Question
1. A debit entry may signify:
A a decrease in asset accounts
B a decrease in liability accounts
C an increase in equity accounts
D an increase in liability accounts
2. A receipt of cash from a credit customer in payment of his account would be recorded by a:
A debit to cash at bank; credit to debtor
B debit to debtors; credit to cash at bank
C debit to cash at bank; credit to creditor
D debit to creditor; credit to cash at bank
3. A listing of ledger account balances with titles of the accounts on a given date is referred to as:
A income summary
B income statement
C balance sheet
D trial balance
4. Gateway Travel provided travel services to its clients on credit and recorded revenues of K 28 000. The business’ asset which was increased as a result of this transactions is:
A accounts receivable
B travel service revenue
C cash at bank
D accounts payable
5. Which of the following is an example that decreases both an asset and a liability?
A sale of goods on credit
B purchase of goods on credit
C cash received from debtors
D cash paid to creditors
6. Which of the following best describes an income statement?
A a statement of business transactions for the year
B a statement showing business results for a period
C a statement of assets, liabilities and equity of a business
D a summary of revenue items and expense items for year
7. On 1 November 2015 Theodist Ltd signed a contract with EMTV to run advertisements during January and March 2016 to promote school supplies at an agreed amount of K 12 000. Theodist Ltd paid the agreed amount on the same day.
Which of the following is the correct double entry made by Theodist Ltd on 1 November 2015.
Dr Cr
A Advertising expenses K 12 000 Cash at bank K 12 000
B Advertising expenses K 12 000 Accounts payable – EMTV K 12 000
C Prepaid expenses K 12 000 Cash at bank K 12 000
D Accounts receivable- EMTV K 12 000 Cash at bank K 12 000
8. Which of the following documents is issued when goods are returned to a creditor?
A Invoice
B Credit note
C Purchase order
D Delivery docket
9. “ A business will continue to trade in the foreseeable future”. Which accounting principle is referred to in this statement?
A accrual
B business entity
C consistency
D going concern
10. The purpose of making provisions for doubtful debts is:
A to cancel a particular debt
B to provide for possible bad debt
C to write off outstanding debts more than 9 months
D to follow up outstanding debts
11. A business entity increases its provision for doubtful debts by K 1 600. What will be the effect of this adjustment on net profit and current assets?
Net profit Current assets
A Decrease by K 1 600 Decrease by K 1 600
B Decrease by K 1 600 Increase by K 1 600
C Increase by K 1 600 Decrease by K 1 600
D Increase by K 1 600 Increase by K 1 600
12. Business cash at bank account showed K 5 000 debit balance as at 31 March 2016. On this date there were K 4 750 unpresented cheques and K 4 600 unrecorded deposits. What will be the balance as per bank statement?
A K 4 600 Dr
B K 6 500 Cr
C K 4 850 Cr
D K 5 150 Cr
13. The prime function of accounting is:
A recording economic data
B providing information for decision making
C classifying and recording business transactions
D summarizing accounting data
14. Which of the following statements is correct?
A an asset account always shows a credit balance
B an expense account always shows a credit balance
C an expense account always shows debit balance
D a liability account always shows a debit balance
15. Which of the following transactions would affect the owner’s equity of a business?
A purchase of furniture on credit
B a receipt from a debtor
C a purchase of a photocopier
D a sale of a goods which cost K 15 000 on credit for K 22 000
16. In a business Peter’s account showed a debit balance of K 9 000. Which of the following is correct?
A Peter has paid a K 9 000 to the business
B Peter owes the business K 9 000
C the business has paid Peter K 9 000
D the business owes Peter K 9 000
17. A trader provided the following information.
K
Cost of sales 70 000
Operating expenses 8 000
Profit for the year 14 000
What was the sales revenue?
A K 48 000
B K 62 000
C K 84 000
D K 92 000
18. On a bank reconciliation, a deposit not recorded in the bank statement would be:
A added to the bank balance as per business records
B subtracted from the bank balance as per business records
C added to the credit balance as per bank records
D subtracted from the bank balance as per bank records
19. Which of the following is correctly describes the purpose of having a petty cash system?
A reduction of workload of the chief cashier
B prevent from theft and fraud
C distribution of work between cashier and petty cahier
D reduction of entries in cash receipts journal
20. Which of the following is correct?
A Re-imbursable amount = Imprest amount + Amount spent
B Re-imbursable amount = Cash in hand + Amount spent
C Re-imburseable amount = Imprest amount + Cash in hand
D Imprest amount = Cash in hand + Value of paid vourchers
21. Which of the following correctly describes bank overdraft?
A a loan taken by a business entity
B the amount withdrawn from a cheque account over and above the available balance
C an amount given to an employee when he/she is distress
D amount of money payable to the bank
22. Which of the following lists the information required to calculate depreciation expense of an asset?
A cost, number of years used and rate of depreciation
B date of purchase, cost and useful life
C cost and accumulated depreciation
D cost, estimated residual value and useful life
23. Which of the following describes the purpose of adjusting unearned revenue?
A to repay excess amount received and clear customer’s account
B to record amount receivable from customers
C to record unexpired portion in the income statement
D to record revenue earned during the year
24. A business provides the following information:
Debtors account balance K 8 000
Bad debts to be written off K 1 500
Provision for doubtful debts to be made: 5%
The amount to be credited to the provision for doubtful debt account is:
A K 400
B K 325
C K 725
D K 75
A a decrease in asset accounts
B a decrease in liability accounts
C an increase in equity accounts
D an increase in liability accounts
2. A receipt of cash from a credit customer in payment of his account would be recorded by a:
A debit to cash at bank; credit to debtor
B debit to debtors; credit to cash at bank
C debit to cash at bank; credit to creditor
D debit to creditor; credit to cash at bank
3. A listing of ledger account balances with titles of the accounts on a given date is referred to as:
A income summary
B income statement
C balance sheet
D trial balance
4. Gateway Travel provided travel services to its clients on credit and recorded revenues of K 28 000. The business’ asset which was increased as a result of this transactions is:
A accounts receivable
B travel service revenue
C cash at bank
D accounts payable
5. Which of the following is an example that decreases both an asset and a liability?
A sale of goods on credit
B purchase of goods on credit
C cash received from debtors
D cash paid to creditors
6. Which of the following best describes an income statement?
A a statement of business transactions for the year
B a statement showing business results for a period
C a statement of assets, liabilities and equity of a business
D a summary of revenue items and expense items for year
7. On 1 November 2015 Theodist Ltd signed a contract with EMTV to run advertisements during January and March 2016 to promote school supplies at an agreed amount of K 12 000. Theodist Ltd paid the agreed amount on the same day.
Which of the following is the correct double entry made by Theodist Ltd on 1 November 2015.
Dr Cr
A Advertising expenses K 12 000 Cash at bank K 12 000
B Advertising expenses K 12 000 Accounts payable – EMTV K 12 000
C Prepaid expenses K 12 000 Cash at bank K 12 000
D Accounts receivable- EMTV K 12 000 Cash at bank K 12 000
8. Which of the following documents is issued when goods are returned to a creditor?
A Invoice
B Credit note
C Purchase order
D Delivery docket
9. “ A business will continue to trade in the foreseeable future”. Which accounting principle is referred to in this statement?
A accrual
B business entity
C consistency
D going concern
10. The purpose of making provisions for doubtful debts is:
A to cancel a particular debt
B to provide for possible bad debt
C to write off outstanding debts more than 9 months
D to follow up outstanding debts
11. A business entity increases its provision for doubtful debts by K 1 600. What will be the effect of this adjustment on net profit and current assets?
Net profit Current assets
A Decrease by K 1 600 Decrease by K 1 600
B Decrease by K 1 600 Increase by K 1 600
C Increase by K 1 600 Decrease by K 1 600
D Increase by K 1 600 Increase by K 1 600
12. Business cash at bank account showed K 5 000 debit balance as at 31 March 2016. On this date there were K 4 750 unpresented cheques and K 4 600 unrecorded deposits. What will be the balance as per bank statement?
A K 4 600 Dr
B K 6 500 Cr
C K 4 850 Cr
D K 5 150 Cr
13. The prime function of accounting is:
A recording economic data
B providing information for decision making
C classifying and recording business transactions
D summarizing accounting data
14. Which of the following statements is correct?
A an asset account always shows a credit balance
B an expense account always shows a credit balance
C an expense account always shows debit balance
D a liability account always shows a debit balance
15. Which of the following transactions would affect the owner’s equity of a business?
A purchase of furniture on credit
B a receipt from a debtor
C a purchase of a photocopier
D a sale of a goods which cost K 15 000 on credit for K 22 000
16. In a business Peter’s account showed a debit balance of K 9 000. Which of the following is correct?
A Peter has paid a K 9 000 to the business
B Peter owes the business K 9 000
C the business has paid Peter K 9 000
D the business owes Peter K 9 000
17. A trader provided the following information.
K
Cost of sales 70 000
Operating expenses 8 000
Profit for the year 14 000
What was the sales revenue?
A K 48 000
B K 62 000
C K 84 000
D K 92 000
18. On a bank reconciliation, a deposit not recorded in the bank statement would be:
A added to the bank balance as per business records
B subtracted from the bank balance as per business records
C added to the credit balance as per bank records
D subtracted from the bank balance as per bank records
19. Which of the following is correctly describes the purpose of having a petty cash system?
A reduction of workload of the chief cashier
B prevent from theft and fraud
C distribution of work between cashier and petty cahier
D reduction of entries in cash receipts journal
20. Which of the following is correct?
A Re-imbursable amount = Imprest amount + Amount spent
B Re-imbursable amount = Cash in hand + Amount spent
C Re-imburseable amount = Imprest amount + Cash in hand
D Imprest amount = Cash in hand + Value of paid vourchers
21. Which of the following correctly describes bank overdraft?
A a loan taken by a business entity
B the amount withdrawn from a cheque account over and above the available balance
C an amount given to an employee when he/she is distress
D amount of money payable to the bank
22. Which of the following lists the information required to calculate depreciation expense of an asset?
A cost, number of years used and rate of depreciation
B date of purchase, cost and useful life
C cost and accumulated depreciation
D cost, estimated residual value and useful life
23. Which of the following describes the purpose of adjusting unearned revenue?
A to repay excess amount received and clear customer’s account
B to record amount receivable from customers
C to record unexpired portion in the income statement
D to record revenue earned during the year
24. A business provides the following information:
Debtors account balance K 8 000
Bad debts to be written off K 1 500
Provision for doubtful debts to be made: 5%
The amount to be credited to the provision for doubtful debt account is:
A K 400
B K 325
C K 725
D K 75
Answers
GPT 3.5
25. Which of the following accounts would be closed at the end of the accounting year?
A. Cash at bank
B. Accounts payable
C. Prepaid expenses
D. Income summary
A. Cash at bank
B. Accounts payable
C. Prepaid expenses
D. Income summary
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