2) Record the transactions in the ledger accounts (3) Balance the ledger accounts and hence, extract a trial balance (5 marks) (10 marks) (10 marks)

22. (a) Distinguish between financial and management accounting. (b) Define any THREE qualitative characteristics of accounting. (c) List and explain any THREE accounting conventions. (d) Explain how inventory should be valued as per IAS 2 Inventories? (e) List the users of accounting information. Explain why one set of accounting information is unlikely to satisfy the needs of all users. (f) List down 5 examples of source documents. recorded. Give THREE examples of these books.

(4 marks) (6 marks) (6 marks) (4 marks)

(5 marks) (5 marks)

(g) State the TWO names given for the books where accounting transactions are first (5 marks)

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