Danho
ZIMSEC O Level · 7112/1 · J2014

Principles of Accounting Paper 1 June 2014

Questions
40
Syllabus code
7112/1

Sit this paper online

Questions
40
Pass mark
24
Sit this paper

Answer every question in the printed order, get marked at the end, then see the answers.

The questions

Question 1

The accounting cycle
Which is the correct accounting cycle?
  1. Aledger → trial balance → subsidiary book → final accounts
  2. Bsubsidiary book → ledger → trial balance → final accounts
  3. Csubsidiary book → trial balance → ledger → final accounts
  4. Dtrial balance → ledger → subsidiary book → final accounts

Question 2

Books of original entry
The subsidiary book which is part of the ledger is the
  1. Acash book.
  2. Bgeneral journal.
  3. Cpurchases journal.
  4. Dsales journal.

Question 3

Computers in accounting
The advantage of using computers in data processing is that they
  1. Aare readily available.
  2. Bcannot be corrupted by virus.
  3. Chave a huge storage facility.
  4. Drequire skilled personnel.

Question 4

Books of original entry
The total in the sales journal is posted to the
  1. Acredit side of the debtor's account.
  2. Bcredit side of the sales account.
  3. Cdebit side of the debtor's account.
  4. Ddebit side of the sales account.

Question 5

Manufacturing accounts
Which of the following is a factory overhead cost?
  1. Adepreciation of plant
  2. Bmachine operator's wages
  3. Cpatent fees
  4. Droyalties

Question 6

Source documents
The documents used when preparing a cash book are
  1. Acheque stubs and receipts.
  2. Bcredit notes and purchases invoices.
  3. Cdebit notes and sales invoices.
  4. Dinvoices and vouchers.

Question 7

Capital and revenue expenditure
Which of the following is classified as capital expenditure?
  1. Acost of extending a garage
  2. Bcost of buying a motor van for resale
  3. Ccost of repainting premises
  4. Dcost of repairing a plant

Question 8

The cash book
What is the double entry for dishonoured cheques?
  1. Adebit bank account, credit creditor's account
  2. Bdebit bank account, credit debtor's account
  3. Cdebit creditor's account, credit bank account
  4. Ddebit debtor's account, credit bank account

Question 9

Discounts

On 01 January 2011, G. Nare bought goods worth $20 000 less 10% trade discount. The cash discount was 5% within 20 days.

How much was paid on 12 January 2011?

  1. A$17 000
  2. B$17 100
  3. C$18 000
  4. D$19 000

Question 10

Non-profit making organisations
In the accounts of a club, the excess of expenditure over income is called a
  1. Adeficit.
  2. Bloss.
  3. Cprofit.
  4. Dsurplus.

Question 11

Petty cash book
One of the advantages of preparing a petty cashbook is to
  1. Arecord small payments on vouchers.
  2. Breduce the number of postings to the ledger.
  3. Cspend less on small payments.
  4. Duse the imprest system.

Question 12

Depreciation

The following information was extracted from the books of a trader on 01 January 2011.

Dr $Cr $
Motor vehicles60 000
Provision for depreciation20 000

Motor vehicles were depreciated at 10% per annum using the reducing balance method.

The net book value of the motor vehicles on 31 December 2011 was

  1. A$24 000.
  2. B$32 000.
  3. C$36 000.
  4. D$38 000.

Question 13

Manufacturing accounts

Given:

$
Cost of raw materials used80 000
Repairs and maintenance of plant4 000
Royalties3 000
Manufacturing wages11 000
Closing stock of work in progress2 000

The prime cost is

  1. A$ 93 000.
  2. B$ 94 000.
  3. C$ 98 000.
  4. D$100 000.

Question 14

Control accounts
Control accounts are important because they are used to
  1. Acalculate sales and purchases.
  2. Bcheck the work of junior clerks.
  3. Ccorrect errors.
  4. Dprevent fraud.

Question 15

Bad debts and provisions

On 31 December 2011, debtors were $60 000. A provision for doubtful debts of 5% was created after writing off an amount of $4 000 as bad debts.

The amount for net debtors in the balance sheet was

  1. A$49 200.
  2. B$53 000.
  3. C$53 200.
  4. D$57 000.

Question 16

Errors and the suspense account
Which error would prevent totals of a trial balance from agreeing?
  1. Acomplete reversal of entries
  2. Berror of commission
  3. Cerror of transposition
  4. Dsingle entry

Question 17

Bank reconciliation
Which item increases the bank statement balance?
  1. Abank charges
  2. Bcredit transfer
  3. Cdirect debit
  4. Ddishonoured cheques

Question 18

Banking
A bank loan differs from a bank overdraft in that it
  1. Ahas a high interest rate.
  2. Bis given to current account holders only.
  3. Cis repaid over a long period of time.
  4. Dis repaid over a short period of time.

Question 19

Errors and the suspense account

The omission of an invoice of $1 300 for goods sold was discovered after preparation of a draft income statement.

If the error is corrected, the effect is to

  1. Aincrease gross profit only by $1 300
  2. Bincrease gross profit and net profit by $1 300.
  3. Creduce gross profit only by $1 300.
  4. Dreduce gross profit and net profit by $1 300.

Question 20

Bank reconciliation

Given:

$
Bank statement balance12 700 credit
Bank lodgements not yet credited4 800
Unpresented cheques3 900

The cash book balance is

  1. A$ 4 000 credit.
  2. B$ 4 000 debit.
  3. C$13 600 credit.
  4. D$13 600 debit.

Question 21

Partnerships
What is the double entry for interest on capital?
  1. Adebit appropriation account, credit current account
  2. Bdebit capital account, credit current account
  3. Cdebit current account, credit appropriation account
  4. Ddebit current account, credit capital account

Question 22

Partnerships
In partnership accounts, a partner's drawings are debited to the
  1. Aappropriation account.
  2. Bcurrent account.
  3. Cprofit and loss account.
  4. Dtrading account.

Question 23

Partnerships

Banda and Mwale are in equal partnership. Mwale is entitled to a monthly salary of $10 000. Their net trading profit is $600 000.

How much is Mwale's total income for the year?

  1. A$240 000
  2. B$295 000
  3. C$305 000
  4. D$360 000

Question 24

Disposal of fixed assets
Profit or loss made on the sale of a fixed asset is calculated in the
  1. Aasset disposal account.
  2. Bprofit and loss account.
  3. Cprovision for depreciation account.
  4. Dtrading account.

Question 25

Control accounts

The following information was extracted from the books of F. Shumba.

2011$
January 01debtors/trade receivables10 000
December 31debtors/trade receivables15 000
discount allowed3 000
bad debts written off2 000
cheques from debtors6 000

The amount of credit sales was

  1. A$10 000.
  2. B$12 000.
  3. C$16 000.
  4. D$36 000.

Question 26

Errors and the suspense account

A cheque payment of $1 400 for electricity was omitted from the books.

The effect of this error was to

  1. Aincrease gross profit.
  2. Bincrease net profit.
  3. Creduce gross profit.
  4. Dreduce net profit.

Question 27

Final accounts
What is meant by a debit balance in a profit and loss account?
  1. Agross loss
  2. Bgross profit
  3. Cnet loss
  4. Dnet profit

Question 28

Banking
Cheques are dishonoured if the
  1. Aamount is equal to the drawer's bank balance.
  2. Bamount in words is the same as the amount in figures.
  3. Cdrawer's signature is the same as the specimen signature.
  4. Ddrawer stops payment.

Question 29

Manufacturing accounts
Direct materials, direct labour and direct expenses make up the
  1. Acost of production.
  2. Bcost of raw materials consumed.
  3. Cfactory overhead costs.
  4. Dprime cost.

Question 30

Limited companies
The issued share capital of a joint stock company cannot exceed the
  1. Aauthorised share capital.
  2. Bcalled up share capital.
  3. Cordinary share capital.
  4. Dpaid up share capital.

Question 31

Limited companies
In limited companies, total capital funds are obtained by adding
  1. Aauthorised capital and issued capital.
  2. Bdebentures and reserves.
  3. Cdebentures and shareholders' funds.
  4. Dreserves and shareholders funds.

Question 32

Limited companies

The issued share capital of a limited company consists of

600 000 10% preference shares of 50 cents each.
100 000 ordinary shares of $2 each.

What is the issued share capital?

  1. A$300 000
  2. B$500 000
  3. C$600 000
  4. D$800 000

Question 33

Adjustments

A business sub-lets part of its premises at a rate of $1 200 per month.

During the year ended 31 December 2011 the business received $15 000.

How much is credited to the profit and loss account on 31 December 2011?

  1. A$ 1 200
  2. B$13 800
  3. C$14 400
  4. D$15 000

Question 34

Goodwill
Which of the following is an intangible asset?
  1. Acash at bank
  2. Bgoodwill
  3. Cfurniture
  4. Dstock of stationery

Question 35

Non-profit making organisations

On 01 January 2011, the subscriptions account had a debit balance of $800 and a credit balance of $1 000. An amount of $5 000 was received for subscriptions during the year.

The amount transferred to the income and expenditure account on 31 December 2011 was

  1. A$4 800.
  2. B$5 000.
  3. C$5 200.
  4. D$6 800.

Question 36

Goodwill

Owen's business was purchased at an agreed price of $75 000. The following assets and liabilities were taken over.

$
Furniture45 000
Stock15 000
Trade debtors20 000
Trade creditors13 000
Expenses owing17 000

The value of goodwill was

  1. A$ 25 000.
  2. B$ 50 000.
  3. C$ 80 000.
  4. D$125 000.

Question 37

Ratios and interpretation

The following information was extracted from the books of a trader on 31 December 2011.

$
Net profit25 000
Turnover200 000
Gross profit50 000

The gross profit mark-up was

  1. A12½%.
  2. B25%.
  3. C33⅓%.
  4. D50%.

Question 38

Adjustments

The account shown below was taken from the nominal ledger of N. Ncube.

Packaging Materials Account

2011$2011$
Oct. 1Balance b/d40 000Oct. 21Patel Ltd3 000
6Cash10 00031Profit and loss66 000
17Patel Ltd20 00031Balance c/d1 000
70 00070 000

What is meant by the entry "Profit and loss 66 000"?

  1. Apacking materials bought on credit
  2. Bpacking materials not used
  3. Cpacking materials returned
  4. Dpacking materials used

Question 39

Bad debts and provisions
An increase in provision for bad debts is recorded as
  1. Adebit bad debts account, credit profit and loss account.
  2. Bdebit profit and loss account, credit bad debts account.
  3. Cdebit profit and loss account, credit provision for bad debts account.
  4. Ddebit provision for bad debts account, credit profit and loss account.

Question 40

Partnerships

The account shown below was taken from the ledger of a partnership.

T. Bwanali: Current Account

2011$2011$
Dec 31Drawings15 000Jan 1Balance b/d180
Interest on drawings750Dec 31Salary2 000
Interest on capital10 000
Share of profits1 000
Balance c/d2 570
15 75015 750

The balance on 31 December 2011 represents

  1. Aloss to be shared.
  2. Boverdrawn profits.
  3. Cprofit not used.
  4. Dundrawn profits.

More sittings of this paper

The answers, and why they are the answers

Sit the paper here to see which ones you got right. Danho explains every question, keeps your score, and works without a connection.

Get it on Google PlayDownload on the App Store