Bookkeeping Multiple Choice Questions

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Question 1 Should details of material adjusting or material non- adjusting events after the balance sheet date be disclosed in the notes to financial statements according to IAS 10 Event after the Balance Sheet Date? Adjusting Events Non-adjusting Events Normal Events Special Events

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Question 2 At 30 June 2008 a company’s allowance for receivables was RM39,000. At 30 June 2009 trade receivables totalled RM517,000. It was decided to write off debts totalling RM37,000 and to adjust the allowance for receivables to the equivalent of 5 per cent of the trade receivables based on past events. What figure should appear in the income statement For the year ended 30 June 2009 for these items? RM61,000 RM22,000 RM24,000 RM23,850

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Question 3 In times of rising prices, what effect does the use of the historical concept have on a company’s asset values and profit? Asset values and profit both understated Asset values and profit both overstated Asset values understated and profit overstated Asset values overstated and profit understated

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Question 4 The IASB’s Framework for the preparation and presentation of financial statements gives qualitative characteristics that make financial information reliable. Which of the following are examples of those qualitative characteristics? Faithful Representation, neutrality and prudence Neutrality, Comparability and True and Fair View Prudence, Comparability and Accruals Neutrality, Accruals and Going Concern

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Question 5 The following Bank Reconciliation Statement has been prepared by trainee accountant: RM Overdraft per Bank Statement 3,860 Less: Outstanding Cheques 9,160 5,300 Add: Deposits credited after date 16,690 Cash at Bank as calculated above 21,990 What should be the correct balance per the Cash Book? RM21,990 balance at bank as stated RM3,670 balance at bank RM11,390 balance at bank RM3,670 overdrawn

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Question 6 Which of the following calculates a trader’s net profit for a period? Closing net assets + Drawings – Capital Introduced - Opening net assets B. Closing net assets - Drawings + Capital Introduced - Opening net assets C. Closing net assets - Drawings – Capital Introduced - Opening net assets D. Closing net assets + Drawings + Capital Introduced - Opening net assets

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Question 7 A sole trader took some goods costing RM800 from inventory for his own use. The normal selling price of the goods is RM1,600. Which of the following journal entries would correctly record this? Debit Credit RM RM A. Drawings Account 800 Inventory Account 800 B. Drawings Account 800 Purchases Account 800 Drawings Account 800 Gross Profit Account 800 D. Drawings Account 800 Cost of Sales Account 800

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Question 8 The debit side of a company’s trial balance totals RM800 more than the credit side. Which one of the following errors would fully account for the difference? RM400 paid for plant maintenance has been correctly entered in the Cash Book and credited to the plant asset account. B. Discount Received RM400 has been debited to the discount allowed account. A receipt of RM800 for commission receivable has been omitted from the records. D. The petty cash balance of RM800 has been omitted from the trial balance.

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Question 9 A company’s income statement for the year ended 31December 2009 showed a net profit of RM83,600. It was later found that RM18,000 paid for the purchase of motor van had been debited to the , motor expenses account. It is the company’s policy to depreciate motor vans at 25% per year on the straight line basis, with a full year charge in the year of acquisition. What would be the net profit be after adjusting for this error? RM106,100 RM 70,100 RM 97,100 RM101,600

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Question 10 Should dividends paid appear on the face of a company’s income statements? Yes B. No

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Question 11 The following Control Account has been prepared by a trainee Accountant: Receivable Ledger Control Account RM RM Opening Balance 308,600 Cash received from credit Customers 147,200 Credit Sales 154,200 Discount Allowed to credit Customers 1,400 Cash Sales 88,100 Interest Charged on overdue accounts 2,400 Contras against credit balances in Payables Ledger 4,600 Bad Debts written Off 4,900 Allowance for receivables 2,800 Closing Balance 396,800 555,500 555,500 What should the closing balance be when all the errors made in preparing the Receivables Ledger Control Account have been corrected? A. RM395,200 B. RM304,300 C. RM309,500 D. RM307,100

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Question 12 At 31 December 2008 Z, a limited liabilities company, owned a building that cost RM800,000 on 1 January 1999. It was depreciated at 2% p.a. On 1 January 2009 a revaluation to RM1,000,000 was recognised. At This date the building had a remaining useful life of 40 years. What is the depreciation charge for the year ended 31 December 2009 and the Revaluation reserve as at 1 January 2009? Depreciation charge Revaluation Reserve for the year ended as at 1 January 2009 31 December 2009 RM RM A. 25,000 200,000 B. 25,000 360,000 C. 20,000 200,000 D. 20,000 360,000

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Question 13 P and Q are partnership, sharing profits equally. On 30 June 2009, R joined the partnership and it was agreed that from That date all three partners should share equally in the profits. In the year ended 31 December 2009 the profit amounted to RM300,000, accruing evenly over the year, after charging a bad debts of RM30,000 Which it was agreed should be borne equally by P and Q only. What should P’s total profit share be for the year ended 31 December 2009? A. RM 95,000 B. RM122,500 C. RM125,000 D. RM110,000

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Question 14 A company has made a material change to an accounting policy in preparing its current financial statements. Which of the following disclosures are required by IAS 8 Accounting Policies, changing in accounting estimates and errors in the financial statements? The reasons for the change The amount of the adjustment in the current period and in comparative information for prior period. 3. An estimate of the effect of the change of the next five accounting period. A. 1 and 2 Only B. 1 and 3 Only C. 2 and 3 Only D. 1, 2 and 3

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Question 15 According to IAS 2 Inventories, which of the following costs should be including in valuing the inventories of a manufacturing company? Carriage Inwards Carriage Outwards Depreciation of Factory Plant General Administrative Overheads A. All four items B. 1,2 and 4 Only C. 2 and 3 Only D. 1 and 3 Only

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Question 16 Part of a company’s cash flow statement is shown below: RM’000 Operating Profit 8,640 Depreciation Charges (2,160) Increase in Inventory (330) Increase in account payable 440 The following criticisms of the extract have been made: Depreciation Charges should have been added, not deducted. Increase in inventory should have been added, not deducted. Increase in accounts payable should have been deducted, not added. Which of the criticisms are valid? 2 and 3 only B. 1 only C. 1 and 3 only D. 2 only

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Question 17 Which of the following explains the imprest system of operating petty cash? Weekly expenditure cannot exceed a set amount. B. The exact amount of expenditure is reimbursed at intervals to maintain a fixed float. C. All expenditure out of the petty cash must be properly authorised. D. Regular equal amounts of cash are transferred into petty cash at intervals..

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Question 18 Which of the following are differences between sole traders and limited liability companies? A sole traders’ financial statements are private; a company’s financial statements are sent to shareholders and may be publicly filed. 2. Only companies have capital invested into the business. 3. A sole trader is fully and personally liable for any losses that the business might make; a company’s shareholders are not personally liable for any losses that the company might make. 1 and 2 only B. 2 and 3 only C. 1 and 3 only D. 1,2 and 3

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Question 19 Which of the following documents should accompany a payment made to a supplier? Supplier Statement Remittance Advise Purchase Invoice

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Question 20 Goodwill should never be shown on the balance sheet of a partnership. Is this statement true or false? False B. True

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Answer: B 2. B 3. C 4. A 5. B 6. A 7. B 8. B 9. C 10. B 11. D 12. B 13. B 14. A 15. D 16. B 17. B 18. C 19. B 20. A