Multiple Choice Questions:

2.Which of the following items decreases the balance in the accounts receivable?

A.Cash paid to creditors

B.Discounts received

C.Credit sales

D.Discounts allowed

3.Which of the following statements is not true?

A.Expense is the amount incurred or paid in earning the revenue and running the business.

B.Expenses includes the cost of goods sold (that is, the cost of the goods or inventory that have been sold).

C.The expense account should be credited when an expense is incurred.

D.Wages, electricity and motor vehicle expenses are all examples of expenses.

4.If inventory was purchased for $2288 inclusive of GST, what would the GST amount be?

A.$22.88

B.$229.00

C.$208.00

D.$20.80

5.In a credit sale of inventory using the perpetual inventory method, which of the following accounts is not affected?

A.Inventory

B.GST payable

C.Accounts receivable control

D.GST receivable

4.The business hires an office manager at $700 a week. The immediate effect on the

accounting equation is to:

A.increase equity by $700 and decrease the asset cash by $700.

B.decrease the asset cash by $700 and decrease equity by $700.

C.no effect as this is not a business transaction.

D.increase wages by $700 and decrease equity by $700.

5.An invoice for $275 has been overdue for two months and the terms of trading stated that 15% p.a. interest would be charged for late payments. How much interest is to be added for late payment?

A.$4.13

B.$41.25

C.$6.88

D.$68.80

6.Which of the following statement is not correct?

A.Employees who approve the payment should not also prepare cheques

B.Control relies heavily on separation of record keeping and custodianship

C.Making all payments by electronic transfer or by cheques is necessary for a good internal control system.

D.All of the statements are correct.

7.When the petty cash imprest system is established:

A.the bank account is debited.

B.the petty cash account is credited.

C.the bank account is debited and the petty cash account is credited.

D.the bank account is credited and the petty cash account is debited.

8.ABC Books has a petty cash imprest of $200. Expenses from petty cash were stationery $110; travel $22; coffee, tea, milk etc. $18; postage $25. If the petty cash is reimbursed, the cheque for reimbursement would be drawn up for:

A.$25.

B.$200.

C.$175.

D.$159.

9.When special journals are used, a General Journal is

A.still required

B.not required.

C.used only to record sales returns and allowances.

D.used only to record cash deposits of owner investments

10.Purchase journal maintained to record:

A.all credit purchases.

B.all cash purchases.

C.all cash and credit purchase of goods.

D.None of the above

11.When special journals are used, a General Journal is

A.still required

B.not required.

C.used only to record sales returns and allowances.

D.used only to record cash deposits of owner investments

12.Purchase journal maintained to record:

A.all credit purchases.

B.all cash purchases.

C.all cash and credit purchase of goods.

D.None of the above