Accounting 11 - sole trader

A business maintains a provision for doubtful debts of 5% per annum. It has trade receivables balances of $560 000 at the start and $468 000 at the end of the financial year.

Which statements are correct?

• 1, 2 and 3

• 1 only

• 2 only

• 2 and 3 only

A business makes up its financial statements to 30 April each year.

Included in the ledger account balances on 1 May 2014 was insurance (debit) $800.

On 31 October 2014 an insurance premium of $2100 was paid for the year ended 31 October 2015.

Which amount was charged for insurance in the income statement for the year ended 30 April 2015?

• $1050

• $1850

• $2100

• $2900

The draft profit for the year for a sole trader was $108000 before the following were taken into account.

What was the correct profit for the year?

• $104 400

• $105 200

• $109 000

• $111 600

A business provides the following information.

What is the total amount to be included in current liabilities?

• $34 100

• $39 000

• $42 000

• $46 900

The following information is available from the financial records of a trader.

What was the profit for the year ended 31 December 2015?

• $10 000

• $30 000

• $35 000

• $40 000

A business had a profit for the year of $450 000 before correcting the following errors.

1 Closing inventory was undervalued by $15 000.

2 Sales returns of $5000 had been recorded as purchases returns.

3 The charge for depreciation was overstated by $20 000.

What was the profit after correcting these errors?

• $435 000

• $445 000

• $475 000

• $495 000

A business paid $5750 during its trading year for advertising. This amount included $500 in respect of the next financial year.

How would the correct treatment of the $500 affect the financial statements?

• A

• B

• C

• D

A company’s trial balance showed trade receivables of $14 600 and an existing provision for doubtful debts of $470.

It was discovered that the trade receivables included an irrecoverable debt of $500. A contra entry of $400 was also to be made.

The provision for doubtful debts is to be maintained at 5% of trade receivables.

Which amount for doubtful debts was charged in the income statement?

• $215

• $235

• $470

• $685

A business provides the following information.

Goods are sold at 25% mark up.

The owner has taken goods for own use but has not recorded these as drawings.

What is the value of the goods taken for own use?

• $5 500

• $10 500

• $12 500

• $17 500

A business owner suspects that a loss of cash has occurred.

He provides the data shown.

How much cash has been lost?

• $200

• $250

• $300

• $350