Accounting - Test 1

Which groups of people are most likely to be interested in the financial statements of a sole trader?

1 Shareholders of the company

2 The business’s bank manager

3 The tax authorities

4 Financial analysts

• 1 and 2 only

• 2 and 3 only

• 2, 3 and 4 only

• 1, 2 and 3 only

Which accounting concept should be considered if the owner of a business takes goods from inventory

for his own personal use?

• The fair presentation concept

• The accruals concept

• The going concern concept

• The business entity concept

The following totals appear in the day books for March 20X8.

$

Sales day book 40,000

Purchases day book 20,000

Returns inwards day book 2,000

Returns outward day book 4,000

Opening and closing inventories are both $3,000. What is the gross profit for March 20X8?

• $22.000

• $24.000

• $20.000

• $18.000

An inventory record card shows the following details.

February 1 50 units in stock at a cost of $40 per unit

7 100 units purchased at a cost of $45 per unit

14 80 units sold

21 50 units purchased at a cost of $50 per unit

28 60 units sold

What is the value of inventory at 28 February using the FIFO method?

• $2,450

• $2,700

• $2,950

• $3,000

Which one of the following would be an error of principle?

• Plant and machinery purchased was credited to a non-current assets account.

• Plant and machinery purchased was debited to the purchases account.

• Plant and machinery purchased was debited to the equipment account.

• Plant and machinery purchased was credited to the equipment account.