QUIZ 1-FRIDAY 13 OCTOBER 2023

In financial statements, inventories are valued at the lower of cost and net realisable value in the statement of financial position. Which accounting concept is being applied?

• A duality

• B historic cost

• C matching

• D prudence

What would be treated as part of the capital expenditure of the purchase of a building? 1. cost of purchase 2. installation of air conditioning needed for the machinery in the building 3. insurance of the building

• 1, 2 and 3

• 1 and 2 only

• 1 only

• 2 and 3 only

A business has a financial year end of 31 December. It purchased a motor vehicle on 1 January 2017 for $24000. The estimated useful life of the motor vehicle was four years. The estimated residual value at the end of four years was $8000. The business depreciates motor vehicles at 25% per year using the reducing balance method. No depreciation is charged in the year of disposal. The motor vehicle was sold on 31 July 2020 for $12000. What was the profit on the sale of the motor vehicle?

• A $1875

• B $4000

• C $5250

• D $8000

A business's suspense account appears as follows. Which statements are correct? 1. The salaries account had been overcast by $150. 2. The sales account had been overcast by $50. 3. Total debits had been $100 less than total credits in the trial balance.

• 1 and 2

• 1 only

• 2 and 3

• 3 only

In statement of profit or loss carriage outwards of $5000 has been treated as carriage inwards. Carriage inwards of $3000 has been treated as carriage outwards. What effect do these errors have on the profit?

• gross profit overstated by $2000

• gross profit overstated by $8000

• gross profit understated by $2000

• gross profit understated by $8000

A bank statement shows a credit balance of $1500. A payment of $500 and a receipt of $1250 were included in the cash book but have not yet appeared on the bank statement. Bank interest payable of $1100 had been correctly recorded in the cash book but due to a bank error had been recorded in the bank statement as $1000. What is the cash book balance?

• $2150

• $3350

• $3600

• $5000

In which book of prime entry is the contra between the sales ledger control account and the purchases ledger control account recorded?

• general journal

• cash book

• purchases journal

• sales journal

A book-keeper reconciles the control accounts with the sales and purchases ledgers. Which errors are identified in this way? 1. A figure was transposed when copied from a book of prime entry to a personal account. 2. An incorrect amount was entered in a book of prime entry. 3. A total in a book of prime entry was incorrect. 4. A transaction was omitted from a book of prime entry.

• 1, 2 and 3

• 1, 2 and 4

• 1 and 3 only

• 3 only

The draft profit for the year for a sole trader was $108 000 before the following were taken into account. An accrual of $600 for repairs had been treated as a prepayment. Depreciation of non-current assets had been undercharged by $2000. The allowance brought forward for irrecoverable debts was $1850. The allowance to carry forward should be $2250. What was the correct profit for the year?

• $104 400

• $105 200

• $109 000

• $111 600

A company received interest of $8800 during the financial year. Interest of $700 was due to be received at the beginning of the year and $850 at the end of the year. Which entry appeared in the interest received account to make the transfer to the statement of profit or loss?

• $8650 credit

• $8650 debit

• $8950 credit

• $8950 debit