financial accounting assignment 1

8/2/2019 Financial Accounting Assignment 1

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Financial Accounting

Assignment I

Section A 30 multiple choice questions of 2 marks eachSection B 2 Structured Problems of 20 marks each

All questions are compulsory and must be attemptedSection A

1) Which is first on Statement of financial position?a) Current Assets b) Current liabilitiesc) Non Current Assets d) Intangible assets

2) Working capital isa) Gains minus lossesb) Current liabilities minus current assetsc) Current Assets minus current liabilities

d) Asset minus liabilities

3) The accounting equation is expressed asa) Asset = liabilities capital b) Asset = liabilities + capitalc) Liabilities = capital + assets d) Capital = assets + liabilities

4) The cost of goods and services consumed in operating an enterprise area) Assets b) revenues or incomeb) Expenses d) liabilities

5) To record cash received on account

a) Dr cash Cr Accounts receivableb) Dr cash Cr Accounts Payablec) Dr sales Cr Accounts receivabled) Dr sales Cr Accounts Payable

6) Inventory of goods on hand held by firm for future sale is calleda) cost of goods sold b)purchasesc) sales d)closing Inventory

7) Drawings are deducted froma) Accounts Payable b) Capitalc) Profits d) Non current assets

8) A trial balance indicatesa) Complete proof of accuracy of ledgerb) Net profit or lossc) Postings to ledgers are accurated) Debit and credit are equal


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9) Which of the following should not be called salesa) Office furniture soldb) Goods sold on creditc) Goods sold for cashd) Sale of item previously included in purchase

10) Which of the following is correct?a) Profit does not alter capitalb) Profit reduces capitalc) Capital can only come from profitsd) Profit increases capital

11) Which of the following is correct?a) Asset increases liability decreasesb) Asset decreases liability increasesc) Asset increases liability increases

d) Liability increases capital increases

12) Profit isa) Asset liabilities b) Capital Drawingsc) Revenue Expenses d) Expenses Revenue

13) New capital isa) New assets new liabilitiesb) Old capital + profit + additional capital if any drawingsc) Old capital + lossd) Old capital + drawings profit additional capital

14) Which of the following is expense A/Ca) Rent receivable A/C b) Insurance A/Cc) Discount received A/C d) Commission received A/C

15) Which of the following is revenue A/Ca) Rent A/C b) Bank interest A/Cc) Commission A/C d) Royalties receivable A/C

16) Double entry book keeping meansa) Every transaction affect one item in Statement of financial positionb) Each debit has an equal and opposite creditc) Each transaction is entered only one sided) Total debit is not equal to total credit

17) Which of the following best describes trial balancea) Shows financial position of businessb) It is a special A/Cc) Shows all entries in the book


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d) It is a list of balances on the book

18) Rent of $200 paid in casha) Debit cash A/C Cr Rent A/C b) Dr Rent A/C Cr cash A/Cc) Dr cash A/C Cr bank A/C d) Dr Bank A/C Cr cash A/C

19) Van bought for cash. The correct entry isa) Dr purchases Cr cash b) Cash A/C Cr van A/Cc) Dr van A/C Cr cash A/C d) Dr cash A/C Cr purchases A/C

20) Sold van for cash. The correct entry isa) Dr cash A/C Cr sales A/C b) Dr sales A/C Cr van A/Cc) Dr cash A/C Cr van A/C d) Dr van A/C Cr sales A/C

21).Traders net profit for the year may be computed by using the foll. Formula:A-op. cap+drawings-cap int-cl. capital

B-Cl. capital +drawing cap int. op.capC-op. cap + drawing S + Cap. Int. Cl. CapD-Cl. Cap- Drawing + Cap.int. Op. cap.

22).Which one of the foll. Occurrences could not account for a credit balance on tradeAccounts receivable a/c.A-A sales invoice has been paid twice.B-Sales Invoice has been posted to another customers account in errorC-Returns outward have not been taken in to account.D-A cheque from customer was made out in wrong a/c

23). The capital of sole trader would change as a result ofA-A creditor being paid his account by chequeB-Raw material being purchased on creditC-Non current assets purchased on creditD-Wages being paid in cash

24). Capital incomeA- Included in Statement of financial positionB- Included in debit side of Income StatementC- Included in credit side of Income StatementD-Included in trading Account

25). Classify Capital or RevenueA-Purchase of new delivery van B-Redecorating sales Managers officeC-Purchase of new exhaust for van D-Running and Maintenance exp of van

26). Classify capital or revenueA- The cost of new warehouse B-Cost of servicing a delivery vanC-A telephone bill D-wages for new employees


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27). Classify capital or revenueA- A purchase of computer hardwareB-Purchase of accounting softwareC-Training accounting staff for new system

D-Purchase of computer stationery

28). Which of the following is classified as current assetsA-Inventory in hand B-Accounts receivableC-Motor Vehicle D-Cash at Bank

29) Gross Profit isa) Excess of sales over cost of goods soldb) Sales less purchasesc) Cost of goods sold + opening Inventoryd) Net profit les expenses of the period

30) Which of these best describes a Statement of financial position

a) An account providing book balance b) A record of closing entriesc) A listing of balances d) A statement of Assets

Section B31) Summarise the effect of each transaction on accounting equation

1) Payment of $200 to a creditor2) Payment of $1000 by cheque for office furniture3) A sale on credit of $350 (goods sold originally cost $250)

4) Receipt of 140 from debtor5) Taking out bank loan of $1006) Drawing by owner of $1007) Payment of $40 casual wages8) Purchase of computer for office on credit for 15009) Sale for cash $800 (goods sold originally costs $600)

32). Prepare ledger A/Cs and trial balance for 10 days ended below. (2012 January)1) Kermits starts business and introduces $2000 cash2) He buys a motor van for $1000 and some shop fittings for $8003) He buys some Inventory from Fozzie costing $500 on credit

4) He sells one half of goods to scooter for $650 cash5) He pays $500 to Fozzie6) He draws $50 cash from business for personal use7) He buys goods costing $1000 on credit terms from Fozzie8) He sells goods which cost him $900 to Miss. Pat on credit for $12009) He receives $500 from Miss Pat10) He pays wages of $100 to Rolf his employee

financial accounting assignment 1

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