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British Management College

FA- test Total Marks: 100 Passing Marks: 60 Times Allowed: 2 Hours

Attempt all Questions:

1) The trade receivables control account had a balance of $32,920 but the list of
customer balances totaled $35,760.
Which one of the following would explain the difference?
The sales day book total is understated by $2,840

A customer balance of $2,840 has been omitted from the list of customer
balances

The trade receivables column of the cash receipts book is understated by

$2,840

A contra of $2,840 with the payables ledger has not been done in the control
account

2) In the trade payables control account which one of the following would be on the
credit side of the account?
Contras with the trade receivables control account

Cash paid to suppliers

Purchase returns

Purchases

3) Before paying a supplier a purchase invoice should be checked against which one
of the following documents?
Sales order

Goods received note

Paying in slip

Remittance advice
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4) Alesha's trade receivables control account balance is $32,000 which does not
agree with the total of the individual accounts in the receivables ledgers. The
following will need to be taken into account:

(1) Sales returns of $4,300 were not recorded in the control account

(2) A total from the sales day book is overstated by $200

(3) An individual receivables account of $360 was omitted when the receivables
ledgers were totaled
What is the correct total for the individual receivables ledgers?
$27,900
=32000-4300-200
$27,140

$27,860

$27,500

5) The following are extracted from Pierre's trial balance:

Capital 30,000

Sales ?

Purchase 34,000

Inventory 20,000

Receivables 28,000

Payables 19,000

Cash 11,000
What is the figure for sales?
$44,000

$26,000
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$11,000

$22,000

6) The following statements relate to bank reconciliations:

(1) Unpresented cheques will result in the cash book balance being less than
the credit balance on the bank statement

(2) Outstanding lodgements can arise as a result of the banks' clearing

systems
Which of the above statements are correct?
Both statements

Statement 2 only

Statement 1 only

Neither statement

7) Talik maintains a petty cash balance of $150 each week. At the end of one
particular week he has vouchers within petty cash of $16.20, $10.37 and $31.65.
In order to restore the petty cash balance, what transaction should Talik make?
Dr Petty $58.22 Cr Bank $58.22
cash

Dr Bank $58.22 Cr Petty cash $58.22

Dr Petty $91.78 Cr Bank $91.78

cash

Dr Bank $91.78 Cr Petty cash $91.78

the transaction of debiting Petty Cash and crediting Bank for 58.22
8) Jacob has a debit balance on his suspense account of $3,720. The following errors
are subsequently found:

(1) Opening inventory of $1,980 is omitted from the trial balance

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(2) Bank overdraft of $630 has been included in the trial balance as a positive
cash balance

(3) Receivables have been understated by $3,000

After adjusting for these errors what is the remaining balance on the suspense
account?
$6,000 Dr = 3720-1980+630*2-3000
$630 Cr

$3,960 Dr

Nil

9) In the ledger accounts Warren recorded both discounts allowed of $200 and
discounts received of $200 as credits in the discounts received account.
What journal entry should be made to correct the error?
Dr Discounts $200 Cr Discounts $200
received allowed

Dr Discounts $200 Cr Discounts $200

allowed received

Dr Discounts $200 Dr Discounts $200 Cr Suspense $400

received allowed account

Dr Suspense $400 Cr Discounts $200 Cr Discounts $200

account allowed received

Dr Discount aloowed $400 Cr. Suspense $400

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10) Arthur sent a payment to Zoe along with a document that listed the items or
invoices he was paying.
What is this document known as?
Remittance advice

Statement

Delivery note

Credit note

11) At the start of November William had $10,000 in his cash account. The only
transactions he made during November were cash sales of $16,000 and cash
purchases of $12,500.
What was the balance on his cash account at the end of November?
$13,500 Dr

$6,500 Dr

$6,500 Cr

$13,500 Cr

12) Marina owns a hairdresser's shop. She employs Betty and Kathleen to work in
the shop. Each month she takes $1,200 for herself and pays Betty $200 and
Kathleen $400.
What is the correct double entry to record this transaction?
Dr Bank $1,800 Cr Drawings $1,200 Cr Wages $600

Dr Wages $1,800 Cr Bank $1,800

Dr Bank $1,800 Cr Wages $1,800

Dr Drawings $1,200 Dr Wages $600 Cr Bank $1,800

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13) A business, which is registered for sales tax, has the following totals for a
purchases day book for a week:

Purchases (gross) 350,150

Purchases (net) 298,000

Sales tax 52,150

How should this information be recorded in the double entry system?
Dr Purchases Cr Accounts payable
$350,150 control $350,150

Dr Purchases Cr Accounts payable

$298,000 control $298,000

Dr Purchases Cr Accounts payable Cr Tax $52,150

$350,150 control $298,000

Dr Purchases Dr Sales tax $52,150 Cr Accounts payable

$298,000 control $350,150

14) A credit entry in a ledger account can represent which of the following?
(1) Decrease in an asset

(2) Increase in a liability

(3) Increase in an expense

(4) Decrease in income

3 and 4 only

1 and 2 only

2 and 3 only

1, 2, 3 and 4
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15) Marlene receives cheque payments from her customers which she pays into the
bank on a daily basis.
What should the cheques be accompanied by when they are paid into the bank?
Petty cash form

BACS payment form

Paying-in slip

Cheque requisition form

16)The following are extracted from Boris' trial balance:

Sales 67,000

Purchases ?

Capital 80,000

Trade payables 21,000

Trade 35,000
receivables

Inventory 19,000

Cash 14,000
What is the figure for purchases?
$34,000

$100,000

$5,000

$128,000

17) Which of the following should be classified as liabilities?

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(1) Trade receivables

(2) Sales tax payable

(3) Trade payables

(4) Drawings

2 and 3

1 and 2

2 and 4

3 and 4

18) Henry is owed $172.00 from Clechan, a credit customer. Clechan has become
bankrupt and a final payment of $0.40 for every $1 owed has been received in final
settlement of the debt. Henry is not registered for sales tax.
How should Henry record this in the ledger?
Dr Irrecoverable $103.20 Cr Accounts $103.20
debts payable

Dr Irrecoverable $68.80 Cr Accounts $68.80

debts receivable

Dr Cash $68.80 Dr Irrecoverable $103.20 Cr Accounts $172.00

debts receivable

Dr Cash $68.80 Dr Irrecoverable $103.20 Cr Accounts $172.00

debts payable
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19) Which of the following are risks that an organisation might be exposed to if it
does not have adequate data protection procedures in place?
(1) Access to personal information by unauthorised parties

(2) Personal information being used for purposes for which it was not originally
intended

(3) Harm to an individual caused by inaccurate or misleading information about

them being circulated electronically

(4) Information about an individual being held for a longer period of time than
permitted by law

1 and 2 only

3 and 4 only

1, 2 and 3
only

1, 2, 3 and 4

20) Which one of the following books of prime entry would settlement discounts
allowed be recorded in?
Cash payments book

Cash receipts book

Purchase day book

Sales day book

21) At 31 October 20X0 Jemma was owed $138,644 by her customers. She has
calculated that her receivables allowance should be $2,600.
How should receivables be reported in Jemma's statement of financial position at 31
October 20X0?
As an asset of $138,644 and a liability of $2,600

As a liability of $136,044
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As an asset of $136,044

As a liability of $138,644 and an asset of $2,600

22) Parvez has $2,000 in his business bank account. He withdraws $750 from this
account for personal use.
Which parts of the accounting equation will change as a result?
Assets and capital

Liabilities and capital

Capital and profit

Assets and liabilities

23) Stuart's trial balance did not agree and a suspense account was opened for the
difference. A subsequent check of the account system revealed the following errors:

(1) $54,900 paid as wages was correctly recorded in the cash book but was debited
to the wages account as $45,900

(2) A total of $27,600 for discounts received was posted to the credit of the
discount allowed account
When correcting the errors which would need an entry to be made in the suspense
account?
2 only

1 only
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Both 1 and 2

Neither 1 nor 2

24) Elizabeth is paid a basic wage of $1,500 a week. If total production is more than
5% 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 6 the target set was 49,000 units and actual production was 54,000 units.
What is Elizabeth's bonus for week 6?
$1,620

No bonus is payable

$120

$75

25) Mischa sells goods to Felipe allowing a 5% trade discount. At the start of May
Felipe had no outstanding balance with Mischa but during the month of May Felipe
had the following transactions:

4 May Purchased goods with a list price of

$2,800

20 Returned goods with a list price of $1,340

May

28 Paid Mischa $2,500

May
At the end of May what is the balance on Felipe's account in Mischa's receivables
ledger?
$1,040 Dr

$1,040 Cr

$1,113 Cr

$1,113 Dr
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26) The following statements relate to an imprest system of petty cash:

(1) The total cash and total vouchers in the petty cash tin will always add up to
the imprest amount

(2) The total amount in the petty cash tin is periodically topped up to a fixed limit
Which of the above statements are correct?
Neither statement

Statement 1 only

Both statements

Statement 2 only

27) The following statements relate to the aged receivables analysis:

(1) An aged receivables report is useful for identifying late paying customers and
for providing information about debt collection efficiency to management

(2) An aged receivables report lists all suppliers, how much is owed to them and
for how long the debt has been outstanding
Which of the following is correct?
Both statements

Statement 2 only

Neither statement

Statement 1 only

28) One of Jean's customers purchased goods on credit for $1,880 plus sales tax of
$329, and paid Jean $2,209 for those goods.
What is the double entry to record this payment in Jean's accounts?
Dr Cash $2,209 Cr Trade receivables $1,880 Cr Sales tax $329
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Dr Cash $2,209 Cr Sales $2,209

Dr Cash $2,209 Cr Trade receivables $2,209

Dr Cash $2,209 Cr Sales $1,880 Cr Sales tax $329

29) Why must all journal entries be accompanied by a narrative?

As it is a requirement of International Accounting Standards

As it is a legal requirement in most regimes

For audit and control purposes

For future training purposes

30) Betty sold goods worth $3,300 to Sean on credit. She subsequently discovered
that Sean is bankrupt and will not be able to pay for the goods.
What entry should Betty make in her accounts as a result of her discovery?
Dr Irrecoverable debts Cr Receivables $3,300
$3,300

Dr Receivables $3,300 Cr Irrecoverable debts

$3,300

Dr Irrecoverable debts Cr Sales $3,300

$3,300

Dr Sales $3,300 Cr Irrecoverable debts

$3,300

31) The balance on the payables ledger control account was $5,891. It was then
discovered that the purchase day book was overcast by $135 and that discounts
received of $90 had not been posted at all.
What is the correct balance on the payables ledger control account?
$5,666
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$5,846

$6,116

$5,936

32) Details of BACS payment will be found on which document?

Petty cash voucher

Bank statement

Paying-in slip

Standing order mandate

33) James accepts payment of $6,256 from Eric in full settlement of an invoice for
$6,800.
How should James record the discount of $544?
Dr Discounts Cr Eric
received

Dr Eric Cr Discounts
received

Dr Discounts Cr Eric
allowed

Dr Eric Cr Discounts allowed

34) James accepts payment of $6,256 from Eric in full settlement of an invoice for
$6,800.
How should James record the discount of $544?
Dr Discounts Cr Eric
received
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Dr Eric Cr Discounts
received

Dr Discounts Cr Eric
allowed

Dr Eric Cr Discounts allowed

35) James accepts payment of $6,256 from Eric in full settlement of an invoice for
$6,800.
How should James record the discount of $544?
Dr Discounts Cr Eric
received

Dr Eric Cr Discounts
received

Dr Discounts Cr Eric
allowed

Dr Eric Cr Discounts allowed

36) Which of the following documents must contain a monetary amount?

(1) Quotation

(2) Delivery note

(3) Sales invoice

(4) Remittance advice

1, 3 and 4

2 and 3 only

3 and 4 only

1, 2 and 3
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37) Laurence buys goods from Patrick and receives a 10% trade discount. During
May Laurence bought goods with a list price of $8,930 (including sales tax). Sales
tax is 17.5%.
What is the value of the invoice that Patrick issued to Laurence?
$6,840

$7,600 = 8930/1.175 * .9 *1.175

$8,037

$9,443

38) The totals for the sales day book for a trader who is registered for sales tax were
as follows:

Sales (net) 151,000

Sales tax 26,425

Sales (gross) 177,425

How should these be posted to the double entry system?
Dr Trade receivables $151,000 Dr Sales $26,425 Cr $177,425
control tax Sales

Dr Trade receivables $177,425 Cr Sales $26,425 Cr $151,000

control tax Sales

Dr Trade receivables $177,425 Cr Sales $177,425

control

Dr Trade receivables $151,000 Cr Sales $151,000

control

39) In Maureen's accounting record the total of the balances on the customers'
accounts is $55,000 and the balance on the receivables control account is $58,500.
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Which of the following would explain this situation?

A sales invoice for $3,500 has been debited to a supplier's personal account
instead of the customer's

The total of the sales book has been undercast by $3,500

The total of the purchases book has been overcast by $3,500

A sales invoice of $3,500 has been omitted from the sales day book

40) At the end of May there is a credit balance in Kwai's cash book of $839. On
receiving his bank statement Kwai identified the following items:

(1) A receipt paid into the bank of $1,212 had been recorded in the cash book as
$2,121

(2) Bank charges of $63 have not been recorded in the cash book
After accounting for these items what should be the cash book balance?
$1,811 Cr

$133 Dr

$7 Dr

$1,715 Cr

41) During the year ended 30 November 20X8 Varsha earned a gross salary of
$27,000. She paid 10% and her employer paid 5% of her gross salary into a pension
fund.
What amount will her employer record as the total wages and salaries expense for
Varsha for the year ended 30 November 20X8?
$31,050

$27,000

$28,350

$25,650
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42) Which type of accounting data file is permanent and would not usually be
deleted?
Transitory file

Non-active file

Master file

Active file

43) According to her sales returns day book Amy's returns were $880 excluding
sales tax at 17.5%. Amy is registered for sales tax.
How should this information be recorded in Amy's general ledger?
Dr Receivables $1,034 Cr Returns $880 Cr Sales tax $154
control inwards

Dr Returns $880 Dr Sales tax $154 Cr Receivables $1,034

inwards control

Dr Receivables $1,034 Cr Returns $1,034

control inwards

Dr Returns $880 Cr Receivables $880

inwards control

44) The following is a personal account in Brian's ledger:

Kelly Alrick $ $

16 May Bank 1,008 01 May Balance b/f 0

16 May Discount 252 06 May Invoice 1,260

SL23677
Which of the following is correct?
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Brian sold goods to Kelly Alrick and a discount of 25% was allowed when the
invoice was settled

Brian sold goods to Kelly Alrick and a discount of 20% was allowed when the
invoice was settled

Brian purchased goods from Kelly Alrick and a discount of 25% was received
when the invoice was settled

Brian purchased goods from Kelly Alrick and a discount of 20% was received
when the invoice was settled

45) Harval started up in business on 1 May 20X9 using $6,500 of his savings and
$1,800 he received as a business bank loan. During his first month of trading he:

(1) Bought goods costing $2,800 for cash

(2) Paid expenses of $1,240

(3) Bought a van costing $4,300 for cash

(4) Made sales of $5,700 of which $1,700 were on 30 day credit terms
What was the balance on his cash account at 31 May 20X9?
$5,660 Dr

$5,660 Cr

$3,960 Cr

$3,960 Dr

46) A transaction has been recorded in the ledger of Rafik as follows:

Motor vehicles
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$ $

7 May 17,600

Bank

$ $

7 May 17,600
What was the transaction?
Banking of the proceeds from the sale of motor vehicles

Purchase of motor vehicles on credit

Purchase of motor vehicles paid for by cheque

Receipt of a bank loan to purchase motor vehicles

47) What is the correct double entry to record discounts given to a customer?
Dr Receivables Cr Discounts received

Dr Receivables Cr Discounts allowed

Dr Discounts received Cr Receivables

Dr Discounts allowed Cr Receivables

48) Which of the following should be recorded in the purchases day book?
A reminder received about an overdue invoice

An invoice from a supplier

A delivery note from a supplier

A credit note received from a customer

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49) What is the purpose of receivables ledger accounts if a receivables control

account is also maintained?
To record journal entries and adjustments

To record a customer's summarised transactions

To record the detailed transactions of each customer

To form part of the general ledger double entry system

50) Duncan performed a trade payables control account reconciliation and found the
following errors:

(1) The purchase day book was understated by $560

(2) A purchase invoice for $425 had been omitted from the accounts
Which one of the following shows the necessary adjustment required to ensure the
balances reconcile at the correct amount?
Trade payables control account Dr $985

Total of the individual supplier Add $425

accounts

Trade payables control account Cr $985

Total of the individual supplier Subtract

accounts $425

Trade payables control account Dr $985

Total of the individual supplier Subtract

accounts $425

Trade payables control account Cr $985

Total of the individual supplier Add $425

accounts