School of Business & Management Islamabad

FA1 Mock 3 Total Marks: 100 Passing Marks: 60 Time Allowed: 2 Hours

Attempt all questions:

1) Vic's receivables ledger balances add up to $50,000 which does not agree with his trade
receivables control account.

(1) A bank credit transfer from a credit customer of $750 was not recorded in the
receivables ledger
(2) A contra entry of $2,000 was entered into the control account but not in the receivables
and payables ledgers
What should the total of the balances on his receivables ledger be after correcting the
following errors?
$49,250

$50,000

$52,750

$47,250

2) Which of the following is an asset?

An overdraft

Money owed by a business

The capital of a business

Machinery owned by a business

3) Which of the following is the correct entry to record a credit transaction entered into with
a supplier?
Dr Payables Cr Purchases

Dr Sales Cr Receivables

Dr Purchases Cr Payables

Dr Receivables Cr Sales
40 Which of the following would be on the credit side of the trade payables control account?
Contras with the trade receivables control account

Payments to suppliers

Purchase returns

Purchases

5) Bharvinda offers customers a 5% settlement discount if they pay within ten days.
In which book of prime entry will this discount be recorded?
Sales day book

Purchase day book

Cash receipts book

Cash payments book

6) Which of the following is correct?

Capital - Liabilities = Assets

Liabilities - Capital = Assets

Assets - Capital = Liabilities

Assets + Liabilities = Capital

7) What document is a proof of payment?

Delivery note

Advice note

Invoice

Receipt

8) Which of the following is the correct double entry to record discounts given by a supplier?
Dr Payables Cr Discounts allowed

Dr Payables Cr Discounts received

Dr Discounts Cr Payables
received

Dr Discounts allowed Cr Payables

9) Warren had a positive cash balance of $430.60 in his cash book. When performing a bank
reconciliation he discovered that he had not recorded a standing order payment of $80.
After this error has been corrected what will be the balance both in his cash book and on
his bank statement?
Dr Cash book $510.60 Cr Bank statement $510.60

Cr Cash book $510.60 Dr Bank statement $510.60

Cr Cash book $350.60 Dr Bank statement $350.60

Dr Cash book $350.60 Cr Bank statement $350.60

10) Which of the following accounts is an expense account?

Ebeneezer (a customer)

Rent paid

Discounts received

Kamalar (a supplier)

11) Shazheena offers a 2% trade discount to all customers but increases this trade discount
to 7% if a customer's purchases exceed $5,000. She sells goods to Alan with a list price of
$5,200.
What will be the total on the invoice she sends to Alan? (Ignore sales tax.)
$5,086

$5,096

$4,940

$4,836

12) Which of the following errors would require a suspense account in order for the trial
balance to balance?
A debit balance of $7,300 for motor expenses in the trial balance actually related to
the purchase of a motor van

A purchase invoice of $562 has been omitted from the books of prime entry

Discounts allowed have been recorded as a credit balance in the trial balance

The sales day book has been overstated by $3,200

13) Which business document authorises a payment to a supplier?
Advice note

Remittance advice

Internal cheque requisition

Purchase requisition

14) Farsa returned some goods to Kerry, a credit supplier, because they were unsuitable.
Which of the following would correctly document the return?
(1) Farsa sends Kerry a debit note
(2) Farsa sends Kerry a credit note
(3) Kerry sends Farsa a debit note
(4) Kerry sends Farsa a credit note
1 and 3

2 and 4

2 and 3

1 and 4

15) How should the total of the discounts column on the cash payments side of the cash
book be posted to the general ledger?
Dr Receivables control Cr Discounts allowed

Dr Payables control Cr Discounts received

Dr Discounts received Cr Payables control

Dr Discounts allowed Cr Receivables control

16) May has just purchased goods for resale from a supplier for $315. She has agreed to pay
for them in 30 days time.
Which of the following is the correct entry for May to record this transaction?
Dr Purchases $315 Cr Payables $315

Dr Sales $315 Cr Receivables $315

Dr Receivables $315 Cr Sales $315

Dr Payables $315 Cr Purchases $315

17) The following statements relate to an aged receivables analysis:

(1) An aged receivables analysis is a report listing all the suppliers of a business, how
much they are owed and for how long the amount has been outstanding
(2) An aged receivables analysis is a report that is useful for identifying late payers and for
providing information on debt collection efficiency to the management
Which of the above statements is/are correct?
Statement 1 only

Statement 2 only

Both statements

Neither statement

18) What does a paying-in slip give details of?

The invoice a customer is paying

The cheques paid out to suppliers

The quantities of cash and cheques paid into the bank

The credit card payments made by customers

19) The balance on the payables ledger control account is $3,300 but the total of the
individual trade payables ledger account is $4,900.
Which of the following could account for the difference?
The purchase day book is overcast by $1,600

A balance of $1,600 owing to Bob Smith omitted from the total of the individual ledger
accounts

Discounts received of $1,600 omitted from the control account

Discounts received of $1,600 omitted from the individual accounts

20) The following statements relate to the coding of transactions:

(1) Faceted codes are made up of a number of sections, each section of the code
representing a different feature of the item
(2) Sequence codes include a descriptive element to make it easy to find the right code
Which of the above statements is/are correct?
Both statements
 Neither statement

Statement 1 only

Statement 2 only

21) With an imprest system of petty cash which of the following is correct?
Vouchers + Cash held = Imprest

Cash held + Imprest = Vouchers

Imprest + Vouchers = Cash held

Cash held - Vouchers = Imprest

22) Which of the following types of account would normally have credit balances in a trial
balance?
(1) Asset accounts
(2) Liability accounts
(3) Income accounts
(4) Expense accounts
1 and 4

2 and 4

2 and 3

1 and 3

23) Which department within an organisation is MOST affected by data protection

legislation?
Product research and development

Treasury

Human resources

Purchasing

24) When a cheque is crossed A/C payee which of the following is true?
It can be cashed by any type of business

It does not have to go through the clearing system

It can be endorsed
 It must be paid into the account of the person named on the cheque

25) Which of the following describes a sales invoice?

A written statement of the amount of money that has been paid by the customer

A document sent to a potential customer quoting the price for goods

A written request for payment from a supplier giving details of items purchased

A written request to a credit customer for payment giving details of items sold

26) Xyon buys machinery from Zavlax for $10,000 agreeing to pay in 30 days' time.
What is the correct double entry to record this transaction in Xyon's books?
Dr Machinery Cr Payables

Dr Machinery Cr Cash

Dr Purchases Cr Cash

Dr Purchases Cr Payables

27) Dean owed Hedley $192.00 but was declared bankrupt and was only able to pay his
credit suppliers $0.30 for every $1 outstanding.
How should Hedley record the payment from Dean in his ledger?
Dr Cash $57.60 Dr Irrecoverable $134.40 Cr $192.00
debts Receivables

Dr Irrecoverable $57.60 Cr Receivables $57.60

debts

Dr Irrecoverable $134.40 Cr Payables $134.40

debts

Dr Cash $57.60 Dr Irrecoverable $134.40 Cr Payables $192.00

debts

28) Juliette paid a supplier $240 after taking advantage of a 5% settlement discount
received. She also made a credit purchase from another supplier on the same day.
Which two books of prime entry would the above transactions be recorded in?
Cash receipts book and sales day book

Cash payments book and purchase day book

Cash receipts book and purchase day book

 Cash payments book and sales day book

29) Which of the following employee related expenses would be paid out of petty cash?
The purchase of a car to be driven by the sales director

Payment of monthly salaries for the production staff

Payment of pensions contributions

Payments of taxi journeys for employees occasionally working late

30) Which double entry would record a credit transaction with a customer?
Dr Purchases Cr Payables

Dr Sales Cr Receivables

Dr Payables Cr Purchases

Dr Receivables Cr Sales

31) Sogo Co has credit accounts set up with all of its suppliers.
Which of the following are reasons why a particular supplier account may not reconcile to
the supplier's statement?
(1) Sogo Co recently sent a payment by cheque in the post to the supplier
(2) The supplier recently sent Sogo Co a credit note which Sogo Co has not recorded on the
supplier account
(3) The supplier recently purchased goods from Sogo Co and has entered a contra on Sogo
Co's customer account. Sogo Co has not entered the same contra
(4) There is a dispute between Sogo Co and the supplier over a particular invoice which
both parties have recorded in their accounts
1, 2 and 4

1 and 2 only

1, 2 and 3

3 and 4

32) Johan had a debit balance in his cash book of $2,312 but his bank statement showed he
was in credit by $3,425.
Which of the following would explain the difference?
Outstanding lodgements of $1,113
 Unpresented cheques of $1,113

Outstanding lodgements of $5,737

Unpresented cheques of $5,737

33) In the trade receivables control account which of the following would be on the debit
side?
Discounts allowed

Irrecoverable debts

Cash received

Sales

34) Barik purchased items of stationery paying by cheque.

What is the double entry to record this?
Dr Stationery Cr Bank

Dr Stationery Cr Petty cash

Dr Bank Cr Stationery

Dr Petty cash Cr Stationery

35) To make the trial balance balance a suspense account has been opened showing a credit
balance of $560.
Which one of the following could be the reason for the suspense account?
Opening inventory of $560 omitted from the trial balance

A bank overdraft of $280 shown as a positive cash balance

Purchase of a van for $560 recorded as a motor expense

Receivables recorded in the trial balance as $3,620 instead of $4,180

36) Bertha had a credit balance of $4,697 on her suspense account. The following errors
were then discovered:

(1) Inventory of $2,672 had been omitted from the trial balance
(2) Capital brought forward of $10,000 had been included on the debit side of the trial
 balance
(3) A cash payment of $2,600 had been included twice in the cash account
After adjusting for the above errors what is the outstanding balance on the suspense
account?
$15,231 Dr

$10,031 Dr

$5,375 Cr

$14,769 Cr

37) At the beginning of May Barbara has receivables in total of $42,390. During May she
has the following transactions:

$
Sells good on credit 12,380
Makes cash sales 3,890
Receives cash from credit customers 8,490
Writes off irrecoverable debts 695
Returns from credit customers 426
What is the balance on Barbara's receivables account at the end of May?
$2,769

$49,049

$6,659

$45,159

38) Anton is employed at an annual salary of $20,800. He is contracted to work 40 hours

per week, 52 weeks a year (including five weeks paid holiday). If overtime has to be worked
the first six hours of overtime in any week are not paid for. Any overtime in excess of six
hours in a week is paid for at time and a half.

During one week Anton worked nine hours of overtime.

What will be Anton's overtime pay for the week?
$45

$135
 $30

$445

39) The sales ledger control account had a balance of $32,920 but the list of customer
balances totalled $35,760.
Which of the following would explain the difference?
A contra of $2,840 with the purchase ledger has not been done in the control account

A customer balance of $2,840 has been omitted from the list of customer balances

The sales day book total is understated by $2,840

The trade receivables column of the cash receipts book is understated by $2,840

40) Which of the following would normally be on the same side in the trial balance?
Sales and drawings

Receivables and purchases

Loan liabilities and interest expense

Payables and discounts allowed

41) Gustav is invoicing a customer for goods with a list price of $8,000. The customer is
given:

(1) A trade discount of 10%

(2) A settlement discount of 5% if the invoice is paid within 28 days
How much should the customer pay if payment in full is made in 21 days?
$6,840

$8,000

$7,200

$7,600

42) Nanette works for Piroz and is paid a basic wage of $1,000 a week. Piroz operates the
following bonus scheme:
(1) Each employee gets a bonus of $4 for every unit they produce in excess of 2,000 units
for the week
(2) If total production is more than 15% higher than the target production for that week
an additional bonus of 8% of the basic wage for the week is paid to each employee

In week 26 the target set by Piroz was 40,000 units and actual production was 39,200
units. Nanette produced 2,600 of these.
What is Nanette's bonus for week 26?
$3,400

$3,480

$2,400

$2,480

43) The balance on the list of supplier balances of $15,950 does not agree with the
purchase ledger control account. It is subsequently found that a credit note issued by a
supplier for $680 was missed from the list of balances and that the purchase day book was
undercast by $1,220.
What is the corrected total on the purchase ledger control account?
$16,630

$17,850

$15,270

$16,490

44) Malcolm purchased goods from Wendy with a value of $4,900. He paid cash of $2,900
immediately and agreed to pay the rest in 30 days.
What is the correct double entry to record this transaction in Wendy's accounts?
Sales Cr $2,900 Cash Cr $2,000 Receivables Dr $4,900

Sales Dr $2,000 Cash Dr $2,900 Receivables Cr $4,900

Sales Dr $4,900 Cash Cr $2,900 Receivables Cr $2,000

Sales Cr $4,900 Cash Dr $2,900 Receivables Dr $2,000

45) Pavan has a year end of 30 November 20X8. On 30 November 20X8 she buys a car on
credit to use solely in her business.
Which parts of the business' accounting equation will the purchase of the car change on 30
November 20X8?
Assets and Profit

Assets and Liabilities

Capital and Profit

Capital and Liabilities

46) Javesh has a basic salary of $3,200 for November. His income tax on the salary is $640
and he pays state benefit contributions of $290. His employer also pays state benefit
contributions of $340 and pension contributions for Javesh of $160.
How much will Javesh receive as his net pay for November?
$2,270

$1,930

$2,770

$1,770

47) Which one of the following is a reason for preparing a receivables ledger
reconciliation?
To check the calculation of gross profit

To confirm the accuracy of postings

To identify overdue accounts

To calculate discounts allowed

48) On 1 December 20X8 Pavel received a loan of $5,000 to help finance his business. He
paid interest of 5% for the year on 30 November 20X9.
Which of the following is the correct treatment for the interest expense?
Dr Loan Cr Bank
 Dr Bank Cr Interest expense

Dr Bank Cr Loan

Dr Interest expense Cr Bank

49) At the beginning of October Simon has total trade receivables of $26,700. During
October he has the following transactions:

$
Credit sales 75,500
Cash receipts from customers 80,000
Sales returns 700
Irrecoverable debts 2,000
What is the balance on Simon's trade receivables account at the end of October?
$19,500

$23,900

$20,900

$28,500

50) The following has been extracted from Gordon's purchase returns day book:

Purchase returns Sales tax Total

$15,260 $2,670.50 $17,930.50
How should this be recorded in Gordon's ledgers?
Dr Purchase $17,930.50 Cr Sales $2,670.50 Cr Payables $15,260
returns tax

Dr Purchase $15,260 Dr Sales $2,670.50 Cr Payables $17,930.50

returns tax

Dr Payables $17,930.50 Cr Purchase returns $17,930.50

Dr Payables $17,930.50 Cr Sales $2,670.50 Cr Purchase $15,260

tax returns