June 2020 P1 Accounting 7707 Part 2

The totals of a trial balance did not agree and $200 was debited to a suspense account. On checking the books it was found that two errors had been made:

1) A sales invoice for $700 had been recorded in the sales journal as $770.

2) The sales journal had been totalled incorrectly.

What was the error made in totalling the sales journal?

• overcast by $130

• overcast by $200

• undercast by $130

• undercast by $200

The income statement of a business showed a loss for the year of $16 000. On checking the books the following errors were discovered:

1) No adjustment had been made for insurance prepaid, $480.

2) No entry had been made for bank charges, $620.

What was the correct loss for the year?

• $14 900

• $15 860

• $16 140

• $17 100

What would result in a cash book balance being lower than the balance showing on a bank statement?

• A cheque received from a customer was not recorded in the bank statement.

• A customer’s cheque dishonoured by the bank appeared only on the bank statement.

• Payment by a customer directly into the bank was not recorded in the cash book.

• Payment of insurance by standing order was not recorded in the cash book.

Thembi is preparing her sales ledger control account. She needs to know:

1) The total for goods which have been returned by credit customers.

2) The amount owed by credit customers which have been written off as irrecoverable.

Where can she obtain this information?

• goods returned - purchase returns account

  irrecoverable debts - irrecoverable debts account

• goods returned - purchase returns journal

  irrecoverable debts - general journal

• goods returned - sales returns account

  irrecoverable debts - irrecoverable debts account

• goods returned - sales returns journal

  irrecoverable debts - general journal

The following payments were made when a new machine was purchased.

How much was the capital expenditure?

• $32 000

• $33 300

• $35 100

• $37 100

A non-current asset was depreciated at the end of the first year of ownership using the straight-line method based on the following information.

It was then found that the reducing balance method at 30% per annum should have been used. What was the effect on the profit for the year of correcting this error?

• decrease by $2000

• increase by $2000

• decrease by $6000

• increase by $6000

Elzevir purchased a motor vehicle costing $8000 on 1 January 2018. It is depreciated at 40% on the reducing balance basis.

Which journal entry records the depreciation for the year ended 31 December 2019?

• Dr - income statement $1920

  Cr - provision for depreciation of motor vehicles $1920

• Dr - income statement $3200

  Cr - provision for depreciation of motor vehicles $3200

• Dr - provision for depreciation of motor vehicles $1920

  Cr - Motor Vehicles $1920

• Dr - provision for depreciation of motor vehicles $3200

  Cr - Motor Vehicles $3200

Alice’s financial year ends on 31 December. The balances on her books on 1 January 2020 included the following.

What do these balances represent?

• commission receivable - income outstanding

  rent receivable - income outstanding

• commission receivable - income outstanding

  rent receivable - income prepaid

• commission receivable - income prepaid

  rent receivable - income outstanding

• commission receivable - income prepaid

  rent receivable - income prepaid

Annual rental income due from Kumar, a tenant, is $3600. At the start of the year Kumar had prepaid rent of $900.

At the end of the year he owed two months’ rent. How much rent was received from Kumar during the year?

• $2100

• $3300

• $3900

• $5100

Joel’s inventory on 31 December 2019 was valued at $4800. It was discovered that:

1) Goods, cost $100, had not been included.

2) Goods, cost $170, had been included at net realisable value $210.

What was the effect of the incorrect inventory valuation on Joel’s financial statements at 31 December 2019?

• Profit for the year - Overstated $40

  Inventory - Understated $40

  equity - Nil

• Profit for the year - Overstated $60

  Inventory - Understated $60

  equity - Nil

• Profit for the year - Understated $40

  Inventory - Understated $40

  equity - Understated $40

• Profit for the year - Understated $60

  Inventory - Understated $60

  equity - Understated $60