HKUGA College

Final Examination
(2022/2023) TOTAL MARKS: 108

Business, Accounting and Financial

Studies
(Accounting Module)
Paper 2A
Question Paper
Time allowed: 1 hour 30 minutes Form: 4

Name: Class (No.): ( )

INSTRUCTIONS

(1) This paper consists of 8 pages including this cover page. The words ‘END OF PAPER’ should appear
on the last page.
(2) Do not open this examination paper until instructed to do so.
(3) There are TWO sections, A and B, in this Paper. Section A consists of multiple-choice questions and
Section B contains long questions.
(4) Answer ALL questions in Section A and B.
(5) Answers to Section A should be marked on the Multiple-choice Answer Sheet while answers to Section
B should be written in the Answer Book. In the Answer Book, start EACH question (not part of a question)
on a NEW page.
(6) The Answer Sheet for Section A and the Answer Book for Section B must be handed in separately at the
end of the examination.

INSTRUCTIONS FOR SECTION A (MULTIPLE-CHOICE QUESTIONS)

(1) Read carefully the instructions on the Answer Sheet.

(2) When told to open this Paper, you should check that all the questions are there. Look for the words ‘END
OF SECTION A’ after the last question.
(3) All questions carry equal marks.
(4) ANSWER ALL QUESTIONS. You are advised to use an HB pencil to mark all the answers on the
answer sheet, so that wrong marks can be completely erased with a clean rubber. You must mark the
answers clearly; otherwise you will lose marks if the answers cannot be captured.
(5) You should mark only ONE answer for each question. If you mark more than one answer, you will receive
NO MARKS for that question.
(6) No marks will be deducted for wrong answers.
SECTION A (48 marks)

There are 24 questions in this section. Answer ALL questions. Choose the best answer for each question.

1. Which of the following is not a function of bookkeeping?

A. communicating information
B. keeping financial records
C. summarising daily transactions
D. classifying accounting data

2. Which of the following is not a function of accounting?

A. provide relevant information for users

B. record sales and purchases in company’s books
C. keep separate records for different accounting data
D. present all daily transactions in financial statements

3. Accountant should explain the key results using simple terms, ratios and graphs. This statement is
concerned with which of the following accounting functions?

A. recording
B. classifying
C. summarizing
D. communicating

4. Which of the following statements is correct?

A. Many different types of people and organizations need accounting information, including business
owners, management, investors and the government.
B. Accounting is important because it helps users make decisions by providing them with profit and
loss of a firm.
C. Without accounting, people would not know a firm’s financial objectives.
D. The only objective of accounting is to keep financial records.

5. The following tasks are to be performed in an accounting cycle:

(1) balancing off the accounts

(2) recording sales in the books of original entry
(3) prepare financial statements
(4) posting entries to the ledgers

Which of the following is the correct sequence of carrying out the above tasks?

A. (1)  (2)  (3)  (4)

B. (2)  (1)  (4)  (3)
C. (2)  (4)  (1)  (3)
D. (4)  (2)  (3)  (1)

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6. Which of the following statements is not correct?

A. Accounting data are classified according to the period they occurred.

B. Bookkeeping refers to the process of recording transactions and keeping financial records.
C. Accounting provides financial information about a business, which is useful for decision-making.
D. Users have different areas of concern when reading financial statements.

7. Which of the following statements is not correct?

A. Accounting can provide information to both internal users and external users.
B. The details of all business transactions should be included in a business’s financial statements.
C. The double-entry system is used in bookkeeping.
D. An accounting cycle refers to a series of standard procedures for the recording and processing of a
firm’s accounting data in a certain period.

8. Which of the following is not an asset of a business?

A. loan to a trading partner

B. office equipment bought by a manager
C. owner’s bank deposits
D. business premises

9. Capital

A. equals to the sum of assets and liabilities.

B. is cash received from debtors only.
C. equals to the profit and loss of a firm.
D. is affected by drawings.

10. Which of the following transactions will lead to an increase in asset of a business?

A. The owner brings in inventory as capital.

B. Exchange a fax machine worth $160 for a printer of $160.
C. Purchase a motor van by cheque.
D. Receive cash from a trade receivable.

11. Which of the following transactions will lead to an increase in asset of a business?

A. received a loan of $30 000 in cash from creditors

B. pay overdraft interest of $200 to the bank
C. sold an old car at its original cost of $10 000 in cash
D. made a cash deposit of $10 000 into the business bank account

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12. Which of the following equations is correct?

A. Assets = Capital + (Revenues – Expenses) + Drawings

B. Capital = Net Assets – Profit + Drawings
C. Drawings = Assets – Liabilities + (Revenues – Expenses) + Capital
D. Liabilities = Assets + Drawings – Loss – Capital

13. Receiving bank interests affects the accounting equation in the following way:

A. capital increases and liabilities decrease

B. assets increase and liabilities decrease
C. capital increases and assets increase
D. no change in the totals of accounting equation

14. A firm sold a van for $2 000 in cash, then paid $800 for electricity charges and put the remaining amount
in the business bank account. What is the effect on the totals of the accounting equation?

A. increased by $2 000
B. increased by $1 200
C. decreased by $1 200
D. decreased by $800

15. Which of the following statements is correct?

A. The double-entry rules for assets, revenues and drawings are the same, and are the opposite of those
for capital, expenses and liabilities.
B. The first step of recording transactions is to classify the accounts as assets, liabilities, capital,
expenses, revenues or drawings.
C. The title of the account of the corresponding entry is recorded for cross-reference purposes.
D. The debit side of an account records deductions and the credit side records additions.

16. Which of the following entries are correct?

Types of account To record Entry in the account

(1) Asset A decrease Credit
(2) Revenue A decrease Credit
(3) Liability An increase Credit
(4) Drawings An increase Debit

A. (2) only
B. (1) and (3) only
C. (1), (2) and (3) only
D. (1), (3) and (4) only

P. 4 of 8
17. Which of the following double entries are correct?

Transaction Account to be debited Account to be credited

(1) The owner introduced inventory as capital.
Inventory Capital
(2) Took money out of the bank and put it in
Cash Bank
the cash box of the business.
(3) Pony Ltd returned goods to the business.
Inventory Returns inwards
(4) A motor van dealer bought a van to be used
Motor van Purchase
for staff transportation.

A. (1) and (2) only

B. (1) and (3) only
C. (2), (3) and (4) only
D. (1), (2), (3) and (4) only

18. Which of the following double entries are correct?

Transaction Account to be debited Account to be credited

(1) Bought goods on credit from Times Ltd. Times Ltd Purchase
(2) Returned machinery to K Chau Ltd. K Chau Ltd Machinery
(3) Received a cash loan from C Long. Cash loan C Long
(4) The owner drew cash for personal use. Drawings Cash

A. (1) and (3) only

B. (2) and (3) only
C. (2) and (4) only
D. (2), (3) and (4) only

19. Which of the following accounts will be debited when there is an increase in amount?

(1) Loan to XYZ Company

(2) Sales Returns
(3) Commission income
(4) Drawings
(5) Sales

A. (1), (2) and (4) only

B. (2), (3) and (4) only
C. (2), (3) and (5) only
D. (3), (4) and (5) only

20. Which of the following account usually carries a credit balance?

A. Cash at bank
B. Returns outwards
C. Returns inwards
D. Inventories

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21. The business owner used his private savings to pay salaries for the company’s staff. The double entry for
this transaction should be:

A. Dr Drawings Cr Salaries
B. Dr Salaries Cr Capital
C. Dr Capital Cr Cash at bank
D. Dr Salaries Cr Cash at bank

22. The business returned office furniture to Sunflower Furniture on credit. The double entry for this
transaction should be:

A. Dr Returns outwards Cr Office furniture

B. Dr Office furniture Cr Returns inwards
C. Dr Office furniture Cr Sunflower Furniture
D. Dr Sunflower Furniture Cr Office furniture

23. Which of the following statements is correct?

A. If the bank account has a credit balance, there must be an error in the accounting records.
B. Payable accounts usually have credit balances.
C. Accounts can only be balanced off at the financial year-end date.
D. Payments made to non-trade creditors would not be recorded in the books.

24. Which of the following statements is not correct?

A. An increase in cash and office equipment would be recorded on the same side of a T-account.
B. For a trading business which had no assets, no debit entries would ever be recorded in its accounting
books.
C. For a trading business which had no liabilities, its total assets would always be equal to its amount
of capital.
D. A zero balance arises when the debit entry total equals to credit entry total.

END OF SECTION A

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