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Accounting - Test 4


1. Which book of prime entry is part of the double-entry system?
A. Cash book
B. General journal
C. Purchases journal
D. Sales journal


2. In a business's books, the ledger account of J. Brown, a customer, shows a debit balance of $450. What does this mean?
A. Brown has paid $450 to the business
B. Brown owes the business $450
C. The business has paid Brown $450
D. The business owes Brown $450


3. A bookkeeper mistakenly treats a capital expenditure item as revenue expenditure. What is the effect of this error?
A. Gross profit is understated
B. Total assets are overstated
C. Net profit is overstated
D. Total assets are understated


4. A vehicle costing $20,000 is depreciated by 20% per annum on the diminishing balance method. What is the depreciation charge at the end of the second year?
A. $3,200
B. $4,000
C. $6,400
D. $8,000


5. Which item would NOT appear in a sales ledger control account?
A. Discounts allowed
B. Interest charged on overdue accounts
C. Provision for bad debts
D. Sales returns


6. How is an invoice for an expense owing shown in the Balance Sheet?
A. current asset
B. non-current asset
C. current liability
D. non-current liability


7. A firm's sales are $100k, the expenses are $30k and the net profit is $20k. What is the gross profit as a percentage of the sales?
A. 10%
B. 50%
C. 70%
D. 80%


8. Which of the following is an item of revenue expenditure?
A. dividend paid
B. payments for major building improvements
C. purchase of machinery
D. rent paid


9. What is the purpose of control accounts?
A. calculate accruals and prepayments
B. calculate trade receivables and trade payables
C. calculate purchases and sales
D. calculate receipts and payments


10. How is working capital calculated?
A. total assets less total liabilities
B. current assets less current liabilities
C. owner's capital less drawings
D. total non-current assets plus current assets







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