A book of prime entry is one in which:

AThe rules of double-entry bookkeeping do not apply.

BLedger accounts are maintained.

CTransactions are entered prior to being recorded in the ledger accounts.

DSubsidiary accounts are kept.

(2 marks)

7.2 The petty-cash imprest is restored to 300 at the end of each week. The following amounts are paid out of petty cash during week 23:

Stationery

42.30 including VAT at 17.5%

Travelling costs

76.50

Office refreshments

38.70

Sundry creditors

72.00 plus VAT at 17.5%

The amount required to restore the imprest to 300 is

(2 marks)

7.3 Stock is valued using FIFO. Opening stock was 10 units at 4 each. Purchases were 30 units at 6 each, then issues of 12 units were made, followed by issues of 8 units. Closing stock is valued at

(2 marks)

7.4 In times of rising prices, the FIFO method of stock valuation, when compared with the average cost method of stock valuation, will usually produce

Aa higher profit and lower closing stock value

Ba higher profit and a higher closing stock value

Ca lower profit and a lower closing stock value

Da lower profit and a higher closing stock value

(2 marks)

7.5Stock movements for product X during the last quarter were as follows:

January

Purchases

10 items at 39.60 each

February

Sales

10 items at 60 each

March

Purchases

20 items at 49 each

Sales

5 items at 60 each

Opening stock at 1 January was six items valued at 30 each.

Gross profit for the quarter, using the weighted average cost method, would be

(2 marks)