British Management College
FA-test Total Marks: 100 Passing Marks: 60 Time Allowed: 2 Hours
Attempt all questions:
1) Vic's receivables ledger balances add up to $50,000 which does not agree with his trade
receivables control account.
(1) A bank credit transfer from a credit customer of $750 was not recorded in the
receivables ledger
(2) A contra entry of $2,000 was entered into the control account but not in the receivables
and payables ledgers
What should the total of the balances on his receivables ledger be after correcting the
following errors?
$49,250
$50,000
$52,750
$47,250
2) Which of the following is an asset?
An overdraft
Money owed by a business
The capital of a business
Machinery owned by a business
3) Which of the following is the correct entry to record a credit transaction entered into with
a supplier?
Dr Payables Cr Purchases
Dr Sales Cr Receivables
Dr Purchases Cr Payables
Dr Receivables Cr Sales
4) Which of the following would be on the credit side of the trade payables control account?
Contras with the trade receivables control account
Payments to suppliers
Purchase returns
Purchases
5) Bharvinda offers customers a 5% settlement discount if they pay within ten days.
In which book of prime entry will this discount be recorded?
Sales day book
Purchase day book
Cash receipts book
Cash payments book
6) Which of the following is correct?
Capital - Liabilities = Assets
Liabilities - Capital = Assets
Assets - Capital = Liabilities
Assets + Liabilities = Capital
7) What document is a proof of payment?
Delivery note
Advice note
Invoice
Receipt
8) Which of the following is the correct double entry to record discounts given by a supplier?
Dr Payables Cr Discounts allowed
Dr Payables Cr Discounts received
Dr Discounts Cr Payables
received
Dr Discounts allowed Cr Payables
9) Warren had a positive cash balance of $430.60 in his cash book. When performing a bank
reconciliation he discovered that he had not recorded a standing order payment of $80.
After this error has been corrected what will be the balance both in his cash book and on
his bank statement?
Dr Cash book $510.60 Cr Bank statement $510.60
Cr Cash book $510.60 Dr Bank statement $510.60
Cr Cash book $350.60 Dr Bank statement $350.60
Dr Cash book $350.60 Cr Bank statement $350.60
10) Which of the following accounts is an expense account?
Ebeneezer (a customer)
Rent paid
Discounts received
Kamalar (a supplier)
11) Shazheena offers a 2% trade discount to all customers but increases this trade discount
to 7% if a customer's purchases exceed $5,000. She sells goods to Alan with a list price of
$5,200.
What will be the total on the invoice she sends to Alan? (Ignore sales tax.)
$5,086
$5,096
$4,940
$4,836
12) Which of the following errors would require a suspense account in order for the trial
balance $520052 to balance?
A debit balance of $7,300 for motor expenses in the trial balance actually related to
the purchase of a motor van
A purchase invoice of $562 has been omitted from the books of prime entry
Discounts allowed of $2600 have been recorded as a credit balance in the trial balance
The sales day book has been overstated by $3,200
13) Which business document authorises a payment to a supplier?
Advice note
Remittance advice
Internal cheque requisition
Purchase requisition
14) Farsa returned some goods to Kerry, a credit supplier, because they were unsuitable.
Which of the following would correctly document the return?
(1) Farsa sends Kerry a debit note
(2) Farsa sends Kerry a credit note
(3) Kerry sends Farsa a debit note
(4) Kerry sends Farsa a credit note
1 and 3
2 and 4
2 and 3
1 and 4
15) How should the total of the discounts column on the cash payments side of the cash
book be posted to the general ledger?
Dr Receivables control Cr Discounts allowed
Dr Payables control Cr Discounts received
Dr Discounts received Cr Payables control
Dr Discounts allowed Cr Receivables control
16) May has just purchased goods for resale from a supplier for $315. She has agreed to pay
for them in 30 days time.
Which of the following is the correct entry for May to record this transaction?
Dr Purchases $315 Cr Payables $315
Dr Sales $315 Cr Receivables $315
Dr Receivables $315 Cr Sales $315
Dr Payables $315 Cr Purchases $315
17) The following statements relate to an aged receivables analysis:
(1) An aged receivables analysis is a report listing all the suppliers of a business, how
much they are owed and for how long the amount has been outstanding
(2) An aged receivables analysis is a report that is useful for identifying late payers and for
providing information on debt collection efficiency to the management
Which of the above statements is/are correct?
Statement 1 only
Statement 2 only
Both statements
Neither statement
18) What does a paying-in slip give details of?
The invoice a customer is paying
The cheques paid out to suppliers
The quantities of cash and cheques paid into the bank
The credit card payments made by customers
19) The balance on the payables ledger control account is $3,300 but the total of the
individual trade payables ledger account is $4,900.
Which of the following could account for the difference?
The purchase day book is overcast by $1,600
A balance of $1,600 owing to Bob Smith omitted from the total of the individual ledger
accounts
Discounts received of $1,600 omitted from the control account
Discounts received of $1,600 omitted from the individual accounts
20) The following statements relate to the coding of transactions:
(1) Faceted codes are made up of a number of sections, each section of the code
representing a different feature of the item
(2) Sequence codes include a descriptive element to make it easy to find the right code
Which of the above statements is/are correct?
Both statements
Neither statement
Statement 1 only
Statement 2 only
21) With an imprest system of petty cash which of the following is correct?
Vouchers + Cash held = Imprest
Cash held + Imprest = Vouchers
Imprest + Vouchers = Cash held
Cash held - Vouchers = Imprest
22) Which of the following types of account would normally have credit balances in a trial
balance?
(1) Asset accounts
(2) Liability accounts
(3) Income accounts
(4) Expense accounts
1 and 4
2 and 4
2 and 3
1 and 3
23) Which department within an organisation is MOST affected by data protection
legislation?
Product research and development
Treasury
Human resources
Purchasing
24) When a cheque is crossed A/C payee which of the following is true?
It can be cashed by any type of business
It does not have to go through the clearing system
It can be endorsed
It must be paid into the account of the person named on the cheque
25) Which of the following describes a sales invoice?
A written statement of the amount of money that has been paid by the customer
A document sent to a potential customer quoting the price for goods
A written request for payment from a supplier giving details of items purchased
A written request to a credit customer for payment giving details of items sold
26) Xyon buys machinery from Zavlax for $10,000 agreeing to pay in 30 days' time.
What is the correct double entry to record this transaction in Xyon's books?
Dr Machinery Cr Payables
Dr Machinery Cr Cash
Dr Purchases Cr Cash
Dr Purchases Cr Payables
27) Dean owed Hedley $192.00 but was declared bankrupt and was only able to pay his
credit suppliers $0.30 for every $1 outstanding.
How should Hedley record the payment from Dean in his ledger?
Dr Cash $57.60 Dr Irrecoverable $134.40 Cr $192.00
debts Receivables
Dr Irrecoverable $57.60 Cr Receivables $57.60
debts
Dr Irrecoverable $134.40 Cr Payables $134.40
debts
Dr Cash $57.60 Dr Irrecoverable $134.40 Cr Payables $192.00
debts
28) Juliette paid a supplier $240 after taking advantage of a 5% settlement discount
received. She also made a credit purchase from another supplier on the same day.
Which two books of prime entry would the above transactions be recorded in?
Cash receipts book and sales day book
Cash payments book and purchase day book
Cash receipts book and purchase day book
Cash payments book and sales day book
29) Which of the following employee related expenses would be paid out of petty cash?
The purchase of a car to be driven by the sales director
Payment of monthly salaries for the production staff
Payment of pensions contributions
Payments of taxi journeys for employees occasionally working late
30) Which double entry would record a credit transaction with a customer?
Dr Purchases Cr Payables
Dr Sales Cr Receivables
Dr Payables Cr Purchases
Dr Receivables Cr Sales
31) Sogo Co has credit accounts set up with all of its suppliers.
Which of the following are reasons why a particular supplier account may not reconcile to
the supplier's statement?
(1) Sogo Co recently sent a payment by cheque in the post to the supplier
(2) The supplier recently sent Sogo Co a credit note which Sogo Co has not recorded on the
supplier account
(3) The supplier recently purchased goods from Sogo Co and has entered a contra on Sogo
Co's customer account. Sogo Co has not entered the same contra
(4) There is a dispute between Sogo Co and the supplier over a particular invoice which
both parties have recorded in their accounts
1, 2 and 4
1 and 2 only
1, 2 and 3
3 and 4
32) Johan had a debit balance in his cash book of $2,312 but his bank statement showed he
was in credit by $3,425.
Which of the following would explain the difference?
Outstanding lodgements of $1,113
Unpresented cheques of $1,113
Outstanding lodgements of $5,737
Unpresented cheques of $5,737
33) In the trade receivables control account which of the following would be on the debit
side?
Discounts allowed
Irrecoverable debts
Cash received
Sales
34) Barik purchased items of stationery paying by cheque.
What is the double entry to record this?
Dr Stationery Cr Bank
Dr Stationery Cr Petty cash
Dr Bank Cr Stationery
Dr Petty cash Cr Stationery
35) To make the trial balance balance a suspense account has been opened showing a credit
balance of $560.
Which one of the following could be the reason for the suspense account?
Opening inventory of $560 omitted from the trial balance
A bank overdraft of $280 shown as a positive cash balance
Purchase of a van for $560 recorded as a motor expense
Receivables recorded in the trial balance as $3,620 instead of $4,180
36) Bertha had a credit balance of $4,697 on her suspense account. The following errors
were then discovered:
(1) Inventory of $2,672 had been omitted from the trial balance
(2) Capital brought forward of $10,000 had been included on the debit side of the trial
balance
(3) A cash payment of $2,600 had been included twice in the cash account
After adjusting for the above errors what is the outstanding balance on the suspense
account?
$15,231 Dr
$10,031 Dr
$5,375 Cr
$14,769 Cr
37) At the beginning of May Barbara has receivables in total of $42,390. During May she
has the following transactions:
$
Sells good on credit 12,380
Makes cash sales 3,890
Receives cash from credit customers 8,490
Writes off irrecoverable debts 695
Returns from credit customers 426
What is the balance on Barbara's receivables account at the end of May?
$2,769
$49,049
$6,659
$45,159
38) Anton is employed at an annual salary of $20,800. He is contracted to work 40 hours
per week, 52 weeks a year (including five weeks paid holiday). If overtime has to be worked
the first six hours of overtime in any week are not paid for. Any overtime in excess of six
hours in a week is paid for at time and a half.
During one week Anton worked nine hours of overtime.
What will be Anton's overtime pay for the week?
$45
$135
$30
$445
39) The sales ledger control account had a balance of $32,920 but the list of customer
balances totalled $35,760.
Which of the following would explain the difference?
A contra of $2,840 with the purchase ledger has not been done in the control account
A customer balance of $2,840 has been omitted from the list of customer balances
The sales day book total is understated by $2,840
The trade receivables column of the cash receipts book is understated by $2,840
40) Which of the following would normally be on the same side in the trial balance?
Sales and drawings
Receivables and purchases
Loan liabilities and interest expense
Payables and discounts allowed
41) Gustav is invoicing a customer for goods with a list price of $8,000. The customer is
given:
(1) A trade discount of 10%
(2) A settlement discount of 5% if the invoice is paid within 28 days
How much should the customer pay if payment in full is made in 21 days?
$6,840
$8,000
$7,200
$7,600
42) Nanette works for Piroz and is paid a basic wage of $1,000 a week. Piroz operates the
following bonus scheme:
(1) Each employee gets a bonus of $4 for every unit they produce in excess of 2,000 units
for the week
(2) If total production is more than 15% higher than the target production for that week
an additional bonus of 8% of the basic wage for the week is paid to each employee
In week 26 the target set by Piroz was 40,000 units and actual production was 39,200
units. Nanette produced 2,600 of these.
What is Nanette's bonus for week 26?
$3,400
$3,480
$2,400
$2,480
43) The balance on the list of supplier balances of $15,950 does not agree with the
purchase ledger control account. It is subsequently found that a credit note issued by a
supplier for $680 was missed from the list of balances and that the purchase day book was
undercast by $1,220.
What is the corrected total on the purchase ledger control account?
$16,630
$17,850
$15,270
$16,490
44) Malcolm purchased goods from Wendy with a value of $4,900. He paid cash of $2,900
immediately and agreed to pay the rest in 30 days.
What is the correct double entry to record this transaction in Wendy's accounts?
Sales Cr $2,900 Cash Cr $2,000 Receivables Dr $4,900
Sales Dr $2,000 Cash Dr $2,900 Receivables Cr $4,900
Sales Dr $4,900 Cash Cr $2,900 Receivables Cr $2,000
Sales Cr $4,900 Cash Dr $2,900 Receivables Dr $2,000
45) Pavan has a year end of 30 November 20X8. On 30 November 20X8 she buys a car on
credit to use solely in her business.
Which parts of the business' accounting equation will the purchase of the car change on 30
November 20X8?
Assets and Profit
Assets and Liabilities
Capital and Profit
Capital and Liabilities
46) Javesh has a basic salary of $3,200 for November. His income tax on the salary is $640
and he pays state benefit contributions of $290. His employer also pays state benefit
contributions of $340 and pension contributions for Javesh of $160.
How much will Javesh receive as his net pay for November?
$2,270
$1,930
$2,770
$1,770
47) Which one of the following is a reason for preparing a receivables ledger
reconciliation?
To check the calculation of gross profit
To confirm the accuracy of postings
To identify overdue accounts
To calculate discounts allowed
48) On 1 December 20X8 Pavel received a loan of $5,000 to help finance his business. He
paid interest of 5% for the year on 30 November 20X9.
Which of the following is the correct treatment for the interest expense?
Dr Loan Cr Bank
Dr Bank Cr Interest expense
Dr Bank Cr Loan
Dr Interest expense Cr Bank
49) At the beginning of October Simon has total trade receivables of $26,700. During
October he has the following transactions:
$
Credit sales 75,500
Cash receipts from customers 80,000
Sales returns 700
Irrecoverable debts 2,000
What is the balance on Simon's trade receivables account at the end of October?
$19,500
$23,900
$20,900
$28,500
50) The following has been extracted from Gordon's purchase returns day book:
Purchase returns Sales tax Total
$15,260 $2,670.50 $17,930.50
How should this be recorded in Gordon's ledgers?
Dr Purchase $17,930.50 Cr Sales $2,670.50 Cr Payables $15,260
returns tax
Dr Purchase $15,260 Dr Sales $2,670.50 Cr Payables $17,930.50
returns tax
Dr Payables $17,930.50 Cr Purchase returns $17,930.50
Dr Payables $17,930.50 Cr Sales $2,670.50 Cr Purchase $15,260
tax returns
