Year 8

Term 2
END OF TERM

ACCOUNTING
Duration: 1hr 20 Minutes

Name: …………………………………………………………………..
Date: …………………………………………………………………….

Instructions
 Answer all questions.
 The number of marks is given in brackets [ ].
 Write your answers in the spaces provided.

NISA 2024©
 SECTION A
1. What is the fundamental principle of 8. How are incomes recorded in accounting
double-entry bookkeeping? books?
A) Every transaction is recorded only once A) As a debit entry
B) Every debit has a corresponding credit B) As a credit entry
C) Every transaction increases capital C) As an asset
D) Only income transactions are recorded D) As a liability

2. Which of the following is NOT a feature of 9. How do expenses affect a business’s

the double-entry system? financial position?
A) Every transaction affects at least two A) They increase financial resources
accounts B) They decrease financial resources
B) Every debit has a corresponding credit C) They increase liabilities only
C) It ensures errors never occur D) They do not affect us
D) It helps in preparing financial statements
10. What is bookkeeping primarily concerned
3. In double-entry bookkeeping, an increase in with?
an expense account is recorded as a: A) Preparing financial statements
A) Debit B) Collecting and recording financial
B) Credit transactions
C) Liability C) Filing tax returns
D) Capital increase D) Managing employees’ salaries

4. What is the purpose of a T-account? 11. Which of the following is NOT an

A) To represent transactions graphically in a importance of bookkeeping?
ledger A) Ensures financial records are accurate
B) To track employee salaries B) Helps monitor business performance
C) To record only cash transactions C) Determines the exact amount of profit a
D) To replace financial statements business makes
D) Ensures financial records are up to date
5. Which of the following is an example of an
asset account? 12. What are the two main financial
A) Trade Payables statements?
B) Bank Account A) Income statement and balance sheet
C) Rent Expense B) Profit & loss statement
D) Commission Received C) Cash flow statement and invoice
D) Trial balance and journal
6. Which of the following is an example of a
liability account? 13. Which of the following is NOT part of the
A) Machinery Account accounting process?
B) Sales Revenue A) Recording financial data
C) Trade Payables B) Interpreting financial data
D) Rent Received C) Destroying outdated records
7. Which of the following is NOT a valid D) Summarizing financial data
account name?
A) Cash Account
B) Cheque Account
C) Rent Expense
D) Capital Account

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14. Why is classifying financial data 20. Why would a potential investor study a
important? business’s financial records?
A) It helps categorize transactions into assets, A) To assess whether the business is profitable
liabilities, income, and expenses before investing
B) It eliminates bookkeeping B) To monitor employee salaries
C) It automatically increases profits C) To ensure taxes are paid correctly
D) It removes accounting softwares D) To check the amount of cash stored in the
business
15. Why is accounting important for
businesses? 21. Which of the following users would be most
A) It increase sales automatically concerned about whether a business can
B) It provides financial information for pay its debts on time?
decision-making A) Employees
C) It is only for large businesses B) Trade payables (creditors)
D) It is used solely for paying taxes C) Customers
D) Competitors
16. If a business sees a decline in profits, what
might managers do? 22. How does the government use accounting
A) Decrease expenses or increase revenue information?
B) Stop recording financial transactions A) To determine the tax a business needs to
C) Ignore the financial statements pay
D) Fire all employees B) To provide loans to businesses
C) To decide how much salary employees
17. How can businesses increase their revenue? should receive
A) Reduce salaries of employees D) To track competitor profits
B) Increase advertising and expand product
range 23. What is financial data?
C) Stop bookkeeping to save money A) Information related to a business’s
D) Remove all taxes from financial statements monetary transactions
B) A list of employee names and salaries
18. Who is an internal user of accounting C) A report of customer preferences
information? D) A document used only for tax calculations
A) Government tax authorities
B) Bank managers 24. What does analyzing financial data
C) Business owners and managers involve?
D) Competitors A) Examining details to explain and interpret
them
19. Why do external users, such as banks, need B) Ignoring financial records
accounting information? C) Destroying old accounting records
A) To determine whether to approve a loan or D) Writing reports without using numbers
overdraft
B) To increase a business’s tax liabilities 25. After financial data is analyzed and
C) To track employee attendance interpreted, what happens next?
D) To decide how much rent a business should A) It is communicated to interested parties
pay B) It is stored away and ignored
C) It is deleted to save space
D) It is used only for tax payments

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 SECTION B

1. Complete the following sentences, choosing from the words below:

Fixed; equation; accounting; drawings; current liability; capital

A. Owner’s equity is also known as _______________________________
B. The statement of financial position reflects the ___________ _____________
C. When the owner withdraws cash from the business bank account for personal
use, it is called ________________________
D. Non-current assets are also known as ________________ assets.
E. Trade payables is an example of a ____________ _______________
F. Explain why owner’s equity is a type of liability.
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________

2. Indicate if it’s an Asset or Liability

Assets / Liabilities
Furniture and Fixtures
Machinery
Bank Loan
Overdraft
Property and Buildings
Trade payables
Equipment
Trade receivables
Inventory
Trade receivables
Cash in hand

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3. Given the following information, create fill in the T-accounts with the proper
information in the T-accounts. Once done, close off the Bank account and find the
balance b/d on June 1.

Bank

Capital

Motor Vehicle

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 K.L. Loans

Offset Ltd

Furniture

Drawings

4. What do the following books of prime entry record?

a. Petty cashbook; ______________________________
b. Sales return journal; ___________________________
c. Purchases Journal: ____________________________
d. Purchases return Journal; _______________________
e. Cashbook; ___________________________________

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 i. Mention the remaining two books of prime entry and what each they
record
1. ___________________________________________________
___________________________________________________
2. ___________________________________________________
___________________________________________________

5.

Prepare a three column cashbook for Sammy and find the balance brought down on 1 July,
2018.

END OF QUESTIONS PAPER

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