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True or false questions

(25) has any effect SECTION TRUE OR FALSE QUESTION (40 Marks) The following questions indicate if it's True or False. Each question carries 2 Marks 1. Accounting Principle is general law or rule followed in the preparation of financial statements 2. Usefulness, objectivity and feasibility are the three basic norms generally found in accounting principles 3. The Cash book record only the cash payments 4. If a Cheque sent for collection is dishonored, the debit is given to customer's account 5. If a Cheque is issued by us is dishonored, the credit is given to supplier's account 6. Discount allowed column appears in debit side of the cash book 7. Discount Received Column appears in the credit side of the cash book 8. Cash books one of the Subsidiary books 9. When Bank column of a Cash Book shows a credit balance, it means overdraft or amount due to the bank 10. Overdraft balance as per Pass book is R11,500. Interest on Overdraft R350 Debited by Bank but not recorded in the Cash Book. Overdraft Bank balance as per Cash Book is R11.150 credit 11. The ledger is the book of original entry 12. The income statement shows either net profit or net loss for a particular period 13. The salary paid in advance is not an expense because it neither reduces assets or nor increase liabilities 14. All liabilities which become due for payment in one year are classified as long-term liabilities 15. The term current asset is used to designate cash and other assets or resources which are reasonably expected to be realized or sold or consumed within one year 16. An asset gives rise to expenditure when it is acquired and to an expense when it is consumed 17. Sales less cost of goods sold = gross profit 18. Depreciation account appear in the trial balance is taken only to profit and loss account 19. Depreciation is charged on all assets 20. Fixed assets are stated in the balance sheet at their written down value SECTION B Question 1 The following details were obtained from the accounting records of S GLOW for January 2011 22 556 37 452 35 036 860 400 160 Balances in the debtors' ledger (1 January 2011) Balances in the creditors ledger (1 January 2011) Receipts issued to debtors Cheques received from debtors, returned by the bank marked "RID" Credit losses Cash received from G McDermott (his account was already closed and debt written off) Credit sales Credit purchases Cheques issued to creditors Returns on purchase Settlement discount granted to debtors Returns on sales Interested charged on overdue debtors accounts Cash purchase Interest collected by creditors 65 636 59 724 25 724 400 110 60 17 544 336 Additional information Credit sales of R48 were incorrectly posted to B Ball's account as R84. An invoice of R40 for goods sold was not recorded in the sales journal. Required: Prepared the following property balanced/closed off accounts in the general ledger of S GLOW for January 2011 1.1 Debtors control account 1.2 Creditors control account (10) Question 2 M Jay carried down a bank balance of R3110 in her cash book 31 March, her bank statement at the date showed at the date an overdraft R5711. On the checking the statement she discovers the following: Cheques for R 5010 and R 4743 have not yet been presented for payment Dividend Cheques for 62 and R100 have been paid directly into his bank account Bank charge amounting to R 1114 and 880 have been debited to his account A deposit of 19 872 on the 31 March has not been credited by the bank A cheque for 12 914 from Felix and Co. paid into bank on 25 March by M Jay was dishonoured on presentation and debited to M Jay's account on 28 March Required 2.1 Prepare a supplementary cash book to correct M Jay's books. [10] 2.2 Prepare a reconciliation statement to agree her amend cash book with the bank statement [10] Questiona NEN ENTERPRISES TRIAL BALANCE AS AT 31 DECEMBER 2010 Capital cr 130 000 50 000 11 000 81 000 14 000 14 000 100 000 82 000 37 200 283 300 Mortgage loan ) Land and buildings Furniture and equipment Bank Inventory (1 January 2010) Debtors control Fixed deposit Creditors control Sales Purchase Interest income Rent income Freight charges on purchases Advertising Insurance Credit losses Administration expenses Property rates and taxes Interest expenses Water, electricity and telephone Salaries 90 000 500 000 800 2 400 5 000 9800 5 000 2 600 30 000 9 600 3 000 10 000 75 000 773 200 773 200 Additional information relating to the year-end adjustments is as follows On 1 August 2010 N&N Enterprises rent out a part of their premises to Oli Traders for 12 Months a cheque for R2 400 was received on that date for the entire year's rent . The interest earned on the fixed deposit amounted to R1 060, but was not yet received . An amount of R3 500 of the insurance expenses was prepaid for next year The advertising expense includes a payment of R2 400 made to Count News Magazine for Advertisements to be published from January 2011 Salaries earned by employees but not yet paid at 31 December 2010 amounts to R800 (N.B Please turn over Question continues) . Interest on the mortgage loan is payable quarterly in arrears on the first day of January April, July and October the loan was negotiated on 1 March 2010 No repayment of the capital amount was made during the year. Furniture and equipment should be depreciated at 10% per annum using the straight-line Method The closing inventory on 31 December 2010 was R72 000 Required: 3.1 Using the information given above, record the necessary year-end adjustments in the general journal of N&N Enterprise as at 31 December 2010 (7) 3.2 Prepare a post adjustment trial balance for N&N Enterprises as at 31 December 2010 (23) TOTAL MARKS 100 10 Marks Question 1 choice questions has four suggested answers, (A), (B), (C) and (D). You decide which choice is best, either (A) or (Bor (CJ or (D.Each question Each of these multiple choice questions has four suggested ans Should read each question and then decide which choice is best, either la carries 2 Marks 11 Working Capital a term meaning (Al The amount of capital invested by the proprietor (B) The excess of the current assets over the current liabilities The capital less drawings (Dj The total of Fixed Assets Current Assets 17) SA 12 Acredit balance brought down on a Rent Account means (Al We owe that rent at that date (B) We have paid thar rent in advance at that date, (C) We have paid too muckrent (((DJ We have paid too little in rent: 19 SV rent We ha paid to SS 3 A debit balance brought down orta Packing Materials Account means (A) We owe for packing materials (B) We are owed for packing materials (cl we have lost money on packing materials ( We have a stock of packing materials unused. MARRIVAL (Al Debit Drawings Acouse we hould (B) Debit purchases Account credit Drawings Account (c Debit Drawings Account credit stock Account 10 Debit Sales Account credit Stock Account WINDA $ Capital Expenditure is (A) The extra captal paid in by the proprietor (B) The costs of running the business on a day-to-day basis Money spent on buying fixed assets or adding value to (D) Money spent on selling fixed assets SSS MORE 6 In the business of C Sangster, who owns a clothing store, which of the following are Capital Expenditure? ( Shop fixtures bought (1) Wages of assistants i New van bought vi Petrol for van AJ il and its B) it and ( c) (i) and (11) D) and (iv): ES If R500 was shown added to purchases instead of being added to a fixed asset 2 . Al Net profit only would be understated B) Net profit only would be overstated Page 2 of 7 (C) It would not affect net profit (D) Both gross and net profits would be understated. PLEASE TURN OVER 8 A cheque paid by you, but not yet passed through the banking system, is (A) A standing order (B) A dishonoured cheque (C) A credit transfer (D) An unpresented cheque. 9 A Bank Reconciliation Statement is a statement (A) Sent by the bank when the account is overdrawn (B) Drawn up by us to verify our cash book balance with the bank statement balance (C) Drawn up by the bank to verify the cash book (D) Sent by the bank when we have made an error. 10 Which of the following are not true? A Bank Reconciliation Statement is (i) Part of the double entry system (ii) Not part of the double entry system (ii) Sent by the firm to the bank (iv) Posted to the ledger accounts. (A) (i), (iii) and (iv) (B) (i) and (ii) (C) (i), (ii) and (iv) (D) (i), (iii) and (iv). (20 Marks) Question 2 20 Marks 100 the trial balance extracted from the books of Tailor Times Lid at 31 December 2003 was as Follows: 200,000 27.500 271,000, 563,700 o 6,109 (1400 Share capital Profit and loss account 31 December 2002 Freehold premises at cost Provision for depreciation on freehold premises Sat 31 December 2002 (54,000 Machinery at cost PAY $4.000 Provision for depreciation on machinery account as at 31 December 2002 21,000 Purchases) Sales (General expenses 14,600 Wages and salaries We (179,400 Business rates Electricity (4.800 Bad debts Provision for doubtful debts at 31 December 2002 Debtors Creditors 300 Stock in trade 31 December 2002 81,900 Bank balance 16,200 1.297 300 1,297,300" You are given the following additional information: The authorized and issued share capital is divided into 400,000 ordinary shares of Sop each Stock in trade at 31 December 2003, R94, 3001 2 (hi) Wages and salaries due at 31 December 2003 amounted to R1,800. Oiv Business rates paid in advance at 31 December 2003 amounted to R700 A dividend of R20,000 is proposed for 2003: S W (w) The provision for doubtfuldebts is to be increased to R1,500 (( A depreciation charge is to be made on freehold premises of R25 000 and machinery at the rate of 20 per cent per annuin oricost.31 774,200 (Required: A trading and profit and loss account for 2003 (20 Marks Driver's PLEASE TURN OVER 03 20 Marks Question 4!!! CR 31 The financial year of The Better Trading Company ended on 30 November 2007. You have >> been asked to prepare a Total Debtors Account and a Total Creditors Account in order to produce End of year figures for Debtors and creditors for the draft final accounts, 231 You are able to obtain the following information for the financial year from the books of original entry SA 22 VAX344,890 Sales-cash credito P urchases - cash 496,600 S 600570 Total receipts from customers $03.970 Total payments to suppliers Discounts allowed (all to credit customers) 5,520 3,510 727 Discounts received (all from credit suppliers) 5,070 Refunds given to cash customers Balance in the sales ledger set off against balance in the purchases ledger 780 Bad debts written off 90 Increase in the provision for bad debts 4,140 Credit notes issued to credit customers 1,480 Credit notes received from credit suppliers 70 According to the audited financial statements for the previous year debtors and creditors as a 1 December 2006 were R26,555 and R43,450 respectively, AD Required: Draw up the relevant Total Accounts entering end-of-year totals for debtors and creditors. totals for debtors and cre (20 Marks) PLEASE TURN OVER Question 5 Total Marks 20 Massa is setting up a new business. Before actually selling anything, he bought a van for R4, 500, a market stall for R2,000 and a stock of goods for R1,500. He did not pay in full for his stock of goods and still owes R1,000 in respect of them. He borrowed R5,000 from Crox. After the events just described, and before trading starts, he has R400 cash in hand and R1, 100 cash at bank. Calculate the amount of his capital. (10 Marks) Draw up Emmanuel's balance sheet from the following information as at 31 December 2008 Capital Debtors Van Creditors Fixtures Stock of goods Cash at bank (10 Marks) 7,200 1,200 3,800 1,600 1,800 4,200 300