What are the 4 sections in a General Ledger?

The General Ledger is a permanent summary of the various accounts that details an organization's financial information. The ledger contains four parts: the chart of accounts, financial transactions, account balances and accounting periods.

What is a sales invoice?

A sales invoice is a business accounting document that records a transaction involving the sale of goods or services. The invoice can identify the name and address of the buyer, the items sold and the amount of money due for payment.

What is the purpose of a bank statement?

The purpose of a bank statement is to summarize the transactions that occurred in the account during a given period. To do this, banks act as agents for their customers and report the balances and transactions that occurred during the period.

What are Revenue Expenditures?

Revenue Expenditures are short-term expenses used to meet the ongoing costs of running a business, including salaries and wages, leases and rental costs, utilities, and repairs.

What is the difference between noncurrent assets and current assets?

Current assets include cash and other liquid assets that can be easily converted to cash within twelve months. Noncurrent assets include long-term investments, real estate, and other assets that are not expected to be turned into cash for at least a year or longer.

Accounting and Finance MCQ Quiz With Answers Test 2

1. Goods bought on credit by X from Y are returned before they are paid for. X keeps a full double entry system. Where will X record the return of goods?

cash book and sales ledger
general ledger only
general ledger and purchase ledger
purchase ledger only

2. A firm buys goods on credit. Which document does the firm use to record this?

credit note
purchase invoice
sales invoice
supplier's statement

3. X sends back $800 of faulty goods to Y. In which book of prime entry would Y record this transaction?

general journal
sales journal
purchases returns journal
sales returns journal

4. A supplier offers the following discounts. Trade discounts of 12.5% off list prices and cash discounts of 3%. What is the lowest amount that will be paid for goods with a list price of $1 600?

$1 358
$1 400
$1 552
$1 600

5. X Ltd receives a cheque for $100, records it in the Cash Book and banks it on the same day. A statement sent by the bank that day does not show this $100. How is this $100 shown on the bank reconciliation statement?

as an uncredited deposit added to the bank statement balance
as an uncredited deposit deducted from the bank statement balance
as an unpresented cheque added to the bank statement balance
as an unpresented cheque deducted from the bank statement balance

6. A bookkeeper discovers that an amount paid to a supplier has been wrongly entered in another supplier's account. Which book of original entry will the bookkeeper use when correcting this error?

cash book
general journal
purchase day book
sales day book

7. A supplier's account in a customer's books, has a credit balance of $8 000. What does this mean?

the customer owes the supplier $8 000
the customer has paid the supplier $8 000
the supplier has paid $8 000
the supplier owes $8 000

8. Bob returns goods bought on credit from Tariq. Which ledger account entries record this in Tariq's books? Q-8

A
B
C
D

9. Which error will be discovered by the preparation of a trial balance?

capital expenditure treated as revenue expenditure
an incorrect amount entered as both a debit and a credit
complete omission of a transaction
an incorrect amount entered twice as a debit

10. Premises are purchased on 1 January 2009 using a bank loan repayable on 1 January 2019. How will this have affected the balance sheet on 1 January 2009?

increased non-current assets, decreased current liabilities
increased non-current assets, increased current liabilities
increased non-current assets, increased non-current liabilities
decreased non-current assets, increased non-current liabilities

11. Which of the following is an item of revenue expenditure?

dividend paid
payments for major building improvements
purchase of machinery
rent paid

12. What is the main purpose of charging depreciation?

to provide funds for asset replacement
to reduce the cost of repairing assets
to show the assets at their realisable values in the balance sheet
to spread the cost of an asset over its useful life

13. On 1 January a machine is bought for $12 800. Two methods of depreciating the machine being considered as follows: Accounting and Finance mcqs test

How will the year's net profit be affected if the reducing balance method is used rather than the straight-line method?

It will be increased by $200
It will be increased by $500
It will be decreased by $640
It will be decreased by $1 340

14. At the start of the year a car was purchased for $5 000. By the end of the year it was written down to $4 500 in the books. It was then revalued at the end of the second year at $3 800. Which value will appear in the Balance Sheet at the end of year 2?

$3 300
$3 800
$4 500
$5 000

15. Details of an electricity account are given. Accounting and Finance Test mcqs

What amount will appear in the Income statement in 2019 for electricity?

$9 800
$10 000
$10 200
$11 800

16. Lee maintains a Bad Debts account and a separate Provision for Doubtful Debts account. He wishes to write off an amount due from Tan that had not been previously provided for. What entries will Lee make? Accounting and Finance MCQs Test

A
B
C
D

17. The table shows information about a business at 31 December 2018. Accounting and Finance MCQs

The Provision for Doubtful Debts at 31 December 2018 is to be of trade receivables. What is the entry in the Income statement for the Provision for Doubtful Debts?

$24 debit
$24 credit
$326 debit
$326 credit

18. Goods sold on credit to Knight are wrongly debited to Smith's account. Which journal entry corrects this error? Accounting and Finance mcqs test

A
B
C
D

19. Which item will appear on the credit side of a Trade payables Ledger Control account?

cheques paid
discount received
goods purchased
purchase returns

20. What is the purpose of control accounts?

to calculate total accruals and prepayments
to calculate total trade receivables and trade payables
to calculate total purchases and sales
to calculate total receipts and payments

21. X Ltd. has the following balance sheet summary. Accounting and Finance mcqs test

The non-current assets are valued at $180 000, the net current assets at $20 000. The business is acquired for $225 000. What is the payment for Goodwill?

$25 000
$45 000
$75 000
$105 000

22. After a trader's net profit has been calculated, it is discovered that the closing inventory was undervalued by $1000. What is the effect of correcting the error? Accounting and Finance MCQs

A
B
C
D

23. The balance on the bank account in a cash book is $1 200 credit. How is this shown in the Balance Sheet?

as a current asset
as a current liability
as a non-current liability
as owner's drawings

24. How is working capital calculated?

total assets less total liabilities
current assets less current liabilities
owner's capital less drawings
total non-current assets plus current assets

25. At what value is inventory stated in a company's Balance Sheet?

cost price
net realisable value
the greater of net realisable value or cost price
the lower of net realisable value or cost price

26. A Company has capital of $24 400. Its assets are $16 100 and its current liabilities are $4 500. There are no non-current liabilities. What is the amount of its current assets?

$8 300
$11 600
$12 800
$28 900

27. How should the Goodwill resulting from the admission of a new partner be treated if it is to be retained in the books?

apportioned among old partners in old profit-sharing ratios
apportioned among all partners in new profit-sharing ratios
apportioned equally among all partners
apportioned equally among old partners

28. A trader's sales for the year were $128 000, and his purchases cost $84 000. The inventory at the beginning of the year was $15 700 and the inventory at the end was $16 300. He had to return S1 300 of goods to his suppliers. What is his gross profit for the year?

$42 100
$44 300
$44 600
$45 900

29. A business calculates its net profit at $25 000. It is later found that two items had been omitted.

What is the correct net profit?

$23 000
$23 800
$25 400
$27 000

30. The current account of a partner of a business is prepared from the following information. Accounting and Finance MCQs Test

What is the balance of the account on 31 December?

$3 000 Cr
$2 600 Cr
$1 000 Cr
$1 000 Dr

31. In a partnership a separate capital account and current account is kept for each partner. What are the accounting entries for interest on a loan from a partner? Accounting and Finance MCQs Test

A
B
C
D

32. The following information is taken from a trader's accounts. Accounting and Finance MCQs Test

What is the trader's net profit for the year ?

nill
$3 000
$6 000
$11 000

33. Some of the accounting records of X have been partially destroyed by fire. The remaining records show sales for the year of $85 240. X has a gross profit riargin of 20%. What is the cost of sales for the year?

$17 048
$21 310
$63 930
$68 192

34. During the year an orchestral society bought $10 000 of new musical instruments, paying by cheque. Where will this item appear?

balance sheet only
income and expenditure account and balance sheet
income and expenditure account and receipts and payments account.
receipts and payments account and balance sheet

35. A company is formed with an authorized share capital of 10 million shares of $0.50 each. 6 million shares are issued as fully paid, and two months later another 1 million shares are issued and $0.30 per share is called up. What is the issued share capital of the company?

$3.3 million
$3.5 million
$5.3 million
$7.0 million

36. A company makes furniture What will be treated as a direct cost in the company's manufacturing account?

depreciation of vehicles that deliver the furniture
insurance of the machinery used to make the furniture
transport costs of bringing in the raw materials to make the furniture
wages of workers maintaining the factory machinery

37. A firm's manufacturing costs are shown in the table.

20 000 units are manufactured during the year. What is the prime cost?

$100 000
$200 000
$300 000
$320 000

38. A business with sales of $125 000 sells its goods at a 25% markup on cost. It has overheads of $10 000. What is the net profit as a percentage of sales?

10%
12%
17%
22%

39. The table shows the gross and net profits as percentages of sales for four businesses. From this information, which business controls its overheads most efficiently? Q-39