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LaiACCT1200(20)/online homework/test(b)

ADA University, School of Business

ACCT1200 Principles of Financial Accounting, Spring 2020

Online Homework Assignment / Test(b)

This homework assignment / test contains 16 questions (total 100 marks).

Question 16 is worth 46.875 marks, question 15 is worth 9.375 marks while all

other questions carry 3.125 marks each. You are required to answer ALL

questions. Write your answers in the text submission / write submission space.

Regarding the multiple choice questions, you only need to indicate the question

number and the alphabet letter in your answers – for example 1(a).

Question 1 (3.125 marks):

Which accounting principle is the accountant applying when the accountant makes a

provision (allowance) for bad and doubtful debts?

(a) Matching.

(b) Historical cost.

(c) Prudence / conservatism.

(d) Accrual basis of recognition.

Answer: ____________________

In each of the cases below in Questions 2 and 3, state the accounting principle which

is relevant or which would most likely have been adopted by the financial accountant.

Do not give more than one accounting principle in your answer. Answer which contains

more than one accounting principle will not get any credit.
Question 2 (3.125 marks):

The sole trader did not hand over records and receipts of his personal transactions to

his book-keeper for preparation of the financial statements.

Answer: _____________________

Question 3 (3.125 marks):

The annual depreciation on the fixed asset rather than its original total cost was used by

the accountant in the preparation of the Profit and Loss Account of the company.

Answer: ______________________

Question 4 (3.125 marks):

Absheron Ltd. returned part of the goods it had bought on credit from Baki Ltd. To

record this transaction, the accountant of Baki Ltd. should:

(a) Credit the returns outwards account; debit Absheron Ltd. account.

(b) Debit the returns outwards account; credit Absheron Ltd. account.

(c) Credit the returns inwards account; debit Absheron Ltd. account.

(d) Debit the returns inwards account; credit Absheron Ltd. account.

Answer: ______________________

Question 5 (3.125 marks):

Baki Ltd. received a cash discount for the goods which it had purchased on credit from

Caspian Ltd. To record this transaction, the accountant of Baki Ltd. should:

(a) Debit the discounts allowed account; credit Caspian Ltd. account.

(b) Debit the discounts received account; credit Caspian Ltd. account.

(c) Credit the discounts allowed account; debit Caspian Ltd. account.
(d) Credit the discounts received account; debit Caspian Ltd. account.

Answer: ______________________

Question 6 (3.125 marks):

The following data relates to a trading company for a particular accounting period:

Beginning inventory 50,000

Ending inventory 153,200

Purchases 180,000

Carriage inwards 10,000

Calculate the cost of goods sold of the company:

(a) $66,800.

(b) $86,800.

(c) $273,200.

(d) $293,200.

Answer: ______________________

The trial balance does not identify several errors committed in the accounting recording

process. In each of the cases below in Questions 7 to 9 identify / name the error

committed:

Question 7 (3.125 marks):

Both the debit and credit entries were recorded / entered as $8,000 when the original

figure was only $800.

(a) error of omission.

(c) error of commission.

(d) compensating error.

Answer: ______________________

Question 8 (3.125 marks):

Both the Motor Vehicle and the Owner’s Capital accounts were each incorrectly

increased by an equal amount of $500.

(a) compensating error.

(b) error of commission.

(c) error of omission.

(d) complete reversal of entries.

Answer: ______________________

Question 9 (3.125 marks):

Credit purchases from M Carey were incorrectly recorded in the credit side of M Casey.

(a) error of accounting principle.

(b) error of omission.

(c) complete reversal of entries.

(d) error of commission.

Answer: ______________________

Question 10 (3.125 marks):

rental by cash, out of which $9,000 was for the office rental for the first three months of

2020. The adjustments to be made by the accountant of the company at the end of

2019 would be:

(a) Debit office rental account $9,000; credit cash account $9,000.

(b) Credit office rental account $9,000; debit cash account $9,000.

(c) Debit prepayment (office rental) account $9,000; credit office rental account $9,000.

(d) Credit prepayment (office rental) account $9,000; debit office rental account $9,000.

Answer: ______________________

Questions 11 to 14 should be answered based on the information given below:

A company keeps a provision (allowance) for bad and doubtful debts at a level of 5 % of

its total outstanding trade debtors as at the end of the year. The balance on the

provision (allowance) for bad and doubtful debts at 01 January 2019 was $15,000. Its

trade debtors at 31 December 2019 amounted to $360,000 and for the financial year

ended 31 December 2019, the company was profitable.

Question 11 (3.125 marks):

The amount of provision (allowance) for bad and doubtful debts which would be

charged to the profit and loss account of the company for the year ended 31 December

2019 would be:

(a) $33,000.

(b) $18,000.

(c) $3,000
(d) None of the above.

Answer: ______________________

Question 12 (3.125 marks):

The effect of the provision (allowance) for bad and doubtful debts on the profit of the

company in the above case would be:

(a) Profit of the company decreased by $3,000.

(b) Profit of the company increased by $3,000.

(c) Profit of the company decreased by $18,000

(d) None of the above.

Answer: ______________________

Question 13 (3.125 marks):

The correct accounting entries made by the accountant of the company would be:

(a) Debit provision (allowance) for bad and doubtful debts account $3,000 and credit the

profit and loss account $3,000.

(b) Credit provision (allowance) for bad and doubtful debts account $3,000 and debit the

profit and loss account $3,000.

(c) Credit provision (allowance) for bad and doubtful debts account $18,000 and debit

the profit and loss account $18,000.

(d) None of the above.

Answer: ______________________

Question 14 (3.125 marks):

What is the amount of the provision for bad and doubtful debts which will appear in the

balance sheet of the company for the year ended 31 December 2019?

Answer: ____________________
Question 15 (9.375 marks):

An equipment costs $19,200. It will be kept for 4 years then sold for $1,400. Using the

reducing balance method with a depreciation rate of 50%;

(a) calculate the annual depreciation on the equipment during its second year of use.

Answer: _____

(b) calculate the annual depreciation on the equipment during its fourth year of use.

Answer: _____

(c) what will be the accumulated depreciation on the asset at the end of its third year?

Answer: _____

Question 16 (46.875 marks):

Record the following transactions relating to a trading business for the month of

November 2019 into their respective ledger accounts, balance off all the accounts at the

end of the month and then answer the questions which follow. Note: the questions

require just one-word answers (for example part (a) $20,000; part (b) debit or credit);

thus you are not required to show the ledger or T-accounts in your answers.

2019

Nov. 1 Owner started business with $5,000 in the bank.

Nov. 3 Bought goods on credit from C Berry $160.

Nov. 5 Sold goods for cash $240.

Nov. 6 Paid office rent by check $20.

Nov. 11 Sold goods on credit to F Parris $48.

Nov. 17 Paid salaries to employees by cash $40.

Nov. 19 Bought goods on credit from C Berry $80.

Nov. 21 Bought delivery van from AN Motors paying $500 by check.

Nov. 23 Paid C Berry by check $146.

Nov. 30 Received check from F Parris $44.

November? Answer: ____

(b) State whether the bank account had a debit or credit ending balance?

Answer: ____

(c) How much money has been invested by the owner in the business?

Answer: _____

(d) State whether the owner’s capital account had a debit or credit ending balance?

Answer: ____

(e) What was the total amount of purchases made in the month? Answer: _____

(f) State whether the purchases account had a debit or credit ending balance?

Answer: ____

(g) How much was owed to C Berry at the end of the month? Answer: _____

(h) State whether the C Berry account had a debit or credit ending balance?

Answer: ____

(i) How much cash did the business have at the end of the month?

Answer: _____

(j) State whether the cash account had a debit or credit ending balance?

Answer: ____

(k) What was the total amount of sales made in the month? Answer: _____

(l) State whether the sales account had a debit or credit ending balance?

Answer: ____

(m) What was the balance carried down (b c/d) in the office rent account?

Answer: _____

(n) State whether the office rent account had a debit or credit ending balance?

Answer: ____

(o) How much did F Parris owe the business at the end of the month?

Answer: _____

(p) State whether the F Parris account had a debit or credit ending balance?
Answer: ____

(q) How much salary was paid by the business to its employees during November?

Answer: _____

(r) State whether the employee salaries account had a debit or credit ending balance?

Answer: ____

(s) What was the balance brought down (b b/d) in the delivery van account?

Answer: _____

(t) State whether the delivery van account had a debit or credit ending balance?

Answer: ____

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