Practice Question

1. What is the purpose of a purchase invoice?
i)
To record how much owed to the supplier
ii)
To identify the goods bought
iii)
To record how much is owed from the customer
iv)
To claim back the sales tax
A. All
B. i,ii and iv
C. i,ii and iii
D. i and iv
2. The prime document used for recording petty cash into the petty cash book
is:
A. A till receipt
B. A petty cash voucher
C. An invoice
D. A petty cash I.O.U.
3. Which of the following is an advice of employee earning?
A. Pay slip
B. Advice note
C. Purchase order
D. Quotation
4. Which of the following correctly describes the term debit note?
A. It is issued by a customer to a supplier to cancel an invoice received.
B. It is issued by a customer to a supplier to cancel an invoice received.
C. It is issued by a customer to a supplier to request a credit note.
D. It is issued by a supplier to a customer to demand payment in full for
goods supplied.
5. What is the purpose of a remittance advice?
A. It identifies goods that have been dispatched by the business.
B. It provides details of cheques to be issued.
C. It provides details of an amount being paid.
D. It identifies goods that have been received by the business.
6. Which of the following statements concerning credit entries is correct?
A. Credit entries record increases in expenses.
B. Credit entries record increases in profits
C. Credit entries record decreases in capital or liabilities.
D. Credit entries record increases in assets.
7. Which of the following correctly records the repayment of a loan of $10000
plus outstanding interest $500?
A. Assets -$10500, Liabilities -$10000, Expenses +$500
B. Assets -$10500, Liabilities -$10500.
C. Assets -$10500, Capital -$10500.
D. Assets -$10500, Liabilities +$10500.
8. Which of the following statement is correct?

A. Cash received is recorded in the cash book and posted to the journal.
B. Adjustments to the financial statements are recorded in the cash book and
summarized and posted to the general ledger.
C. Sales invoices are recorded in the sales returns daybook and are
summarized and posted to the receivables ledger.
D. Purchase invoice are recorded in the purchase daybook and are
summarized and posted to the payables ledger.
9. Matrix Co keeps a receivables ledger control account as part of its accounting
system. Invoices totaling $5000 are raised in March and customers pay cash
$3000 for invoices having face values of $3100(discount $100). Which of the
following entries correctly record these transactions?
A. Debit sales $5000, credit receivables ledger control $5000, debit cash
$3000, debit discount allowed $100, credit receivables ledger control
$3100.
B. Debit receivables ledger control $5000, credit sales $5000, debit cash
$3000, credit receivables ledger control $3100.
C. Debit receivables ledger control $5000, credit sales $5000, debit cash
$3000, credit discount allowed $100, credit receivables ledger control
$3100.
D. Debit receivables ledger control $5000, credit sales $5000, debit cash
$3000, credit receivables ledger control $3100, debit discount allowed
$100.
10.A sales tax registered business sells goods $1200 plus $ 240 sales tax and
purchase goods costing $200 plus sales tax $40. Assuming these are the only
transactions in the saqles tax period and that input tax is fully recoverable,
how much sales tax is due/payable to/from the government?
A. Payable @280.
B. Payable $240.
C. Payable @200.
D. Recoverable @200.
11.Returns outwards are recorded in which prime entry record?
A. The cash book.
B. The purchase returns day book.
C. Sales returns day book.
D. The journal.
12.The total of discount allowed column in a cash book is? (assume a control
account is kept)
A. Debited to discount allowed and credited to receivables ledger control
accunt.
B. Debited to cash and credited to sales.
C. Credit to discounts allowed and debits to sales.
D. Debited to sales and credited to cash.
13.Which of the following is authorized so that a business can settle an
outstanding invoice?
A. A remittance advice
B. An internal cheque requisition
C. A credit note
D. A debit note
14.Which of the following changes could not occur as a result of an entry in the
bookkeeping records?
A. Increase capital and increase liability

B. Increase capital and decrease liability
C. Increase asset and increase liability
D. Increase asset and increase capital
15.A business sells goods on credit to a customer who pays one month later.
when the cash is received the double entry made is:
A. Debit account receivable, credit cash at bank
B. Debit accounts payable, credit cash at bank
C. Debit cash at bank, credit accounts receivable
D. Debit cash at bank, credit accounts payable
16.When inventory is purchased on credit:
A. Net assets decrease and owners capital decrease
B. Net assets increase and owners capital stays the same.
C. Net assets and owners capital do not change
D. Net assets increase and owners capital increase.
17.What is a book of prime entry?
A. A separate ledger where details of a particular type of transactions are
recorded in parallel to the recording in the general ledger.
B. A set of memorandum ledger accounts which back up the total figures
recorded in the general ledger.
C. A ledger account where transactions are originally recorded.
D. A record in which transactions are originally recorded before being
transferred to a ledger account.
18.Credit notes sent out are recorded in which prime entry record?
A. Sales day book.
B. Purchase returns day book.
C. Sales returns day book.
D. General ledger.
19.Trial balance:
A. Is a list of all the transactions which have occurred in a period taken from
ledger accounts.
B. Is an accounting document which a business must prepare.
C. Is a list of ledger valances extracted from customer accounts.
D. Is a list of ledger balances extracted from accounts which help to ensure
that the bookkeeping has been accurate.
20.Which of the following is an example of an error of commission (a control
account is not kept)?
A. An invoice for $1300 is lost and not recorded at all.
B. An invoice for $2500 sales is posted as $2050.
C. A receipt of $25 from J. Gee entered in G.Jays accounts a credit and
debited to cash.
D. A purchase of cleaning materials recorded as debit cash$50, credit
cleaning material $50.
21.Which of the following explains the term current asset?
A. An amount owed to somebody else which is due for repayment soon.
B. Money which the business currently has in its bank account.
C. An asset currently in use by a business.
D. Something a business has or uses, which is likely to be held only for a

short time.
22.Which of the following errors would be a possible reason for a trial balance
failing to agree?
A. A non-current assets purchase $750 being recorded as debit machinery
repairs$750, credit cash $750.
B. Cash wages being recorded as debit cash $250, credit wages $250
C. Sales $500 entered correctly, but entered as $1500 in the receivables
ledger control account.
D. A purchase of $550 on credit not being recorded.
23.Which of the following are appropriate ways of dealing with sensitive or
confidential business documents that are no longer needed?
i.
Secure destruction
ii.
It can be thrown away
iii.
Microfilm or microfiche for long term storage.
iv.
Archiving document for storage
A. i ,ii and iii
B. i , ii and iv
C. i ,iii and iv
D. all of them
24.Which of the following is not an item of capital expenditure?
A. Purchase of a second hand factory machine.
B. Replacement of the managing directors Mercedes car
C. Capital
D. Purchase of a new motor van
25.A capital account has a credit balance of $40000. What balance will occur at
the end of the year to take this balance into the next period?
A. Debit capital balance c/d, debit capital balance b/d
B. credit capital balance c/d, credit capital balance b/d
C. Debit capital balance c/d, credit capital balance b/d
D. Credit capital balance c/d, debit capital balance b/d

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1. What is the purpose of a purchase invoice?

8. Which of the following statement is correct?

A. Increase capital and increase liability

D. Something a business has or uses, which is likely to be held only for a

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