Questions and Answers of Mastering Accounting Skills

Which of the following are partnerships? Tick the correct items.(a) Albert Haddock, fishmonger(b) Cook, Cook and Cook, solicitors(c) McEnroe and Co, butchers(d) Easthills Sports and Social Club(e)
What is a partnership? Give a brief definition. LO.1
Harry Clipper has worked for thirty years as a barber in Oldtown.Whilst he still has a regular number of older people as his customers, his business has declined steadily over the last few years.
List the main points you would wish to see covered in a partnership agreement if you decided to go into a partnership with a friend in setting up and running a shop selling small computers. LO.1
If there is no partnership agreement then the Partnership Act 1890 states that:(a) Salaries and interest on capital are allowed True/False(b) profits and losses are to be shared equally True/False(c)
John and Kevin will each need separate ledger accounts to record the fixed capitals they have contributed, the earnings they have made from the business and the money which they have drawn out.
The fixed capital which they have each agreed to put in should be kept separate from the increase in capital which occurs when the profits earned by each partner are greater than their drawings.
We now need t_ accounts to record the fixed ________ contributions which we've each agreed to put in. LO.1
We need t accounts to show what we've each earned from the partnership and what we have actually taken out in LO.1
When I prepare the final accounts, I will have to do a profit and loss ________ account to show how the profits or losses have been shared. LO.1
Mary and Liz are partners in a boutique business. They agreed to share profits in the ratio 4:1 because Mary provided most of the capital. In their first year the business made a net profit of
In their second year they changed their ratios to 4:3 when Liz provided more capital. Their business made a net profit of £7,700. How much does each receive? LO.1
Capital accounts: a separate account is opened for each partner and credited with the relevant capital contribution. LO.1
Current accounts:(a) throughout the year the drawings made by the partners are debited to their current account e.g. DR Current A/C, CR Bank when a partner takes money out of the business for his own
Profit and loss appropriation account:(a) this account appears below the profit and loss account in the final accounts and begins with the net profit brought down from that account - this is the
Steve and Roger are in partnership with capital contributions of£10,000 and £7,200 respectively. The partnership agreement provides for:• salaries of £2,400 per year to Steve and £1,800 to
March to 30 June?i £600 ii £800 iii £750 iv £1,000(b) How much interest on capital would Roger be entitled to for a period of five months?i £330 ii £360 iii£240 iv £300(c) How much profit
Pete Thomas and Frank Lock go into partnership whereby they provide capital of £6,000 and £5,000 respectively on 1 April. Their partnership agreement states that:• Frank should receive a salary
Dave, John and Jim have joined Fred in an electrical retail business.How many capital and current accounts will there be? Briefly note the information that you would expect to find in each type of
Jane and Jill began a partnership running a health food shop on 1 January when they contributed £3,000 and £2,000 respectively. Their partnership agreement stated that interest on capital of 10%
December the business makes a net profit of £6,000 and the partners take out drawings of £1,400 (Jane) and £1,100 (Jill).Complete the capital and current accounts of the partners, the profit and
Bill and Ben trade in partnership under the name 'The Master Potters'.Their partnership agreement allows for the payment of interest on capital at 12% per year and a salary to Ben of £2,000 per
Catting, Gower and Gooch are in partnership, sharing profits and losses in the ratio 3:2:1 respectively. On 1 January the balance of their capital accounts were: Catting £25,000, Gower £30,000,
During the year drawings amounted to - Catting £8,000, Gower£7,000 and Gooch £5,000. LO.1
The net profit for the year was £36,000.Prepare the partners' capital and current accounts for the year together with the profit and loss appropriation account. LO.1
Davies, Harris and Lord are in partnership with fixed capitals of£40,000, £30,000 and £10,000 respectively. Their partnership agreement allows for: LO.1
Lord receives a salary of £10,000 for acting as general manager. LO.1
Interest on capital is given at the rate of 5%. LO.1
The profit-sharing ratio is 3:3: 1.Drawings during the year to 30 September were Davies £9,000, Harris£7,000 and Lord £1,000. The net profit for the year amounted to£28,000.Prepare the
Nicholson and Marriott are in partnership, sharing profits and losses equally. On 31 March 19-9 the following balances were extracted from their books:Capital accounts:Nicholson 24,000 Marriot 36,000
Judy Brooks recently opened a restaurant. Some of her items of expenditure are listed below. Complete the table by putting a tick in those columns which are relevant to each item.Items of
First write down the definition of 'profit' with which we started this chapter. Try to do it without looking back. Then say whether each of the following statements is true or false.(a) Both capital
If you have understood this chapter you should be able to calculate Judy Brooks's profit for the year to 31 December 1989 from the information which follows. Take care - some information has been
Prepare a trading and profit and loss account from the following information relating to the business of Judy Brooks for the period from 1 Jan.1990 to 30 June 1990.Sales of meals and drinks Purchases
Show the transfer of purchases to Judy's trading account. You may assume that the purchases were made as follows: Jan.-May £600 each month by cheque and June £1,000 on credit.LO.1
Rewrite Judy Brooks's balance sheet (page 95) in vertical style.Before we give a full example to review the contents of this chapter, a few points ought to be made about some accounts which often
Select the information that is relevant and prepare a trading and profit and loss account for the period 1 July 1990 to 31 December 1990. The accounts are those of Tom Evans, grocer.Sales Purchases
£34,000 10,560 2,300 3,540 750 2,595 375 250 9,000 950 The following information relates to the business of A. Brown for the six months ended 31 October 1990:
The following trial balance has been extracted from the accounts of F. Whitbread on 31 May 1990.£ £Sales 85,453 Purchases 35,654 Returns inward and returns outward 1,754 2,352 Stock (1 June 1989)
Analyse the following trial balance and then prepare final accounts for the financial year ended 31 May 1990.Trial balance of B. White as at 31 May 1990 Sales Purchases Returns inward and returns
Harry Wilson's financial year ends on 30 June. He rents his premises at£200 per quarter which is payable on 1 July, 1 October, 1 January and 1 April. In the year ended 30 June 1990, which was his
The following item appeared in the trial balance of a business at 31 October 1990 A/cs Rent dr 944 cr You are told that £68 of the rent has been paid in advance for the next financial year.Show the
£ £944 68 876 Complete the following table in which (a) has been done for you.Current asset in Trial balance Prepaid at Profit and loss a/c balance sheet 31.12.1990 31.12.1990 yr ended 31.12.1990
Current liabilities Accrued rent 109£300 The trial balance of a firm whose financial year ends on 31 March 1990 contains the following item.A/cs Wages£ dr 30,000£ cr Because the weekly wages were
Complete the following table, in which (a) has been done for you.Current lillbility Trill/ balance Accrued at Profit and /(Jii a/c in balance theet 31.12.1990 31.12.1990 yr ended 31.12.1990 aut
Show the final accounts' entries relating to the following.A hotel allows local firms to advertise in the foyer for which it makes a charge. During the year ended 30 June 1990 it had received £250
Show the entries in the final accounts relating to the following.In the year ended 31 October 1990 a hotel received £160 for allowing firms to advertise in its reception area. One firm, however, had
Trial balance of the White Hart Hotel as at 31 October 1990£Capital Stocks (I Nov. 1989)Loan from Busifinance Leasehold premises Furniture and equipment Debtors Creditors 2,250 97,500 22,500
Fill in the blanks:(a) Bad debts are the incurred when debtors fail to pay their debts.(b) In the balance sheet, debtors appear as an because it is assumed that anyone to whom credit has been allowed
Simon Robinson began trading as a retailer on 1 January 1989. By the end of his first year of trading he had written off a total of£ 140 worth of debts as irrecoverable. On 31 December 1989 his
Remind yourself of Simon Robinson's position at 31 December 1989 in the last exercise.During 1990, his second year of trading, he had written off debts to the value of £110 and at the end of the
Rewrite the relevant accounts of Simon Robinson at the end of 1990 using method 2.10.4 BAD DEBTS RECOVERED Sometimes businessmen receive a pleasant surprise in connection with bad debts. A debt that
During 1991, Simon Robinson's third year of trading, he wrote off debts to the value of £130 and on 8 June recovered one debt of £30 which he had written off in 1990. At the end of 1991 his debtors
Trial balance of A. Wilson as at 31 December 1989£ dr Capital (1 Jan.)Stocks (1 Jan.)Leasehold premises Fixtures and fittings Motor vehicles Debtors Creditors Advertising and insurance Salaries and
1 Which of the following documents are used to record transactions by(a) the purchaser and (b) the seller? Invoice; duplicate copy of an invoice; credit note; duplicate copy of a credit note.2 Which
The following is a list of the credit notes received by WEF during July:8 July 10 July 23 July 28 July 29 July EQP Ltd Electose Plugplies Jones Wilsons £ p 38.29 49.54 56.20 17.47 38.25 Enter these
Enter the following transaction in the journal to make certain you have grasped the layout.9 May, WEF sold an electronic typewriter (serial no. 68/54321) valued in the books at £600 for this amount
(a) Are journals part of the double-entry system of book-keeping?(b) What descriptive term indicates that details were recorded in journals before entries were made in the ledger?c) What term is used
State the daybook associated with the following business documents:(a) invoice received(b) credit note received(c) copy of invoice sent(d) copy of credit note sent.EX.1
A trader sent the following credit notes during July:£ p 6 July Gregg 28.79 14 July Hector 79.78 21July Inder 59.86 26 July Jones 16.97 29 July Kelly 76.85 Enter them in the relevant journal and
State the journal entries needed in the following cases:(a) Purchase of motor vehicle on credit from Abbot Motors for £5,000.(b) Transfer sales total of £30,000 to the trading account.(c) Sale of
A trader sent the following invoices during July: £ p 4July Baxter 218.35 14 July Carter 134.43 16 July Davies 223.26 24 July Evans 212.52 27 July Fearns 132.73 Enter them in the relevant journal
Jane Morgan received the following bank statement for March:Date Particulars Cheque no Payments Receipts Balance 1 Mar Balance 150.25 4 Mar Sundry credit 150.33 300.58 7 Mar 2961 41.36 259.22 2962
From the following information about the sales ledger (E-H) prepare a control account on 30 April and state whether it reveals any errors.1 April 1-30 April 1-30 April 1-30 April 1-30 April 1-30
Write up a sales ledger control account from the following information.1 May 1 May 31 May 31 May 1-31 May 1-31 May 1-31 May 1-31 May Debit balances in sales ledger Credit balances in sales ledger
(a) Give reasons why the bank balance in the cash book may differ from that in the bank statement at the same date.(b) Give the three stages involved in reconciling the bank balance as per the cash
From the following information about the sales ledger (K-R) prepare a control account on 31 May and state whether it reveals any errors.1 May 1-31 May 1-31 May 1-31 May 1-31 May 1-31 May 1-31 May 31
£14,000 19,364 1,326 17,693 648 396 672 12,692 From the following information about the purchases ledger prepare a control account on 31 May and state whether it reveals any errors.1 Jan 1 Jan 1-31
A trader checked his cash book against the bank statement dated 30 June and noted the following discrepancies:(i) Balance as per cash book £156.37; balance as per statement £167.91.(ii) Cheques
Mike Bishop opened his petrol service station on 1 May 1989. He had£1,000 in the bank,£200 in cash, £8,000 worth of stock and machinery and equipment worth £12,000. He had borrowed £4,000 from
Imagine your trial balance of 30 June shows that the credit balances are£50 greater than the debits. £50 discount received for promptly settling an amount owing to K. Bryant has been entered on the
Study the account of B. John, which has been extracted from the ledger of G. Edwards, and answer the questions which follow it.LO.1 B. John 39 1989 1989 1 May Balance b/d 150 8 May Bank 6 140 17
What is a trial balance and why is it used?LO.1
An inexperienced book-keeper has drafted the following trial balance. He has made some basic errors which you should be able to correct. The totals of the trial balance will then agree.LO.1 Trial
Name the types of error which will not be revealed by drafting a trial balance.LO.1
A cheque for 60 received from M. Smith has been incorrectly credited to the account of M. J. K. Smith. Show the entries needed to correct the error.LO.1
EBA Ltd has a cash book, debtors' ledger and a general ledger. In which of these would you find the following accounts? (a) T. Smith, a customer,(b) wages account, (c) bank account, (d) A. Lindsay, a
Classify the following accounts as real, nominal or personal. (a) Peter Finch, supplier, (b) wages, (c) stock, (d) Robin Withe, customer, (e)machinery, (f) bank, (g) rent received, (h) capital.
Rewrite the cash and bank accounts on page 280 as they would appear in a two-column cash book. It is possible to buy a variety of types of cash books or loose-leaf paper from good stationers but it
Show the entry in the discount allowed account relating to the transactions from 1 to 14 May. Put as much information in it as you can.
ACE Motors, a small garage, purchases on credit an exhaust from Spareparts pic on 25 May. The catalogue price is £80 but all garages are allowed trade discount of 10%. ACE Motors pay the amount due
Enter the following transactions in the three-column cash book of 1. Harris and balance it on 14 April.1 April Cash balance £67.23; bank balance £191.20.2 April Cash sales £138.00.3 April Paid
Enter the following transactions in the three-column cash book of B. Finn and balance it on 14 May.1 May 2 May 3 May 4May 5 May 6May 7 May 8 May 9 May 10 May 11 May 12 May 14 May Cash balance
Complete the following sentences:(a) Recording transactions is known as because at one time most accounts were kept in ________ _(b) Reporting on the state of a business by means of statements such
What sort of business, from the point of view of ownership, is that of Henry Plunkett?LO.1
Give three examples of information that a business like Henry's would need to record. In each case say why this information should be recorded.LO.1
Which of the following is unlikely to be involved in any way with accounting: business owner, salesman, wages clerk, personnel manager, marketing director, inspector of taxes, treasurer of a tennis
Complete the following statement. Any transaction causes at least ___ changes within the balance sheet. As a result of these changes the total value of the will still equal the value of __ _------ of
Write down the book-keeping equation on which the balance sheet is based.LO.1
Explain what happens to the items in the book-keeping equation when £200 worth of unfashionable stock is reduced and sold for£120 cash.LO.1
Look back at the balance sheet of Valuemart as at 6 July on page 15 and rewrite it in good style. Assume that the bank loan does not have to be repaid for five years.LO.1
Look again at Tom's delivery vehicles account on page 21.Referring to Tom's transaction of 3 May draft ledger accounts and complete the entries for each of the following separate possibilities:(a)
On page 20 in this chapter we opened a set of ledger accounts for Bill Turner's Valuemart, which began business on July 1990. Copy out these accounts leaving space to enter these transactions;2 July
Complete the following sentences:(a) A is a statement of the assets and sources of fmance of a business at a particular date.(b) A is an individual record of transactions affecting one aspect of the
State the accounts to be debited and credited for each of the following separate transactions:(a) Purchased equipment by cheque £600.(b) Sold motor vehicle by cheque £300.(c) Purchased stock by
From the following information open ledger accounts. Then enter the transactions, opening new accounts when necessary.LO.1 Balance sheet of Jill Evans as at 1 May 1990 Premises 33,000 Capital
1 State whether the entries in the following accounts will be debit or credit: (a) purchases, (b) purchases returns, (c) sales, (d) sales returns.2 Give the alternative names for: (a) purchases
Powa Electrics is a wholesaler which has Jim Hogg, a DIY retailer, as one of its customers. On 1 March, Jim owed £160 from the previous month.The following transactions then took place. On 2 March,
Complete the following table:(a) Paid wages by cash (b) Paid insurance by cheque (c) Received by cheque rebate of insurance previously paid Exercise 3. 4 Which asset is reduced in value under the
Complete the table below to show the entries need to record the transactions.LO.1 Transaction (a) Payment of rates by cheque. (b) Purchase of goods for resale on credit from Asta Suppliers. (c)

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