June 2020 P1 Accounting 7707

Which are examples of book-keeping?

1) entering details of a cheque received from a customer in a cash book

2) entering details of goods purchased on credit in a purchases journal

3) producing an income statement to calculate the profit for the year

4) recording details of credit sales in the account of a credit customer

• 1, 2 and 3

• 1, 2 and 4

• 1 and 2 only

• 3 and 4

How does a trader use the information provided by financial statements?

• to calculate the amount of cash drawings taken

• to calculate the amount that is owed by trade receivables

• to check the balance shown on a bank statement

• to compare the business performance over a number of years

A trader bought new fixtures.

He paid half of the purchase price in cash and agreed to pay the balance in two months’ time.

How does this purchase affect the accounting equation?

• Asset - Decrease; Owner's Equity - Decrease; Liabilities - No Effect

• Asset - Decrease; Owner's Equity - No Effect; Liabilities - Increase

• Asset - Increase; Owner's Equity - Decrease; Liabilities - Increase

• Asset - Increase; Owner's Equity - No Effect; Liabilities - Increase

On 2 April Nina received a cheque from Zaffar, a credit customer.

On 12 April the cheque was returned unpaid by the bank.

What entry would Nina make on 12 April?

• Dr - Irrecoverable debts ; Cr - Bank

• Dr - Irrecoverable debts ; Cr - Zaffar

• Dr - Provision for Doubtful Debts ; Cr - Zaffar

• Dr - Zaffar ; Cr - Bank

Ann is a trader. On 1 April Cindy’s account in Ann’s ledger showed a credit balance of $520.

The following transactions took place during April.

April 2 - Ann returned goods, $30, to Cindy.

April 14 - Ann bought goods, $210, from Cindy, and paid in cash.

Which statement about the balance on Cindy’s account in Ann’s ledger on 30 April is correct?

• Ann owes Cindy $490.

• Ann owes Cindy $700.

• Cindy owes Ann $490.

• Cindy owes Ann $700.

Goods bought on credit by Tumelo from Tebogo are returned before they are paid for. Tumelo keeps a full double entry system.

Where will Tumelo record the return of goods?

• cash book and sales ledger

• general ledger only

• general ledger and purchases ledger

• purchases ledger only

Dave supplies goods to Peter on credit. On 1 April, Peter owed Dave $440. Dave sent or received the following documents in April.

What was the closing balance on the statement of account on 30 April?

• $260

• $310

• $321

• $421

A business sold goods with a list price of $50 each.

The terms of trade were:

trade discount for more than 20 items bought - 10%

cash discount if customer pays within 30 days - 4%

How much was received in full settlement from a customer who bought 25 items and paid after 35 days?

• $900

• $1075

• $1125

• $1200

Paul rents premises from John and pays the rent by credit transfer.

How would John record this?

• Dr - Bank; Cr - Rent Receivable

• Dr - Cash; Cr - Rent Receivable

• Dr - Rent Receivable; Cr - Bank

• Dr - Rent Receivable; Cr - Cash

Sita discovers that $1000 received from the sale of fixtures had been entered in the sales account.

Which journal entry corrected this error?

• Dr - Bank $1000; Cr - Disposal of fixtures $1000

• Dr - Bank $1000; Cr - Fixtures $1000

• Dr - Sales $1000; Cr - Disposal of fixtures $1000

• Dr - Sales $1000; Cr - Fixtures $1000