228 test bank for financial and management accounting an introduction 4th edition

Free Test Bank with Answers for Accounting Information Systems 1st Test Bank with Answers for Intermediate Accounting Principles and Analysis 2nd Test Bank with Answers for Financial Accounting An Introduction. Free Test Bank with Answers for Auditing and Assurance Services Understandin Test Bank with Answers for Financial Accounting An Introduction to Concepts Methods and Uses Test Bank with Answers for Advanced Accounting 12th Edition Test Bank with Answers for Auditing A Business Risk Approach 8th Edition Test Bank for Survey of Accounting 6th Free Test Bank for Fundamental Financial and Managerial Accounting Concepts Test Bank for International Accounting 4th Edition Free Test Bank for Financial Accounting Tools for Business Decision Making 6three Test Bank for Introduction to Financial Accounting 11th Free Test Bank for Management Accounting with Answers Ngân hàng câu hỏi trắc nghiệm Hệ thống thông tin kế toán, Ngân hàng câu hỏi kèm đáp án đề trắc nghiệm Tài chính kế toán, đề trắc nghiệm Quản trị kế toán, kế toán nâng cao Test Bank for Managerial Accounting with Answers Miễn phí Đề thi trắc nghiệm có đáp án, Test Bank for Management Accounting, Bank with Answers for Advanced Accounting,trắc nghiệm tài chính kế toán, free test bank, đề thi kế toán, đề thi tài chính DN Free download Test bank with Answers for Finance Accounting, Managerial Accounting

228 Test Bank for Financial and Management

Accounting An Introduction 4th Edition

Pauline Weetman

Multiple Choice Questions

If a business pays a cheque for stationery, the bookkeeping

entries are:

1 A) Debit Purchases Credit Bank

2 B) Debit Bank Credit Stationery

3 C) Debit Stationery Credit Bank

4 D) Debit inventory (stock) Credit Bank

Identify the account to which you would post the following

transaction recorded in the Cash Account: £4 000 paid to Ricky Nelson, the landlord, as rent for the premises used for business purposes

1 A) Ricky Nelson a/c

2 B) landlord's account

3 C) rent account

If a trial balance, extracted from the double entry system of a soletrader, shows that total debits equals total credits then:

1 A) the books are correct

2 B) no errors will have been made in posting the transactions of the

business

3 C) the business is profitable

4 D) an equal debit for every credit will have been posted and the accounts correctly added

A 'T' account is:

1 A) an abbreviation for the telephone account

2 B) an account for all customers whose names begin with the letter T

3 C) the ledger account found between the Sugar account and the Milk account

4 D) a simple representation of a ledger account, forming the letter 'T'

A business registered for Value Added Tax has to maintain a VATaccount, crediting it with the "output tax" and debiting it with the

"input tax" calculated at 17.5 / 117.5 of the transaction value In respect of the transaction listed below, identify whether you wouldaccount for the VAT element by debiting or crediting the VAT account or do neither:Acquisition of motor vehicles

1 A)neither

2 B)debit

3 C) credit

Which of the following statements is correct? A trial balance:

1 A) lists the balances in all the accounts maintained on a double entry basis

2 B) is prepared by a business on the last day of its accounting period

3 C) proves the accuracy of the accounting records

4 D) lists all entries made for accounting for business transactions

Jayantha commenced business on 1 January 20x6 with a capital

in cash of £10 000 During the year ending on 31 December 20x6

he paid £12 000 for furniture, £92 400 for purchasing goods for sale and £31 450 for various expenses He received £139 250 by sale of goods Identify Jayantha’s capital as at 31 December 2001

in the following situation: Jayantha had sold out all goods

purchased during the year and wishes to write off a tenth of the cost of furniture as depreciation

1 A)recording a sale of £30 000 as £3 000 in the Cash Book and £3 000 in the Sales Account

2 B)posting payment of £21 000 for stationery as £12 000 to the Stationery account

3 C)not accounting for £15 000 paid for purchasing goods for sale

4 D)posting to Motor vehicles account £600 paid for servicing vehicles

Which of the following reflects the effect on the accounting

equation of a purchase of an item of plant and equipment, for cash?

1 A) assets increase: ownership interest decreases

2 B) assets unchanged: ownership interest unchanged

3 C) assets decrease: ownership interest increases

4 D) assets decrease: ownership interest unchanged

Identify whether the balance brought down, at the year end, in thenamed account would be on the debit side or credit side of that account Shop fittings a/c

1 A) debit

2 B) credit

Every entry in a ledger should have:

1 A) date and description

2 B) amount

3 C) date, description and amount

4 D) description and amount

Identify whether the account stated below would represent an Asset, Liability, Income or Expenditure: Buildings account

1 A) liability

2 B) income

3 C) expenditure

4 D) asset

Which of the following is the correct terminology for the right handside of a ledger account?

1 A) £200 400

2 B) £236 400

3 C) £218 400

A sale of £7 800 to Peter Blowes has been posted to Paul

Blowes To correct this the journal entry should require which of the following:

1 A) debit Sales account and credit Paul Blowes with £15 600

2 B) debit Sales account and credit Paul Blowes account with £7 800

3 C) debit Peter Blowes account and credit Sales account with £7 800

4 D) debit Peter Blowes account and credit Paul Blowes account with £7 800

The effect of a transaction was that it reduced both the assets andthe liabilities of a business by £100 000 Which of the following is that transaction likely to be:

1 A) introduction of additional capital by the owner

2 B) repayment of a loan

3 C) disposal of an asset

4 D) sale of goods

When preparing a bank reconciliation statement, the balance as shown in the bank statement is reconciled with:

1 A) the bank's account in the business's payables (creditors)' ledger

2 B) the bank balance as shown in the previous balance sheet

3 C) the bank balance as shown in the bank’s ledger

4 D) the bank balance as shown in the business's cash book

The source documents for entries made in the Return Outwards Journal are:

1 A) copies of Credit Notes issued to customers

2 B) Credit Notes issued by suppliers

3 C) purchase invoices

4 D) copies of sales invoices

Identify the year-end balance that would be brought down in the following account on 31 December 20x6, taking into account the stated transaction: Ruth Jones' Loan account: A loan of £60 000 was obtained from Ruth on 1 January 20x5, on an agreement that

it will be settled in six annual instalments of £10 000 each

commencing from 31 December 20x5 The agreement is being complied with

He made sales on credit throughout this period of £1 100, £2 200,

£3 300, £4 400 He sells inventory (stock) at cost plus 25% His closing inventory (stock) at the end of the period is valued at:

1 A) 2 200

2 B) 3 300

3 C) zero

4 D) 4 400

The Cashier has recorded the following transaction in a Cash Book, entering the receipts on the debit side and the payments onthe credit side Identify which side of the named account would beposted by the Bookkeeper Advertising account : £240 paid for advertising the availability of mobile phones

1 A) debit

2 B) credit

Identify whether the balance brought down, at the year end, in thenamed account would be on the debit side or credit side of that account Stationery account

1 A) credit

2 B) debit

Identify whether the posting of the transaction to the account named would increase or reduce the balance in that account: Receipt of a Loan from Kingsley Perera (Perera's Loan account)

1 A) increase

2 B) reduce

A machinery acquired at a cost of £225 000, expected to be in use for five years, with no salvage value, is to be depreciated equally over its useful life Annual depreciation then is:

1 A) £22 500

2 B) £45 000

3 C) £112 500

4 D) £80 000

The total of credit sales found within a sales ledger control

account comes from:

1 A) the sales day book

2 B) the sales ledger

3 C) the trial balance

4 D) the cash book

Which of the following source books (books of prime entry) will not be required in a 'cash' business?

1 A) Debit Suspense account and credit Rent account with £24 000

2 B) Debit Rent account and credit Suspense account with £24 000

3 C) Debit Rent account and credit Suspense account with £12 000

4 D) Debit Rent account with £24 000

The Cashier has recorded the following transaction in a Cash Book, entering the receipts on the debit side and the payments onthe credit side Identify which side of the named account would beposted by the Bookkeeper Interest account : £2 000 paid as interest on Dave's Loan

1 A) credit

2 B) debit

Which of the following events will an accountant normally not record?

1 A) paying a bill that has been owing for 2 years

2 B) receiving an invoice for goods purchased, but not paying for them yet

3 C) providing a service to a customer to be paid for in the next accounting period

4 D) agreeing to hire a new employee who will start work in the next

during the month: S.L.Cont P.L.Cont Neither; Dr Cr Dr Cr a b c d

('bouncing') of a cheque received from a customer S.L.Cont P.L.Cont Neither; Dr Cr Dr Cr a b c d e

1 A) d

2 B) c

3 C)e

4 D) a

5 E) b

Identify whether the balance brought down, at the year end, in thenamed account would be on the debit side or credit side of that account Bank Loan a/c

1 A) credit

2 B) debit

If a business commenced the day with £14 200, paid out £58 900 during the day and has £22 900 by the end of the day, it should have received during the day:

1 A) credit

2 B) debit

Before inserting a closing balance, accounts representing assets

or expenses are likely to have:

1 A)an equal amount of debit and credit entries

2 B)only credit entries

3 C)more debit entries than credit entries

4 D)more credit entries than debit entries

Which of the following reflects the effects on the accounting

equation of a payment to trade payables (creditors)?

1 A) assets decrease: liabilities decrease

2 B) assets decrease: ownership interest decreases

3 C) assets increase: liabilities decrease

4 D) assets decrease: ownership interest increases

Identify the account to which you would post the following

transactions recorded in the Cash Account:£2 500 paid for a steelcabinet to securely lock up the books of account

1 A) furniture account

2 B) accounts safe a/c

3 C) steel cabinet a/c

Identify whether the account stated below would represent an Asset, Liability, Income or Expenditure: Bank Loan a/c

1 A) income

2 B) asset

3 C) expenditure

4 D) liability

Identify the account to which you would post the following

transaction recorded in the Cash Account:£240 paid for

advertising the availability of mobile phones for sale

1 A) publicity account

2 B) advertising a/c

3 C) expenses account

Jayantha commenced business on 1 January 20x6 with a capital

in cash of £10 000 During the year ending on 31 December 20x6

he paid £12 000 for furniture, £92 400 for purchasing goods for sale and £31 450 for various expenses He received £139 250 by sale of goods Identify Jayantha’s profit for the year to 31

December 2001 in the following situation: Unsold goods

remaining in hand on 31 December 20x6 had cost £24 550 and Jayantha wishes to write off the cost of his furniture equally over six years

1 A) increase

2 B) reduce

Identify whether the balance brought down, at the year end, in thenamed account would be on the debit side or credit side of that account Cash account

1 A) a credit sale of £500 to Ashley debited to Ashley account only

2 B) a credit sale of £500 made to Ashley, posted as debit sale account £500 and credit Ashley account £500

3 C) a cash sale of £500 posted to sales account only

4 D) a cash sale of £500 posted as a credit to the sales account of £500, and

a credit to cash account of £500

Identify whether the account stated below would represent an Asset, Liability, Income or Expenditure: Sales account

1 A) credit

2 B) debit

Identify whether the balance brought down, at the year end, in thenamed account would be on the debit side or credit side of that account Salaries account

1 A) credit

2 B) debit

Identify the account to which you would post the following

transaction recorded in the Cash Account: £2 000 paid to Dave Nicholas as interest on a loan

1 A) Dave Nicholas’s Loan a/c

2 B) interest account

3 C) expense account

228 Free Test Bank for Financial and Management Accounting An Introduction 4th Edition Pauline

Weetman Multiple Choice Questions - Page 2

In a trial balance produced at the end of a financial period,

opening inventory (stock) is usually found:

1 A) on the credit side

2 B) as a note after the trial balance has been produced

3 C) it is not shown at all

4 D) on the debit side

Which of the following is not a book of prime entry?

1 A) the Ledger

2 B) Returns Inwards Day Book

3 C) the Petty Cash Book

1 A) it is unlikely that there is a double entry error in the sales ledger

2 B) no amounts arising from sales will appear in the bank reconciliation

3 C) it is unlikely that there is a double entry error in the ledgers as a whole

4 D) any remaining error in the double entry must lie in the purchase ledger

Which of the following economic actions reduces the amount of ownership interest?

1 A) a payment of administration wages

2 B) a receipt of cash from receivables (debtors)

3 C) a receipt of a loan from the owner’s brother

4 D) a payment of cash to trade payables (creditors)

£52 875 (inclusive of Value Added Tax at 17.5%) paid for

acquiring machinery, and credited to the Cash account should be posted to the debit of:

1 A) Machinery account

2 B) £40 000 to Machinery account and £12 875 to Value Added Tax account

3 C) £45 000 to Machinery account and £7 875 to Value Added Tax account

4 D) Value Added Tax account

The Cashier has recorded the following transaction in a Cash Book, entering the receipts on the debit side and the payments onthe credit side Identify which side of the named account would beposted by the Bookkeeper Sales account : £360 received from selling mobile phones

1 A) neither

2 B) debit

3 C) credit

Which one of the following statements is incorrect? According to the rules of double entry:

1 A) a credit entry increases the balance in income and liability account

2 B) a debit entry increases the balance in the assets and expenditure

accounts

3 C) a debit entry decreases or eliminates balances in income and liability accounts

4 D) a debit entry increases the balance in the Capital account

Jayantha commenced business on 1 January 20x6 with a capital

in cash of £10 000 During the year ending on 31 December 20x6

he paid £12 000 for furniture, £92 400 for purchasing goods for sale and £31 450 for various expenses He received £139 250 by sale of goods Identify Jayantha’s profit for the year to 31

December 2001 in the following situation: Jayantha had sold out all goods purchased during the year and wishes to write off a tenth of the cost of furniture as depreciation

1 A) debit

2 B) credit

Which one of the following statements is correct? A Trial

balance:

1 A) lists the balances in all the accounts on any day

2 B) will balance even if the bookkeeper forgets to post a payment

3 C) Lists the balances in the asset accounts and liability accounts on any day

4 D) will reveal how profitable a business has been

Identify the account to which you would post the following

transaction recorded in the Cash Account: £40 paid to buy fuel for

a business vehicle

1 A) Motor Vehicles a/c

2 B) vehicle running a/c

3 C) depreciation account

Identify whether the balance brought down, at the year end, in thenamed account would be on the debit side or credit side of that account Van repairs account

1 A) debit

2 B) credit

Identify whether the posting of the transaction to the account named would increase or reduce the balance in that account: Partrepayment of Kingsley Perera's Loan (Perera's Loan account)

1 A) reduce

2 B) increase

Which one of the following statements is incorrect: Assets

acquired by a business for continuous use should be depreciated

in each year of its use so that:

1 A) a portion of the cost of the asset is matched with the income it generates

2 B) the assets may be reported at the amount each of them is worth

3 C) resources for replacing the asset are retained within the business

4 D) profits of the period and the position as at the end of each period is not exaggerated

Identify whether the balance brought down, at the year end, in thenamed account would be on the debit side or credit side of that account Buildings account

1 A) credit

2 B) debit

Identify, whether the posting of the transaction to the account named would increase or reduce the balance in that account Refund of cash to a customer who returned goods sold to him (Sales account)

Which one of the following is an impersonal ledger?

1 A) receivables (debtors) ledger

2 B) sales ledger

3 C) purchases ledger

4 D) general ledger

Identify the account to which you would post the following

transaction recorded in the Cash Account: £800 paid for 40 units

of mobile phones to be sold in the normal course of business

1 A) inventory (stock) account

1 A) debit Cash account and Credit Owner’s account

2 B) credit Cash account and Debit Investment in business account

3 C) debit Cash account and Credit Capital account

4 D) debit Cash account and Credit Investments account

Identify the account to which you would post the following

transaction recorded in the Cash Account: £360 received from selling 12 units of mobile phone at £30 each

1 A) the trial balance will balance

2 B) total of the credit side will exceed that of the debit side by £98 500

3 C) total of the debit side will exceed that of the credit side by £98 500

4 D) total of the debit side will exceed that of the credit side by £197 000

For the purpose of establishing the accuracy of the individual personal ledger balances, a business maintains, on a

memorandum basis, a Sales Ledger Control account (S.L.Cont) and a Purchases Ledger Control account (P.L.Cont) Identify the account and its side in which you will enter discount received fromsuppliers for early settlement of bills: S.L.Cont P.L.Cont Neither

Dr Cr Dr Cr a b c d e

A trial balance is a list of:

1 A) all the firm's assets and liabilities

2 B) all the firm's receivables (debtors) and trade payables (creditors)

3 C) all the debit and credit balances in the accounts

4 D) all the transactions in a ledger

How would you define the “net assets” of a business?

1 A) Total assets + liabilities

2 B) Owner’s capital + Liabilities

3 C) Total assets - Owner’s Capital

4 D) Total assets - Liabilities

Having placed in a Suspense account the difference in the trial balance, it is revealed that the difference arose because £12 500 received from customer Sally Peter has been posted to the debit

of her account To correct this error which of the following should the journal entry require:

1 A) debit Suspense account and credit Sally Peter’s account with £12 500

2 B) debit Sally Peter’s account and credit Cash account with £12 500

3 C) debit Suspense account and credit Sally Peter’s account with £25 000

4 D) debit Suspense account and credit Cash account with £12 500

Identify whether the posting of the transaction to the account named would increase or reduce the balance in that account: Owner took some cash for his personal needs (Capital account)

1 A) increase

2 B) reduce

The Cashier has recorded the following transaction in a Cash Book, entering the receipts on the debit side and the payments onthe credit side Identify which side of the named account would beposted by the Bookkeeper Motor vehicles account : £26 500 paidfor a Vovo Lorry for business use

1 A) debit

2 B) credit

The following are business transactions of a retailer: Purchased

150 items at cost £4 each for cash Delivered 110 items to

customers for cash at a selling price of £6.50 per item What is the total profit of the retailer?

The balance in the Capital account represents:

1 A) the total of all assets of the business

2 B) total assets of the business minus its liabilities

3 C) cash and any other assets introduced by the owner at the

1 A) Debit: Bank, Credit: Wages

2 B) Debit: Wages, Credit: Staff creditors

3 C) Debit: Wages, Credit: Bank

4 D) Debit: Wages, Credit: Cash

Which of the following will disturb the balancing of the trial

balance?

1 A) entering a wrong amount in a book of prime entry

2 B) posting to an asset account instead of an expenditure account

3 C) entering an acquisition of an asset, on credit terms, in the Purchases Day Book

4 D) error in adding up a book of prime entry

For the purpose of establishing the accuracy of the individual personal ledger balances, a business maintains, on a

memorandum basis, a Sales Ledger Control account (S.L.Cont) and a Purchases Ledger Control account (P.L.Cont) Identify the account and its side in which you will enter Credit sales during themonth: S.L.Cont P.L.Cont Neither Dr Cr Dr Cr a b c d e

the credit side Identify which side of the named account would beposted by the Bookkeeper Rent account : £4 000 paid to Ricky Nelson as rent for business premises

£30 000 being part repayment of a loan and £12 000 being

interest due on the loan have both been credited in the Cash Account The corresponding debit should be:

1 A) £42 000 in the relevant loan account

2 B) £30 000 in the loan account

3 C) £30 000 in the loan account and £12 000 in Interest on loan account

4 D) £18 000 in the loan account

Identify whether the balance brought down, at the year end, in thenamed account would be on the debit side or credit side of that account Capital account

A trader who commenced business on 1 January 20x5 reports thebalances, as at 31 December 20x5, in the Purchases account andSales account as £346 800 and £479 500 respectively The total

of the balances in all other expense accounts is £112 200

Identify the net profit in the first year of operation The cost of goods remaining unsold by the year end was £54 400

provision made for doubtful debts S.L.Cont P.L.Cont Neither Dr

A decrease in an asset will be recorded:

1 A) on the debit side of the ledger account for the asset

2 B) on the credit side of the ledger account for the asset

3 C) on both sides of the ledger account for the asset

4 D) nowhere in the ledger accounts

The Cashier has recorded the following transaction in a Cash Book, entering the receipts on the debit side and the payments onthe credit side Identify which side of the named account would be

posted by the Bookkeeper Vehicle Running account : £40 paid tobuy fuel for the business vehicle

1 A) debit

2 B) credit

The Cashier has recorded the following transaction in a Cash Book, entering the receipts on the debit side and the payments onthe credit side Identify which side of the named account would beposted by the Bookkeeper Stationery account : £53 paid for

various items of stationery

1 A) credit

2 B) debit

228 Free Test Bank for Financial and Management Accounting An Introduction 4th Edition Pauline

Weetman Multiple Choice Questions - Page 3

The double entry system requires that every transaction recorded

by the Cashier should be posted to an appropriate account on theside opposite the one in which the Cashier entered the amount involved If this system fails the failure is flagged up by a

difference arising between the total of all debits and of all credits, when the balances in all accounts are listed in a Trial balance Identify the impact on the trial balance of the following error:

Payment of £420 for stationery has not been entered anywh

1 A) trial balance balances

1 A) debit inventory (stock) account, credit sales account

2 B) debit inventory (stock) account, credit income statement

3 C) debit inventory (stock) account, credit purchases account

4 D) credit inventory (stock) account, debit income statement

Which one of the following statements is incorrect?

1 A) balance sheet usually reports assets in the reverse order of liquidity

2 B) net profit of a period is reported on the balance sheet as part of the owner’s capital

3 C) owner's drawings should be reported in the Profit and Loss a/c as an expenditure

4 D) the gross profit is the difference between sales and the cost of goods sold

Identify whether the account stated below would represent an Asset, Liability, Income or Expenditure: Stationery account

1 A) Asset

2 B) Income

3 C) Expenditure

4 D) Liability

Birdland made a cash purchase of bird cages for re-sale Which

of the following is correct?

1 A) there will be no effect on the total assets of the business

2 B) there will be an increase in the Total assets of the business

3 C) total assets of the business would increase

4 D) owner's Capital will decrease

Identify the balance that will appear on the bank statement as at

31 March 20x6 based on the following information: Cash book

balance on 31.3.20x6 was £72 468; Deposits awaiting bank

clearance on this date was £11 540 and cheques drawn but not presented to the bank for payment by this date was £28 780

as capital from the owner

1 A) credit

2 B) debit

A payable (creditor) account of £8 500 in the double entry system represents:

1 A) an expense of the business

2 B) a liability of the business

3 C) an asset of the business

4 D) an item of income to the business

Identify the account to which you would post the following

transaction recorded in the Cash Account: £25 000 received as a loan, at 8% per annum interest, from Dave Nicholas, a friend of the owner

1 A) Dave Nicholas's gift account

2 B) Capital account

3 C) Dave Nicholas's Loan a/c

When preparing a bank reconciliation statement, an 'unpresented cheque' is:

1 A) a cheque received from a debtor but as yet unbanked

2 B) a cheque which the bank has returned due to lack of funds

3 C) a cheque sent to a creditor but as yet unbanked

4 D) a cheque which has not been signed

Is an error of omission:

1 A) a transaction where the credit entry is posted as a debit entry or vice versa

2 B) a transaction that has been posted to the wrong ledger

3 C) a transaction which has not been included in the total of the ledger it is posted in

4 D) a transaction that has been completely overlooked

Identify whether the account stated below would represent an Asset, Liability, Income or Expenditure: Shop fittings a/c

4 D) Motor vehicles account

Which of the following economic actions decreases the amount ofcurrent assets?

1 A) a purchase of equipment, for cash

2 B) a payment for rent in advance of occupancy of the property

3 C) a receipt of cash, from receivables (debtors)

4 D) a purchase of equipment, on credit

The invoice for acquisition of a vehicle for £45 000 was entered inthe Purchases Day book and the net profit for the year reported

as £862 480 How would this error affect the performance and position reported by the business:

1 A) net profit for the year and the assets by year end will both be overstated

2 B) net profit for the year and liability at year end will both be understated by

£45 000

3 C) net profit for the year and asset by year end will both be understated

4 D) net profit for the year and liability at year end will both be overstated by

of the balances in all other expense accounts is £112 200

Identify the gross profit in the first year of operation The cost of goods remaining unsold by the year end was £72 400 and, in addition, stationery which cost £500 remains unused