This document contains an English for Accounting practice test with multiple choice and accounting entry questions. Part 1 includes true/false statements and choosing the correct answer for accounting definitions. Part 2 provides details to record motor vehicle and cash book transactions, and prepare related accounting entries for provisions, depreciation, bad debts and adjusting accounts at year-end.
This document contains an English for Accounting practice test with multiple choice and accounting entry questions. Part 1 includes true/false statements and choosing the correct answer for accounting definitions. Part 2 provides details to record motor vehicle and cash book transactions, and prepare related accounting entries for provisions, depreciation, bad debts and adjusting accounts at year-end.
This document contains an English for Accounting practice test with multiple choice and accounting entry questions. Part 1 includes true/false statements and choosing the correct answer for accounting definitions. Part 2 provides details to record motor vehicle and cash book transactions, and prepare related accounting entries for provisions, depreciation, bad debts and adjusting accounts at year-end.
This document contains an English for Accounting practice test with multiple choice and accounting entry questions. Part 1 includes true/false statements and choosing the correct answer for accounting definitions. Part 2 provides details to record motor vehicle and cash book transactions, and prepare related accounting entries for provisions, depreciation, bad debts and adjusting accounts at year-end.
PRACTICE TEST 2 PART 1: THEORY Exercise 1: Are statements below TRUE or FALSE STATEMENTS TRUE/ FALSE 1. Drawings is added to capital in the balance sheet. 2. Stock included in the balance sheet is the opening stock. 3. The trading and profit and loss account can be displayed horizontally or vertically. 4. Drawings cannot be in the form of cash. 5. If drawings is in the form of goods, it is necessary to show a reduction from purchases in the trading account. 6. Drawings can be in the form of goods. 7. Opening stock appears both in the trading account and in the balance sheet.
Exercise 2: Choose the correct answer
1. Accrual of income means that income due for the financial year has not been ……. by the end of the year. a. receive b. received c. pay d. paid 2. The provision for ………….. make up the amount of depreciation year by year. a. depreciation b. depreciate c. bad debt d. doubtful debt 3. The asset account is ………….. if no provision for depreciation is made. a. understated b. understate c. overstated d. overstate 4. The main …………. of depreciation are physical deterioration, economic factors and time factors. a. causes b. items c. cause d. ideas 5. If you take no account year-by-year of the fall in value of fixed assets, the annual profit figures are ……… a. overstated b. understated c. undercast d. underestimate 6. Any debts written off are a/an …………of the business. a. benefit b. gain c. loss d. expense 7. Capital is …….. when drawing is made. a. reduced b. increased c. rose d. grew 8. Bad debts are debts that the business is unable to……….. a. buy b. pay c. give d. collect 9. Any decrease in the provision for doubtful debts is a ……….. to the firm. a. profit b. growth c. loss d. reduction 10. The float figure can be ……….. a. amended b. moved c. left d. altered PART 2: PRACTICE Exercise 3: On 1 January year 4, Tonny Green bought a motor vehicle for 12,000 by cheque. She decided to depreciate the motor vehicle by 25% per annum using reducing balance method. She sold the motor vehicle on 31 December year 7 for £4,700 received in cheque. Show the
1 a. Motor vehicle account b. Provision for depreciation of motor vehicle account, and c. Disposal account for the financial year ending 31 December years 4,5,6 and 7. d. An extract of Profit and Loss account at 31 December year 7, showing the transfer of Profit/ Loss on Sales of fixed assets
Exercise 4: From the following details, you are required 1. To bring the cash book up to date at 31 October Year 2 (10 pts) 2. To draw up a bank reconciliation statement at 31 October Year 2, to obtain the balance at that date shown on the bank statement (10 pts) Balance at bank as shown in the cash book £ at 31 October Year 2 960 Cr Cheques paid into bank but not yet shown on the bank statement 440 Credit transfer from Tom Farer had not entered in the cash book 320 Standing Order to D Motors had not been entered in the cash book 150 Cheques drawn but not yet presented 280 Bank charges had not been entered in the cash book 45
Exercise 5: From the following Extract of the Trial balance at 31 December Year 5. Dr (£) Cr (£) Fixtures and Fittings, at cost 46,900 Provision for depreciation on fixtures and Fittings 10,900 Bad debts, written off 2,860 Debtors 85,000 Motor vehicles at cost 81,300 Provision for depreciation on motor vehicles 19,700 Wages and salaries 63,020 Provision for doubtful debts 1,780 Insurance 6,660
The following additional information was available at 31 December Year 5:
£ 1. Insurance prepaid 530 2. Wages and salaries accrued 1,210 T Malone decided to: a. Provide for depreciation: Fixtures and fittings: 20% on cost Motor vehicles 20% on reducing balance b. Adjust the provision for doubtful debts to 3% of debtors REQUIRED: Show the related accounts in Profit and Loss accounts at 31 December Year 5:
