WORLD ACCOUNTING & FINANCE ACADEMY (W.A.F.

A)

FA1 MOCK
Name_______________ starting time ___________

Date________________

Question 1
What is the function of a goods received note (GRN)?
A. A.The supplier uses it to confirm proof of delivery
B. B.A supplier issues it to reduce the value of a previously issued invoice due to
damaged goods
C. C.It is an internal document completed by the customer to ensure everything
ordered has been received
D. D.It shows that payment has been made

Question 2
What is a Statement of Profit or Loss (SPL)?
A. A.It is a financial statement of the business’s financial position at a point in time
B. B.It is a report of the business’s assets, liabilities and capital balances at the end of
the year
C. C.It is a summary of the individual ledger accounts of the business
D. D.It is a report highlighting the financial performance of the business for the period

Question 3
Which is not an example of asset expenditure?
A. A.Paying delivery costs for new machinery
B. B.Paying for the installation of new machinery
C. C.Paying for the repair of the machinery
D. D.Paying for the improvement of the machinery

Question 4
Sam paid for a motor vehicle by bank transfer.
What is the double entry to record this?
A. DR Bank CR Motor Vehicle
B. DR Motor Vehicle CR Bank
C. DR Cash CR Motor Vehicle
D. DR Motor Vehicle CR Cash
Question 5
Tina sells 20 units of inventory with a list price of $400 per unit to Tim. She gives Tim a
trade discount of 5% with a 2% prompt payment discount for payment within 30 days.
No sales tax is applicable.
What is the amount receivable if the prompt payment discount is claimed?
A. A.$7,840
B. B.$7,600
C. C.$8,232
D. D.$7,448

Question 6
Which double entry records a sales return with a credit customer?
A. DR Sales CR Trade receivables
B. CR Sales DR Trade receivables
C. DR Sales returns CR Trade receivables
D. DR Trade receivables CR Sales returns

Question 7
Sam has received an invoice of $660, including sales tax at 20%. There was no
discount offered.
What is the net total entered into the purchase ledger account?
A. A.$550
B. B.$132
C. C.$660
D. D.$792

Question
Alya is closing off the sales tax account. There is a balance b/d at the beginning of the
month on the debit side of $400, output tax of $2,700 and input tax of $630.
What will the balance b/d be at the beginning of the next month?
A. A.Dr $1,670
B. B.Dr $2,470
C. C.Cr $2,470
D. D.Cr $1,670

Question 8
At the end of August X1, the payables ledger of a business is $560, while the supplier
statement received shows a balance of $691. Upon review, the business identifies the
following:
 An invoice of $45 was omitted from the purchase ledger
 A credit note of $23 was incorrectly recorded in the payables ledger as $32
 A payment of $77 made on 31st August was not reflected in the statement
After correcting these issues, what is the correct payables ledger balance?
A. A.$614
B. B.$691
C. C.$596
D. D.$537

Question 9
Sam pays rent of $150 per week – a fixed amount that never changes. Which
payment method is most suitable?
A. A.Cheque
B. B.Direct credit
C. C.Standing order
D. D.Direct debit

Question 10
Which item should be paid for out of petty cash?
A. A.New desk costing $150 for a new member of staff
B. B.Cups for the office pantry
C. C.Manufacturing machinery
D. D.Delivery vehicles

Question 11
Which of the following represents the correct formula for calculating the imprest
amount in an imprest petty cash system?
A. A.Petty Cash tin balance + Petty Cash Vouchers + IOUs
B. B.Petty Cash tin balance − Petty Cash Vouchers − IOUs
C. C.Petty Cash tin balance + Petty Cash Vouchers − IOUs
D. D.Petty Cash tin balance − Petty Cash Vouchers + IOUs

Question 12
Sarah's wages depend on how many units she produces weekly.
Which type of gross pay is this?
A. A.Overtime
B. B.Commission
C. C.Bonus
D. D.Piecework

Question 13
At the end of the month, Ant Co's payroll data is as follows:
 Gross pay $4,510
 Income tax $902
Employees' state benefit
 contributions $586
 Employer's state benefit contributions $622
What is the total wage expense to the business?
A. A.$5,132
B. B.$3,022
C. C.$5,096
D. D.$6,620

Question 14
Fuel for a delivery vehicle costing $45 has been debited to the motor vehicle account
and credited to the cash account.
Which journal entry would correct this?
A. Dr Motor vehicle $45 Cr Vehicle expenses $45
Dr Vehicle expenses
B. $45 Cr Motor vehicle $45
C. Dr Cash $45 Cr Motor Vehicle $45
D. A. Dr Cash $45 Cr Vehicle Expenses $45

Question 15
A business has purchased a new delivery van by direct credit. The business has
incorrectly recorded the purchase for the delivery van as goods for resale.
Which journal entries would be required to adjust for this error?
A. A.DR Non-Current Assets, CR Purchases
B. B.DR Non-Current Assets, CR Cash
C. C.DR Cash, CR Non-Current Assets
D. D.DR Purchases, CR Non-Current Assets

Question 16
Which statement best describes an error of transposition?
 A. A.A value is recorded with the order of two digits reversed
B. B.The double entry is made to the correct accounts, but the debit and credit are
reversed
C. C.Double entry conflicting with an accounting principle
D. D.Posting an entry to the wrong account

Question 17
The trade receivables account had an opening balance of $567. In January, the total
debits posted totalled $6,784, and the total credits posted totalled $3,654.
10. What is the balance for inclusion in the trial balance?
A. A.DR $7,351
B. B.CR $7,351
C. C.DR $3,697
D. D.CR $3,697

Question 18
Which statement or statements are true?
i. The trial balance always discloses compensating errors
ii. The trial balance never discloses errors of total omission
A. A.i) only
B. B.ii) only
C. C.Both i) and ii)
D. D.Neither i) nor ii)

Question 19
The trial balance of Wes Ltd comprises the following account balances.

Account $

Sales 20,600

Purchases 14,700

Non-current assets 75,000

Payables 4,500

Receivables 6,300

Cash 7,200

Drawings 5,000
 Capital 83,100
What is the total of credits in the trial balance?
A. A.$108,200
B. B.$113,200
C. C.$101,000
D. D.$106,000

Question 20
Which error will require an entry to a suspense account to correct?
A. A.A customer receipt of $50 was entered into the accounting system as $55
B. B.A purchase invoice of $110 was lost and not reflected in the ledgers
C. C.Payment to supplier was recorded correctly to the Bank account and credited to
Trade Payables account.
D. D.A purchase of a laptop was debited to the Electricity Expense account instead of
the Office Equipment account

Question 21
What are deductions from an employee’s gross pay?
A. A.Overtime
B. B.Paid leave
C. C.Insurance contribution
D. D.Bonus

Question 22
A business has the following year-end information relating to payroll:

Gross Pay 67,800

Income tax deducted 13,340

State benefit contributions deducted from employees 7,110

State benefit contributions from employer 5,565

Pension contributions deducted from employees 3,925

Pension contributions from employer 5,020

What is the total cost of payroll for the business?
A. A.$67,800
B. B.$32,840
C. C.$78,385
D. D.$89,420

Question 23
Which best describes why a business has petty cash?
A. A.Under the clearing system, it takes a few days for cheques and direct credit
payments to clear
B. B.The cash ledger only records the totals in respect of cash payments
C. C.A business needs some cash on hand from which to meet small items of
expenditure
D. D.By paying cash, a business can avoid paying sales tax

Question 24
A business receives petty cash due to a sundry income of $8. Which of the
following is the correct double entry to post sundry income to the general ledger?
(Ignore sales tax)
A. A.DR Petty cash, CR Sundry income
B. B.DR Sundry income, CR Bank
C. C.DR Bank, CR Sundry income
D. D.DR Sundry income, CR Cash

Question 25
The petty cash box contains vouchers for payments of $235, vouchers for receipts of
cash of $35 and IOUs of $75.
If the imprest is $750, how much money should the petty cash box contain?
A. A.$750
B. B.$335
C. C.$555
D. D.$475

Question 26
What should happen when cash is withdrawn from petty cash tin?
A. A.A petty cash voucher is replaced with cash replenishment.
B. B.An I.O.U. is replaced with a petty cash voucher
C. C.A petty cash voucher is recorded in ledger accounts
D. D.An I.O.U. is deposited in the petty cash tin.

Question 27
A business registered for sales tax pays an invoice in full to a supplier. The invoice was
for goods purchased with a list price of $600, exclusive of sales tax at 20%. The
business was granted a trade discount of 3%.
What amount should the business record in the cash ledger for this payment?
A. A.$582.00
B. B.$698.40
C. C.$720.00
D. D.$600.00

Question 28
What is the journal entry for payment of sales tax to tax authorities?
A. A.DR Cash CR Sales Tax
B. B.DR Cash CR Trade Receivables
C. C.DR Sales Tax CR Cash
D. D.DR Sales Tax CR Trade Receivables

Question 29
An accountant is undertaking a bank reconciliation.
Which reconciling item needs to be recorded in the bank ledger?
A.Uncleared lodgements
A. B.Bank charges
B. C.Unpresented cheques
C. D.Bank errors

Question 30
The balance of the bank general ledger account is an overdraft of $765. The
bookkeeper has identified an error whereby a customer receipt of $78 was recorded
twice. Additionally, uncleared lodgements of $347 have been identified.
20. What should be the overdraft on the bank statement?
A. A.$1,190
B. B.$496
C. C.$340
D. D.$1,034

Question 31
Which would not be referred to when checking a supplier invoice?
A. A.Goods received note
B. B.Purchase order
C. C.Remittance advice
D. D.Delivery note
Question 32
A business purchases goods from a supplier with a list price of $850. The supplier
grants the business a trade discount of 10% and offers a settlement discount of 5% if
they pay within seven days. The business intends to make payment on the last day of
the credit term.
How much should the business record for the purchase in the purchase ledger
account?
A. A.$726.75
B. B.$765.00
C. C.$807.50
D. D.$850.00

Question 33
What are the general ledger entries to post the transactions from a purchase
invoice?
A. A.DR Trade Payables, DR Sales Tax, CR Purchases
B. B.DR Trade Payables, CR Purchases, CR Sales Tax
C. C.DR Purchases, CR Sales Tax, CR Trade Payables
D. D.DR Purchases, DR Sales Tax, CR Trade Payables

Question 34
Credit purchases of $200 have been posted to the general ledger: DR Cash $200, CR
Purchases $200.
Ignoring sales tax, what is the journal entry required to correct this?
A. A.DR Purchases $200, CR Cash $200, CR Trade payables $200
B. B.DR Purchases $200, CR Trade payables $200
C. C.DR Purchases $200, CR Cash $200
D. D.DR Purchases $400, CR Cash $200, CR Trade payables $200

Question 35
During August, Hiro received the following documents from Haruka:
 An invoice totalling $143
 An invoice totalling $176
 A credit note for $55
 An invoice totalling $275
Hiro maintains a separate purchase returns ledger. All invoices and credit notes include
sales tax at 10%.
What will be the total amount recorded in the purchase ledger because of these
transactions?
 A. A.$490
B. B.$539
C. C.$540
D. D.$594

Question 36
A supplier statement shows an outstanding balance of $3,750. The business’s records
show the supplier’s outstanding balance as $3,950.
What could be a reason for the difference?
A. A.The supplier allowed a cash discount of $200 that was not entered into the
ledgers
B. B.The supplier sent an invoice worth $200 that the business has not received
C. C.The business has paid $200 that was not accounted for in the statement
D. D.Goods worth $200 were returned to the supplier that has not been accounted for
in the business records

Question 37
During July, Lisa undertook the following transactions:
$
Payments to
suppliers 47,000
Returns to suppliers 3,000
Cash purchases 15,000
The closing balance on the payables control account is $1,000 higher at the end of July
than it was at the start of the month.
What were the total purchases in July?
A. $51,000
B. $66,000
C. $36,000
D. A. $64,000

Question 38
One of a business's customers has gone into bankruptcy, and the outstanding debt of
$500 is now considered irrecoverable.
What entries would be made in the general ledger to reflect this, ignoring sales
tax?
A. A.DR Trade Receivables, CR Irrecoverable debts expense
B. B.DR Irrecoverable debts expense, CR Cash
C. C.DR Irrecoverable debts expense, CR Trade Payables
D. D.DR Irrecoverable debts expense, CR Trade Receivables

Question 39
In January, payments from credit customers of $10,000 were received. Outstanding
debt of $1,500 is written off as irrecoverable. Credit sales recorded in January are
$12,780. There is no balance at the start of January.
What is the closing balance in the Trade Receivables account in January?
A. A.DR $1,280
B. B.CR $1,280
C. C.DR $2,780
D. D.CR $2,780

Question 40
A business received goods returned by a customer that originally cost $1,000 plus sales
tax of 10% and issued a credit note for this amount.
20. Which double-entry is the correct posting for the credit note issued?
A. A.DR Purchases $1,000, DR Sales tax $100, CR Trade payables $1,100
B. B.DR Sales $1,000, DR Sales tax $100, CR Trade receivables $1,100
C. C.DR Sales $1,100, CR Sales tax $100, CR Trade receivables $1,000
D. D.DR Purchases $1,100, CR Sales tax $100, CR Trade payables $1,000

Question 41
Which situation will likely cause debt to be written off as irrecoverable?
A. A.Customer is refusing the settlement discount.
B. B.The debt is overdue six months after the settlement period.
C. C.The customer no longer lists the business as a vendor
D. D.The customer is rapidly expanding

Question 42
A customer has taken advantage of a settlement discount offered on a credit sale. The
customer was not expected to take up the settlement discount.
Which is the correct journal entry to record the payment by the customer?
A. A.Dr Cash, Cr Sales, Cr Trade Receivables
B. B.Dr Cash, Dr Sales, Cr Trade Receivables
C. C.Dr Trade Receivables, Cr Cash
D. D.Dr Cash, Cr Trade Receivables

Question 43
Which of the following accounts is an expense account?
 A. Ebeneezer (a customer)
B. Rent paid
C. Discounts received
D. Kamalar (a supplier)

Question 44
Which of the following errors would require a suspense account in order for the trial balance to
balance?

A. A debit balance of $7,300 for motor expenses in the trial balance actually related to the
purchase of a motor van
B. A purchase invoice of $562 has been omitted from the books of prime entry
C. Discounts allowed have been recorded as a credit balance in the trial balance
D. The sales day book has been overstated by $3,200

Question 45
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?

A. Dr Purchases $315 Cr Payables $315

B. Dr Sales $315 Cr Receivables $315
C. Dr Receivables $315 Cr Sales $315
D. Dr Payables $315 Cr Purchases $315

Question 46
What does a paying-in slip give details of?

A. The invoice a customer is paying

B. The cheques paid out to suppliers
C. The quantities of cash and cheques paid into the bank
 D. The credit card payments made by customers

Question 47
With an imprest system of petty cash which of the following is correct?

A. Vouchers + Cash held = ImpresT

B. Cash held + Imprest = Vouchers
C. Imprest + Vouchers = Cash held
D. Cash held - Vouchers = Imprest

Question 48
When a cheque is crossed A/C payee which of the following is true?

A. It can be cashed by any type of business

B. It does not have to go through the clearing system
C. It can be endorsed
D. It must be paid into the account of the person named on the cheque

Question 49
Which of the following describes a sales invoice?

A. A written statement of the amount of money that has been paid by the customer
B. A document sent to a potential customer quoting the price for goods
C. A written request for payment from a supplier giving details of items purchased
D. A written request to a credit customer for payment giving details of items sold

Question 50
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?

A. Dr Cash $57.60 Dr Irrecoverable debts $134.40 Cr Receivables

$192.00
B. Dr Irrecoverable debts $57.60 Cr Receivables $57.60
C. Dr Irrecoverable debts $134.40 Cr Payables $134.40

D. Dr Cash $57.60 Dr Irrecoverable debts $134.40 Cr Payables

$192.00