Mock

Q1 MCQs
1. Kate calculated her draft profit for the year at $28 400. She later discovered the following errors.
1 Rent prepaid by Kate was understated by $1000.
2 Closing inventory was understated by $1500. What was the correct profit for the year?
A $25 900 B $27 900 C $28 900 D $30 900
2. A trader’s bank statement showed a credit balance of $2940. The following items had not been entered in
the cash book. i)bank interest received $70 ii)credit transfer $280 What was the debit balance in the cash
book before it was updated?
A 2590 B 2730 C 3150 D 3290
3. A trader debited the cost of repairing office equipment to the office equipment account. How did this error
affect the financial statements?
profit for the year non-current assets
A overstated overstated
B overstated understated
C understated overstated
D understated understated
4. Rashid provided the following information at 31 December. $ machinery at cost 52 000 provision for
depreciation of machinery 23 000 Depreciation for the year is calculated at 20% on cost. After the statement
of financial position was prepared it was found that the machinery repairs costing $2000 had been debited to
the machinery account. What is the correct balance on the provision for the depreciation of machinery
account?
A 21000 B $22 600 C $23 400 D $25 000
5. In the cash book of a company the bank account 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?
A $3300 debit B $4200 debit C $4200 credit D $5800 credit
6. A company’s accounts showed a gross profit for the year of $32 500. After the accounts were prepared it
was found that the opening stock had been overstated by $2400 and the closing stock had been understated
by $3400. What is the corrected gross profit for the year?
A $26 700 B $31 500 C $33 500 D $38 300
7. Dave supplies goods to Peter on credit. On 1 April, Peter owed Dave $440. Dave sent or received the
following documents in April. $ April 7 invoice 360 12 cheque (after deducting $11 cash discount) 429 13
debit note 50 15 credit note 50 What was the closing balance on the statement of account on 30 April?
A 260 B 310 C 321 D 421
8. Which statement about a two-column cash book is correct?
A It is a ledger account for bank transactions only. B It is a ledger account for cash transactions only.
C It is a book of prime entry. D It records cash discounts
9. The income statement of a business showed a loss for the year of $16 000. On checking the books the
following errors were discovered.
1 No adjustment had been made for insurance prepaid, $480.
2 No entry had been made for bank charges, $620. What was the correct loss for the year?
A $14 900 B $15 860 C $16 140 D $17 100
10. Peter’s bank statement showed a debit balance of $600 on 1 April. The following transactions took place in
April. $ total cheque deposits 7400 total cheque payments 6200 direct debit for insurance premium 180
credit transfer from customer 450 What was the bank statement balance on 30 April?
A $870 credit B $870 debit C $2070 credit D $2070 debit
Q2 John Cosway is a trader. The following balances were extracted from his books on 31 August 2004.
Purchases 67600
Wages and salaries 23700
Insurance exp 1480
Discounts received 460
Account payable 7200
Stock 9650
Fixtures and equipment at cost 10000
Sales 123050
Rent exp 7350
Carriage on purchases 1260
Sundry expenses 10760
Account Receivable 11250
Bank overdraft 1560
Capital 29000
Drawings 18220
Additional information
1. Stock at 31 August 2004 was valued at $11 200.

2. Un cleared chequed worth $4500 not appeared in bank statement.
3. At 31 August 2004 rent prepaid were $150.
4. Wages and salaries of $2350 were accrued at 31 August 2004.
5. Bank charges $20 not recorded in cash book
6. Direct deposit by customer $500.
7. Bought motor van $500 wrongly enter into the purchases.
8. Depreciation on 10% on fixed assets.
9. A purchase of goods, £44 from C Simons, was entered in error in C Simpson’s account.
REQUIRED
(a) Prepare the Trading and Profit and Loss Accounts of John Cosway for the year ended
31 August 2004.
(b) Prepare the Balance Sheet of John Cosway as at 31 August 2004.

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Q1 MCQs

1. Stock at 31 August 2004 was valued at $11 200.

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