Accounts 9706 s14

Hedley has 100 items of inventory in his warehouse and five more with a customer on a sale or

return basis. He provides the following information.

Which value should appear in the statement of financial position for inventory?

• $6000

• $6300

• $6825

• $8500

When preparing a sole trader’s annual accounts, no adjustment was made for a prepayment at

the end of the year.

What is the effect of this omission?

• current assets overstated

  owner’s capital overstated

• owner’s capital overstated

  owner’s capital understated

• profit for the year overstated

  trade payables understated

• profit for the year understated

  trade payables understated

Which statement is correct?

• The balance on the bad debts recovered account is carried down to the next accounting

  period.

• The balance on the bad debts recovered account is credited to the income statement.

• The balance on the provision for doubtful debts account is calculated before the deduction of

  bad debts.

• The balance on the provision for doubtful debts account is not included in a trial balance.

A trader took out a 6% bank loan of $30 000 on 1 November 2013, to be repaid in full in 10 years’

time. Interest is to be paid annually. No interest had been paid by 30 April 2014.

How should this be recorded in the statement of financial position at 30 April 2014?

• current liabilities $0;

  non-current liabilities $ 30 000

• current liabilities $900;

  non-current liabilities $ 30 000

• current liabilities $1800;

  non-current liabilities $ 30 000

• current liabilities $30900;

  non-current liabilities $0

A non-current asset is depreciated due to passage of time.

Which type of non-current asset is it?

• a computer which has become out of date

• a lease with a fixed life in terms of years

• a machine which is subject to rust and breakdown

• a mine which loses value as coal is extracted

On 1 June 2011, a company purchases machinery for $18 000. The company depreciates

machinery at 20% per annum using the reducing balance method.

The machinery was sold on 1 June 2013 for $9400.

What is the profit / loss on the disposal of the machinery?

• loss $1400

• loss $2120

• profit $1400

• profit $2120

A trial balance failed to agree. A suspense account was opened. The following errors were then

discovered.

1 The sales returns journal had been undercast by $850.

2 The purchases journal had been overcast by $975.

What was the opening balance on the suspense account before the correction of the errors?

• $125 credit

• $125 debit

• $1825 credit

• $1825 debit

The bank column of a cash book showed a credit balance of $5000. There were unpresented

cheques amounting to $1500. The bank statement showed bank charges of $700 not in the cash

book.

What is the balance on the bank statement?

• $3300 debit

• $4200 debit

• $4200 credit

• $5800 credit

What would cause a trial balance not to balance?

• a casting error in the cash account

• a transposition error in extracting the trial balance

• discounts allowed posted to discounts received account

• misposting of an invoice to a creditor’s account

X buys from and sells goods to Y. At the end of the month, X owes Y $3200 and Y owes X

$1941.

Which double entry records the contra entry in X’s books?

• purchases ledger control account Dr. 1259

  sales ledger control account Cr.1259

• purchases ledger control account Dr. 1941

  sales ledger control account Cr.1941

• sales ledger control account Dr. 1259

  purchases ledger control account Cr. 1259

• sales ledger control account Dr. 1941

  purchases ledger control account Cr. 1941