LEVEL 2: ACCOUNTING - I PRELIMINARY EXAMS PAPER 2020-21

The amount of rent paid in advance may be initially recorded as Rent expense or:

• Rent Payable

• Unearned Rent

• Rent income

• Prepaid Rent

Allowance given to supplier for defective merchandise, bought on credit. The following account is credited:

• Accounts Payable

• Purchases returns & allowance

• Sales discount

• Purchases discount

The following is not shown in un-adjusted trial balance:

• Prepaid expense

• Merchandise Inventory (op)

• Allowance for bad debts

• Depreciation expense

The following is a fixed asset:

• Stationeries for office use

• Cheque

• Equipment bought for resale

• Truck bought for supply of merchandise

The net figure for reporting a depreciable asset on the balance sheet is cost of asset minus:

• allowance for bad debts

• accumulated depreciation

• depreciation expenses

• liabilities

Bank Reconciliation Statement is prepared:

• at the end of financial year

• at the end of month

• at weekend

• when needed

The adjustment affects a contra asset account is:

• Bad debts

• Unearned income

• Accrued expense

• Accrued income

Debit balance of income summary account before transfer to capital represents:

• Gross profit

• Cost of goods sold

• Net loss

• Net profit

The following account(s) is/are transferred to income summary account at the end of financial year:

• Contra Assets

• Capital

• Drawings

• Revenues & Expenses

The account irrelevant for the calculation of cost of goods sold is:

• Transport-in

• Purchases discount

• Sales returns & allowance

• Merchandise Inventory