Accounting Year 10

1. Which of the following is shown in the income statement of a limited liability company?

• Debenture interest

• General reserve

• Ordinary share dividend paid

• Retained earnings

Which of the following is shown in a limited company’s statement of changes in equity?

• Debentures interest

• Directors’ fees

• Ordinary share dividend paid

• Preference share dividend paid

A business increased its rate of inventory turnover during a financial period. Which of the following is a correct explanation of the reason for this increase?

• The business improved its profitability

• The business improved its quick assets ratio

• The business purchased more goods for resale

• The business reduced its average inventory

What is the purpose of a trial balance?

• To calculate the profit or loss

• To check that all of the transactions have been included in the books of account

• To check that there are no bookkeeping errors

• To check the arithmetical accuracy of the bookkeeping

Chen entered the purchase of a non-current asset in the purchase account. What is this mistake known as?

• An error of commission

• An error of complete reversal

• An error of original entry

• An error of principle

A trial balance had the following totals:

Dr $82600

Cr 82800.

Which of the following errors could have caused this disagreement?

• A computer printer cost $200, purchased for office use had been debited to the purchases account

• Drawing of $200 had been completely omitted from the books

• Telephone charges of $200 had been debited to the stationery account

• The sales returns journal had been overcast by $200

Which of the following errors would affect the agreement of the totals of a trial balance?

• A credit note received from the supplier for $300 was completely omitted from the books

• A purchase invoice for $670 was entered in the purchase journal as $760

• The owner’s drawing of $300 was debited to the bank account and credited to the drawing account

• The total of the travel expenses column in the cash book was overcast by $40

1. What does the abbreviation ‘LTD’ mean at the end of the name of a business? (2 points)

Entries in the purchase journal are taken from which of the following documents?

• Credit notes

• Delivery notes

• Invoices

• Receipts

To check the accuracy of the purchases returns journal. Which of the following should be examined, referring to copies if necessary?

• Credit notes issued

• Credit notes received

• Invoices issued

• Invoices received