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17Allot's business had debtors of 300 at 1 January 1994 and 270 at 31 December 1994. Credit sales amounted to 2,370 and cash received from debtors was 2,310; a bad debt of 30 was written off.

How much discount was allowed to customers during the year?

A60

B120

C210

D270

(2marks)

18Alpha's business owed 60 to trade creditors at 1 July 1994 and 90 at 30 June 1995. Purchases on credit amounted to 3,000 during the year and suppliers allowed a total of 150 cash discount.

How much was paid to creditors during the year?

A2,760

B2,820

C2,880

D2,940

(2marks)

19At 30 June 1995 the balance in Barry's cash book was 1,080 Cr. Examination of the bank statements revealed the following:

(i)Standing orders of 30 had not been recorded by Bill; and

(ii)Cheques paid to suppliers of 1,200 and receipts of 240 did not appear on the bank statement.

What was the balance on the bank statement on 30 June 1995?

A150 Dr

B150 Cr

C2,070 Dr

D2,070 Cr

(2marks)

20Candy returned some goods to a supplier because they were faulty. The original purchase price of these goods was 24,780.

The ledger clerk treated the return correctly on both the creditors' ledger control account and the individual creditors' account, but debited the purchase returns account with 25,860.

What is the correcting entry which needs to be made?

Debit

Credit

A

Suspense account

1,080

Purchase returns

1,080

B

Purchase returns

1,080

Suspense account

1,080

C

Suspense account

50,640

Purchase returns

50,640

D

Purchase returns

50,640

Suspense account

50,640

(2 marks)

21Cole extracted a trial balance but by mistake included the amount on the bank statement instead of the cash book balance. Review of the bank statement revealed the following:

(i)Unpresented cheques2,400

(ii)Uncleared lodgements1,500

(iii)Bank charges (not yet entered in cash book)120

(iv)Balance as per bank statement4,200 Dr

What is the journal entry required to clear the suspense account?

Debit

Credit

A

Suspense account

780

Cash

780

B

Bank charges

120

Cash

900

Suspense

780

C

Cash

780

Suspense account

780

D

Cash

780

Bank charges

120

Suspense account

780

(2 marks)

22Which of the following will reduce the net assets of a business?

Aretaining a specific bad debt provision

Bbuying a new plant and machinery for cash

Cdecreasing a general bad debt provision

Dcreating a provision against slow-moving stock

(2marks)

23Which of the following will not alter the total net assets of a business?

ADrawings by the proprietor

BReceipts of interest from investments

CPayments to trade creditors

DCharging depreciation on fixed assets

(2marks)

24Alan's business made purchases of 54,000 during the month of January 1996. His stock was 6,000 on 1 January and 12,000 on 31 January. His gross profit margin is 25% of sales.

What were his sales for the month?

A60,000

B64,000

C75,000

D80,000

(2marks)

25The accountant of Aina Limited gives you the following information for the year ended 31 December 1997:

Stock at 1 January

9,075

Stock at 31 December

4,500

Purchases

36,325

Gross profit margin

30%

What was the company's gross profit for the year?

A12,270

B13,608

C15,567

D17,529

(2marks)

26Ash started a business on 1 October 1997. The following information is available for the year ended 31 September 1998:

Cash received from customers

60,450

Cash paid to suppliers

63,360

Trade debtors at 30 September 1998

17,880

Trade creditors at 30 September 1998

7,020

Mark-up on cost

40%

What is the cost of stock at 30 September 1998?

A14,430

B20,181

C23,382

D27,090

(2marks) 30What does "Limited" mean in a company's name?

A A company's liability is limited to the total amount of its authorised share capital. B The company's liability is limited to the total amount of its issued share.

CThe members' liability is limited to the total amount payable on the shares held by them.

DThe members' liability is limited to the nominal value of the shares held by them.

(2 marks) 31What is a reserve?

Aan asset

Ba liability

Ca charge against profit

Dan appropriation of profit

(2 marks)

32Bill Limited shows the following items as "reserve" in its accounts. Which one of them is wrongly classified?

Aplant replacement service

Bbad debt reserve

Cgeneral reserve

Dshare premium account

(2marks)

33Under what heading debentures should be shown in a company's balance sheet?

Acapital

Breserves

Ccurrent liabilities

Dlong-term liabilities

marks)