1
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For Examiners Use
GCE
O / AS Level
Accounting
Specimen Paper A01
For Examiners Use
You will need no other materials.
You may use a calculator.
Mark Question
Mark
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Time allowed: 1 hour
Instructions
Use blue or black ink or ball-point pen.
Fill in the boxes at the top of this page.
Answer all questions.
Answer the questions in the spaces provided.
All workings must be shown and clearly labelled; otherwise
marks for method may be lost.
Make and state any necessary assumptions.
Do all rough work in this book. Cross through any work
you do not want to be marked.
Total (Column 1)
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Examiners Initials
2
1
Which of the following in the Balance Sheet of a business shows the owner how well his
business
is doing?
A
debtors
drawings
net profit
working capital
X receives a cheque from a customer and pays this into his business bank account.
How does this affect Xs current assets?
bank
debtors
decrease
decrease
decrease
increase
increase
decrease
increase
increase
A business provides the following information for the year ended 30 September 2002.
$
sales
10000
cost of goods sold
60000
expenses
15000
What is the net profit for the year ended 30 September 2002?
A
4
$ 25 000
$ 40 000
$ 45 000
$ 55 000
What is a Balance Sheet?
A
a list of all the accounts in the books of a business
an account showing the trading activities of a business
an account showing the financial position of a business at a certain date
a list of assets, liabilities and capital of a business at a certain date
3
5
A business applies the money measurement concept.
Which would be recorded in its accounting records?
A
the benefits of staff training
the cost of property owned
the effect of new laws
the value of the skills of its managers
Which book of prime entry is also a ledger account?
A
cash book
journal
purchases journal
sales journal
A business bought a machine for $5000 and depreciated it by 20% a year. At the end of
Year 2, the total depreciation amounted to $2000.
Using the concept of consistency, how much is charged for depreciation in Year 3?
A
$400
$600
$1000
$2000
A trader has paid insurance in advance at the end of her financial year. She deducted this
amount from the insurance paid during the year to calculate the total insurance cost for the
year.
Which accounting concept applies?
business entity
matching
money measurement
prudence
Which accounting concept requires provision to be made for foreseeable losses?
A
consistency
duality
prudence
going concern
4
10 Which document from a supplier reduces the amount owed by a customer?
A
credit note
debit note
invoice
statement
11 An invoice for goods for $1200 has been wrongly entered as a credit note. The balance on
the purchases account is $17 000.
What is the correct balance?
A
$14 600
$15 800
$18 200
$19 400
12 A shop selling office furniture purchased a desk on credit. The desk was not sold, so the
shop decided to use it in its own office.
In which book of prime entry were the adjustments made?
A
cash book
journal
purchases journal
purchases returns journal
13 X returned faulty goods to Y, the supplier.
What are the entries in Ys books?
debit
credit
purchases returns
purchases returns
sales returns
sales returns
5
14 Which ledger account entries are made to record the purchase on credit of a motor vehicle?
debit
credit
creditors
motor vehicles
motor vehicles
cash
motor vehicles
creditors
motor vehicle expenses
creditors
15 Credit notes issued by X are listed in which book of prime entry?
A
purchases journal
purchases returns journal
sales journal
sales returns journal
16 $2000 paid for Machinery repairs is entered in the Machinery account.
What kind of error is this?
A
commission
compensating
original entry
principle
17 In which columns of a trial balance do discounts allowed and discounts received appear?
debit
A
discounts allowed
discounts allowed
discounts received
discounts received
credit
discounts received
discounts allowed
discounts allowed
discounts received
6
18 The totals of a trial balance are:
Debit $46 800 Credit $39 700
The following errors have been discovered:
1
Rent received, $3550, has been included as a debit balance.
Cash received from K Greener in settlement of a debt of $2000 has been
credited to B Greener.
What will be the corrected trial balance totals?
A
$38 150
$41 250
$43 250
$45 250
19 The balance of the Discount Allowed account, $200, is entered on the wrong side of
the trial balance. This is the only error.
Which Suspense account entry will make the trial balance totals agree?
A
credit $200
credit $400
debit $200
debit $400
20 A trial balance does not agree and the difference has been entered in a Suspense account.
It is then found that a receipt of $120 from Natasha, a credit customer, has been
recorded correctly in the cash book but debited in the Sales account.
What will be the correcting journal entry?
debit
credit
Natasha
$120 Suspense
$120
Natasha
Sales
$120 Suspense
$120
$240
Suspense
$120 Sales
$120
Suspense
$240 Natasha
Sales
$120
$120
21 What is the purpose of preparing a bank reconciliation statement?
A
to check that all expenses have been paid
to check on the amount owed by debtors
to explain the difference between the bank statement balance and cash book balance
to see by how much the bank balance has increased
22 The balance of cash at bank shown in the cash book is $1200. The bank statement shows
the balance to be $1440.
Which can explain the difference?
A
payment to a supplier, $120, entered on the wrong side of the cash book
bank charges, $240, not in the cash book
cheques to suppliers, $240, not yet presented to the bank
receipts from customers, $240, banked but not yet entered in the bank statement
23 In connection with stock valuation, what is meant by net realisable value?
A
B
selling price
selling price minus estimated profit
selling price minus selling expenses
selling price minus estimated trade discount
24 On 1 January 1999 X bought a computer for use in his business. He sold the
computer on 31 December 2001.
How should the transaction of 31 December be classified?
A
capital expenditure
capital receipt
revenue expenditure
revenue receipt
25 The purchase of fixtures and fittings has been mistakenly entered in the General
Expenses account.
What is the effect of this on the final accounts?
Profit and Loss Account
Balance Sheet
profit understated
assets overstated
profit understated
assets understated
profit overstated
assets overstated
profit overstated
assets understated
26 What is the purpose of depreciating a fixed asset?
A
to find the value of the asset at the end of its useful life
to estimate the profit on sale at the end of the assets useful life
to provide money for a replacement at the end of the assets useful life
to spread the cost of the asset over its expected useful life
27 A machine is purchased for $15 000. It is to be depreciated at 20% per annum using the
reducing balance method.
What is the charge for depreciation in the second year?
A
$2400
$3000
$5400
$6000
28 At the end of the financial year, X has prepaid her insurance by $60.
What action has to be taken to record the correct expense in her final accounts?
Profit and Loss Account
increase
expenses
A
B
C
D
decrease
expenses
Balance Sheet
increase
increase
current assets current liabilities
29 What is the effect of providing for depreciation?
A
It increases profit.
It reduces profit.
It increases the cash balance.
It extends the life of fixed assets.
10
30 The following information is provided.
$
$220 000
$130 000
$10 000
$12 000
Sales for the year
Purchases for the year
Opening stock
Closing stock
What is the cost of goods sold?
A
$90 000
$92 000
$128 000
$132 000
31 In a partnership, Adam has a capital of $20 000 and Ben $10 000. Adam receives a
salary of
$8 000.
The balance of profit is shared equally. The net profit for the year is
$26 000. What is Bens total income from the business?
A
$9 000
$10 000
$13 000
$17 000
32 The table shows information relating to a trader at a given date.
$
fixed assets at valuation
33
000 stock at cost
000 debtors
500 cash at bank
000 creditors
000
What is the traders capital at that date?
A
$44 500
$51 500
$54 500
$57 500
33 The financial year of X ends on 31 December 2001. On 1 May 2001 X paid rent of $2400 for
the period 1 May 2001 to 30 April 2002.
What will be the amount of prepaid rent at 31 December 2001?
A
nil
$800
$1600
$2400
11
12
34 Which is an intangible asset?
A
debtors
goodwill
prepayment
stock
35 Which is a current liability for a business?
A
accrued interest charges on loan from bank
provision for depreciation of fixed assets
five year loan from bank
insurance premium prepaid
36 A trader has 2000 units of stock of which 100 are unsaleable. Each unit
costs $10 and the sale price is $20.
What is the value of the stock?
A
$19 000
$20 000
$38 000
$40 000
37 A business provides the following information for the year ended 31 May
2002.
$
Sales
200 000
Cost of sales
Expenses
150 000
30 000
What is the percentage of net profit to sales?
A
10 %
15 %
25 %
38 The following is extracted from a Balance Sheet.
$
fixed assets
80 000
current assets
45 000
total assets
125 000
60 %
13
current liabilities
20 000
What is the working capital?
A
$15 000
$25 000
$60 000
$105 000
39 How is the quick ratio calculated?
A
current assets minus current liabilities
current assets divided by current liabilities
(current assets minus stock) minus current liabilities
(current assets minus stock) divided by current liabilities
40 The following information about a business is provided.
$
Sales
75 000
Cost of sales
Opening stock
Closing stock
60 000
6 000
9 000
What is the rate of stock turnover?
A 4 times
B 8 times
C 5 times
D 10 times
