Question 1 (10 marks) Part I: Multiple choice questions (1 mark each) For each of the parts (1) to (5) below there are four possible answers A, B, C and D. Choose the one you consider correct and write your answer in front of each question in your answer sheet. 1. What is depreciation? a) The residual value of a fixed asset plus its original cost b) The cost of a replacement for a fixed asset c) The cost of an asset wearing away d) The part of the cost of the fixed asset consumed during the period of use by the business 2. Initial cost of a non-current asset includes the following: a) Original purchase price b) Cost of the site preparation c) Delivery and handling charges d) All of the above 3. Purchases of a motor vehicle entered in the purchases account is an example of an error of: a) Original entry b) Principle c) Compensating d) Commission

4. N$ 25,000 received from Aditi, is credited in the account of Prerna. It is an error of: a) Principle b) Commission c) Omission d) Compensator

5. A cash deposit made by the business will appear on the bank statement as a balance. a) Debit b) Credit c) Expense d) Liability

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6. Error of omission arises when a) Any transaction is incorrectly recorded, either wholly or partially b) Any transaction is left out wholly c) Any transaction is recorded in a fundamentally incorrect manner d) None of these

7. The Journal entry to record the sale or disposition of a depreciable plant asset always includes: a) Recognition of a gain b) A debit to the accumulated depreciation account for the related accumulated depreciation c) Recognition of a loss d) A debit to the asset account for the book value of the assets 8. When a non-current asset is sold for a profit, the amount is transferred to the Statement of Comprehensive Income by a debit in disposal of non-current asset account. a) True b) False 9. A cheque returned to you marked R/D means that: a) The bank cannot verify your identity b) There are no sufficient funds in your account c) The cheque has been forged d) The cheque cannot be cashed because it is illegal

10. An overdraft in the bank statement is included in the balance sheet as a current asset a) True b) False