Unit 1 Assessment Exercises
Multiple choice
1 Which of the following transactions will not reduce 6 Where is the total of the purchases journal posted at
the owner’s capital? the end of each month?
A business expenses paid using a personal cheque A credit sales account
B cash withdrawn from the business bank account B debit sales account
for personal use C credit purchases account
C goods taken from inventory for personal use D debit purchases account
D personal expenses paid using business cash
7 David has sold goods with a list price of $8 000 to a
2 What is the accounting equation? credit customer. The customer was allowed a 10%
A assets less liabilities equals capital trade discount and a further 2.5% cash discount if
payment was made within 30 days of the invoice
B assets plus liabilities equals capital
date.
C capital less liabilities equals assets
How much did David credit to his sales account?
D capital plus assets equals liabilities
A $7 020 C $7 200
3 A customer returns goods to a supplier. How does B $7 000 D $7 800
the supplier record this in his ledger?
Account to be debited Account to be credited 8 The totals of the discount columns in the cash book
of small trading business were as follows.
A Trade receivable Purchases returns
$400 debit
B Trade receivable Trade receivable
$250 credit
C Purchases returns Purchases returns
Which entry did the trader make in the discount
D Sales returns Trade receivable allowed account?
A $250 credit C $400 credit
4 Which type of transaction will a business record in B $250 debit D $400 debit
its purchases ledger?
A cash purchases
9 On 1 January the bank statement of a business
B cheque paid to a trade payable showed an overdrawn balance of $1 070. A refund
C cheque received from a trade receivable for insurance, $60, and bank charges, $80, have not
D purchase of non-current assets been entered in the cash book.
What was the balance on the cash book on
5 Which document will be sent by a supplier to a 1 September before it was updated?
customer who has returned damaged goods? A $1 050 credit C $1 090 credit
A credit note B $1 050 debit D $1 090 debit
B debit note
C invoice
D statement of account
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10 Which document does a trader send to a credit 14 Rosa’s financial year ends on 31 December. She
customer to summarise the transactions for the purchased premises on 1 July 2011. The insurance
month? premium payable on the premises was:
A credit note $
B debit note 1 Jul 2011–30 Jun 2012 1 800 2 000
C receipt 1 Jul 2012–30 Jul 2013 2 000 2 400
D statement of account
How much was transferred from the insurance on
premises account to the income statement (profit
11 Alice has bought a vehicle on credit from Malik and loss account) for the year ended 31 December
Motors for $9 000. Which entries did Alice make to 2012?
her general journal record this?
A $1 000 C $2 400
Debit $ Credit $ B $2 200 D $3 200
A Malik Motors 9 000
Vehicles 9 000
B Bank 9 000 15 New fixtures and fittings for a shop are bought on
Vehicles 9 000 credit for $5 000. Where is this transaction entered
C Vehicles 9 000 first?
Malik Motors 9 000 A general journal C purchases journal
D Vehicles 9 000 B cash book D purchases ledger
Bank 9 000
16 Which ledger entries record the purchase of a
12 The following incomplete account appears in machine bought on credit from Rufus Jones?
Akhtar’s sales ledger.
A debit Rufus Jones, credit machinery
Celine’s account
B debit Rufus Jones, credit purchases
Debit Credit Balance
C debit machinery, credit Rufus Jones
$ $ $
Jul 1 Balance 1 600 dr D debit purchases, credit Rufus Jones
4 Sales 1 040 60 ?
17 Sam Holt rents premises at an annual rent of
13 Sales returns 1 600 ? $5 600. He provides the following information.
28 Bank ?
$
What was the balance on Celine’s account on Rent accrued on 1 Jan 2012 700
31 July?
Payments during 2009 7 200
A $980 credit C $2 020 credit
What is the balance on Sam’s rent account at
B $980 debit D $2 020 debit
31 December 2012?
A $900 accrued C $2 300 accrued
13 A cheque received from Dan was credited to Don’s
account. B $900 prepaid D $2 300 prepaid
Which type of error was made?
18 Which of the following will be most suitable for
A commission C original entry
computer application?
B compensating D principle
A maintaining confidential accounting records
B maintaining the payroll for a large company
C recording credit sales for a small retailer
D recording stock withdrawn by partners
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Structured questions
1 John Trail recently started using computerised accounts software. He
printed out the following account:
Marianne Howard account
2009 Dr Cr Balance
$ $ $
14 June Purchases 950 950
4 July Bank 931 19
4 July Discount 19 0
12 July Purchases 460 460
(a) Identify two documents that John Trail would have used as a source of
information in preparing the above account. Tick the appropriate
boxes. [2]
Document ✓
Cheque
Credit note
Debit note
Invoice
(b) State the type of discount recorded in the ledger account on 4 July. [1]
(c) List the two books of original entry that would be used by John Trail if
the transactions with Marianne Howard had been recorded in a
manual book-keeping system. [2]
(d) Identify the heading under which Marianne Howard’s account would
be recorded in John Trail’s balance sheet at 12 July. Tick the
appropriate box. [2]
Heading ✓
Non current (fixed assets)
Current assets
Current liabilities
Non current (long-term) liabilities
(e) State two benefits John Trail gains from using information and
communication technology (ICT) in book-keeping. [2]
Total [8]
Cambridge O Level Principles of Accounts 7110, Paper 2, Q1, Specimen Paper 2010
2 Sally Major’s cash book (bank column) had a debit balance of $619 on 31
July 2009.
The bank statement balance on 31 July 2009 was $1 594 credit. After
checking the cash book against the bank statement the following
differences were found:
1 A cheque for $710 issued to Jon Fletcher had not been presented to the
bank for payment.
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2 An amount of $1 150 paid into a local bank branch by Sally did not
appear on the bank statement.
3 Bank charges of $170 were shown on the bank statement but had not
been recorded in the cash book.
4 Dividends received, $80, was shown on the bank statement but had
not been recorded in the cash book.
5 A payment of $5 cash for travel expenses had incorrectly been credited
in the bank column of the cash book.
6 The bank statement showed a bank loan for $1 500 had been
transferred into the bank current account. Sally Major was not
expecting this transfer to take place until 1 August and had not yet
recorded the transaction in her books.
(a) Starting with the balance on 31 July 2009, update the cash book of
Sally Major and bring down the amended balance. [5]
(b) Prepare the bank reconciliation statement to reconcile the adjusted
cash book balance with the bank statement balance at 31 July
2009. [4]
Total [9]
Cambridge O Level Principles of Accounts 7110, Paper 2, Q2, Specimen Paper 2010
3 Suzi Iyambo is a sole trader whose financial year ends on 31 January. The
following account appears in Suzi’s ledger.
John Karunda account
Dr Cr
2002 $ 2002 $
Apr 1 Sales 1 000 Apr 30 Bank 1 000
May 6 Bank 1 000 Dec 1 Cash 850
(dishonoured cheque)
2003
Jan 3 Bad debts 150
2 000 2 000
For candidates who are not familiar with the layout of the account shown
above, an alternative presentation is provided.
John Karunda account
Dr Cr Balance
$ $ $
2002
Apr 1 Sales 1 000 1 000
Apr 30 Bank 1 000 0
May 6 Bank (dishonoured cheque) 1 000 1 000
Dec 1 Cash 850 150
2003
Jan 3 Bad debts 150 0
(a) Explain each entry in John Karunda’s account as it appears in Suzi’s
ledger. [10]
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(b) Suzi maintains a provision for doubtful debts. On 1 February 2002
there was a credit balance of $900 on the provision for doubtful debts
account. At 31 January 2003 Suzi’s trade receivables owed $40 000,
and she decided to maintain the provision for doubtful debts at 2% of
the debtors. Write up the provision for doubtful debts account in Suzi’s
ledger for the year ended 31 January 2003. [6]
(c) State four ways in which Suzi could reduce the risk of bad debts. [4]
Total [20]
Cambridge IGCSE Accounting 0452, Paper 3, Q4, May/June 2003
4 The following balances were taken from the books of Dilshan on 1
September 2010:
$
Insurance 280 Dr
Gul & Co 450 Dr
The following transactions took place during September 2010:
On September 1 Dilshan paid, by cheque, the annual insurance premium,
$360, for the year to 31 August 2011.
On September 15 Dilshan sold, on credit to Gul and Co, goods with a list
price of $1 600 and allowed a 15% trade discount.
On September 20 Gul & Co paid the balance at 1 September 2010 less 2%
cash discount.
Dilshan prepared his financial statements (final accounts) on 30 September
2010.
(a) (i) Name an alternative format to “T” accounts. [1]
(ii) State one benefit of this format compared with “T” accounts. [2]
(b) Prepare the following ledger accounts for the month of September
2010. Make any necessary transfers to the income statement (profit
and loss account). Balance the accounts and bring down the
balance. [10]
(i) Insurance account
(ii) Gul & Co account
(c) State in which of Dilshan’s ledgers the following accounts would
appear. [2]
Account Ledger
Insurance
Gul & Co
(d) (i) Name the document which was sent to Gul & Co recording the
transaction of 15 September 2010. [1]
(ii) Name the book of prime (original) entry in which Dilshan recorded
this transaction. [1]
(e) (i) Explain why Dilshan did not include all of the insurance paid on 1
September 2010 in his income statement (profit and loss account)
for the year ended 30 September 2010. [2]
(ii) State the accounting principle that Dilshan applied. [1]
Total [20]
Cambridge O Level Principles of Accounts 7110, Paper 2, Q1, October/November 2010
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