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ZIMSEC O Level · 4051/1 · J2019

Principles of Accounting Paper 1 June 2019

Questions
37
Syllabus code
4051/1

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Questions
37
Pass mark
23
Sit this paper

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

The questions

Question 1

Forms of business organisation
One of the advantages of sole proprietorship is that
  1. Achances of business growth are limited.
  2. Bdecision making is fast.
  3. Cowner bears all losses.
  4. Downer has unlimited liability.

Question 2

Computers in accounting
Which part of a computer manipulates accounting data?
  1. Acentral processing unit
  2. Bkeyboard
  3. Cmouse
  4. Dvisual display unit

Question 3

Manufacturing accounts
In a manufacturing business, which item is a direct cost?
  1. Adepreciation of plant
  2. Bfactory power
  3. Chire of special plant
  4. Dlubricant oil

Question 4

Trial balance
The balances of the carriage inwards and carriage outwards accounts are shown in the trial balance as
  1. Acredit carriage inwards, credit carriage outwards.
  2. Bcredit carriage inwards, debit carriage outwards.
  3. Cdebit carriage inwards, credit carriage outwards.
  4. Ddebit carriage inwards, debit carriage outwards.

Question 5

Drawings
Goods taken by the owner for own use at cost price are credited to the
  1. Acapital account.
  2. Bdrawings account.
  3. Cpurchases account.
  4. Dsales account.

Question 6

Control accounts
Which items are debited to the sales ledger control account?
  1. Acash refunds and dishonoured cheques
  2. Bcredit sales and bad debts
  3. Cinterest on overdue accounts and set off
  4. Dreturns inwards and cash received

Question 7

Capital and revenue expenditure
Which of the following items is capital expenditure?
  1. Acarriage costs of purchases
  2. Bcash paid for insuring delivery vans
  3. Clegal costs for debt collection
  4. Dpayment for new alarm system for vehicle

Question 8

Accounting concepts

Goods sold to Hilda were debited to Hilda's account and credited to the sales account.

Which accounting concept was applied?

  1. Aconsistency
  2. Bdouble entry
  3. Cgoing concern
  4. Dprudence

Question 9

Capital and revenue expenditure

Given:

$
Purchase of delivery van, cost11 500
Import duty on delivery van500
Rear view mirror repairs750
Legal costs of changing ownership1 400

The amount debited to the delivery van account is

  1. A$11 500.
  2. B$12 900.
  3. C$13 400.
  4. D$14 150.

Question 10

Bank reconciliation
Which of the following is debited to the updated cash book?
  1. Acredit transfer
  2. Bdishonoured cheques
  3. Cinterest on overdraft
  4. Dledger fees

Question 11

Source documents
What is the source document for the sales returns day book?
  1. Abank statement
  2. Bcredit note
  3. Cdebit note
  4. Dsales invoice

Question 12

Bad debts and provisions

A decrease in the provision for bad debts is recorded as

debitcredit
Abad debts accountprovision for bad debts account.
Bprofit and loss accountbad debts account.
Cprovision for bad debts accountbad debts account.
Dprovision for bad debts accountprofit and loss account
  1. Adebit bad debts account, credit provision for bad debts account.
  2. Bdebit profit and loss account, credit bad debts account.
  3. Cdebit provision for bad debts account, credit bad debts account.
  4. Ddebit provision for bad debts account, credit profit and loss account

Question 13

Trading account

A hair salon provided the following information:

$
Opening inventory15 000
Closing inventory6 500
Purchases65 000
Gross profit50 000
Returns outwards3 500

The turnover was

  1. A$116 000.
  2. B$120 000.
  3. C$123 000.
  4. D$140 000.

Question 14

Partnerships
In partnership accounts, a partner's salary due is a
  1. Acredit in the current account.
  2. Bcredit in the profit and loss account.
  3. Cdebit in the current account.
  4. Ddebit in the profit and loss account.

Question 15

Partnerships
Which item appears as a debit entry in a partner's current account?
  1. Ainterest on capital
  2. Bpartner's commission
  3. Cpartner's salary
  4. Dshare of loss

Question 16

Clubs and societies

A club's subscriptions account had a credit balance at the end of a financial year.

In which section of a statement of financial position is this balance recorded?

  1. Acurrent assets
  2. Bcurrent liabilities
  3. Cnon-current assets
  4. Dnon-current liabilities

Question 17

Double entry

A creditor was paid by cheque after the preparation of the statement of financial position.

What is the effect of this transaction on the bank account and trade payable account?

banktrade payable
Adecreasedecrease
Bdecreaseincrease
Cincreasedecrease
Dincreaseincrease
  1. Abank decrease, trade payable decrease
  2. Bbank decrease, trade payable increase
  3. Cbank increase, trade payable decrease
  4. Dbank increase, trade payable increase

Question 18

Correction of errors

Goods returned to Tanaka, the supplier, worth $350 were debited to both Tanaka's account and the returns outwards account.

The journal entry to correct the error is

debitcredit
Areturns outwards account $350Tanaka account $350.
Breturns outwards account $700suspense account $700.
Csuspense account $700returns outwards account $700.
DTanaka account $350returns outwards account $350.
  1. Adebit returns outwards account $350, credit Tanaka account $350.
  2. Bdebit returns outwards account $700, credit suspense account $700.
  3. Cdebit suspense account $700, credit returns outwards account $700.
  4. Ddebit Tanaka account $350, credit returns outwards account $350.

Question 19

Final accounts
What shows that the business of a sole trader is solvent?
  1. Acredit balance in a capital account
  2. Bcredit balance in a profit and loss account
  3. Cdebit balance in a capital account
  4. Ddebit balance in a profit and loss account

Question 20

Accounting cycle
Which of the following part of the accounting cycle is correct?
  1. Aledger -> subsidiary books -> final accounts
  2. Bsource documents -> subsidiary books -> ledger
  3. Csubsidiary books -> trial balance -> final accounts
  4. Dsubsidiary books -> trial balance -> ledger

Question 24

Ledger accounts

The following ledger account was extracted from the books of Tapiwa on 31 December 2015.

Sales account

2015$2015$
Dec 31 Balance c/d55 000December 31 Cash20 000
Dec 31 Trade receivables35 000

What is meant by the entry "Trade receivables $35 000"?

  1. Acash sales
  2. Bcheques received from goods sold
  3. Ccredit sales
  4. Dtotal sales for the month

Question 25

Bank reconciliation

A bank statement showed a credit balance of $2 500 on 31 July 2016. The following items appeared in the cash book but not on the bank statement.

$
cheques deposited3 000
cheques issued1 900

What was the cash book balance?

  1. A$1 400 credit
  2. B$1 400 debit
  3. C$3 600 credit
  4. D$3 600 debit

Question 26

Limited companies

A joint stock company has an authorised share capital of 250 000 ordinary shares of $2 each. It issued 200 000 ordinary shares of $2 each which were fully paid. The directors recommended a dividend of 15 cents per share.

What was the amount of dividends?

  1. A$30 000
  2. B$37 500
  3. C$60 000
  4. D$75 000

Question 27

Limited companies

A joint stock company issued 600 000 20% preference shares at $0,50.

An interim dividend of $8 000 was paid.

The final dividend was

  1. A$52 000.
  2. B$60 000.
  3. C$112 000.
  4. D$120 000.

Question 28

Disposal of non-current assets
Which item is debited to a non-current asset disposal account?
  1. Aaccumulated depreciation
  2. Bloss on sale of asset
  3. Cproceeds from sale of asset
  4. Dprofit on sale of asset

Question 29

Limited companies
In joint stock companies, capital funds are obtained by adding shareholders' funds to
  1. Aauthorised capital.
  2. Bdebentures.
  3. Cissued capital.
  4. Dreserves.

Question 30

Partnerships

A partnership provided the following information at the end of a financial year.

John $Peter $
Capitals160 000320 000
Current accounts 31 December 20164 000 Dr10 000 Cr

The total owners' equity was

  1. A$474 000.
  2. B$480 000.
  3. C$486 000.
  4. D$494 000.

Question 31

Ratio analysis
Which of the following is a profitability ratio?
  1. Acurrent ratio
  2. Bmark up
  3. Cquick ratio
  4. Dinventory turnover

Question 32

Inventory valuation
At what value should inventory appear in the financial statements?
  1. Aaverage cost price during the year
  2. Baverage selling price during the year
  3. Chigher of cost and net realisable value
  4. Dlower of cost and net realisable value

Question 33

Statement of financial position

The following information was extracted from the statement of financial position of a trader.

$
Working capital6 000
Long term liabilities12 500
Capital17 500

What was the total of non-current assets?

  1. A$23 000
  2. B$24 000
  3. C$30 000
  4. D$36 000

Question 34

Ethics in accounting
Which of the following is a business ethic?
  1. Acompetence
  2. Bdouble entry
  3. Cgoing concern
  4. Dprudence

Question 35

Accruals and prepayments

The following trial balance extract was taken from the books of a trader.

Trial balance as at 31 December 2016.

Dr $Cr $
Loan100 000
Loan interest paid8 000

Interest on loan was at the rate of 10% per annum.

The profit and loss account figure for loan interest for the year ended 31 December 2016 was

  1. A$2 000.
  2. B$8 000.
  3. C$10 000.
  4. D$18 000.

Question 36

Correction of errors
Which error is not revealed by a trial balance?
  1. Acash received from Nokutenda debited in both the cash account and Nokutenda's account
  2. Bmotor vehicle expenses debited in the asset account
  3. Cthe provision for bad debts balance calculated as $150 instead of $1 500
  4. Dthe sales day book total overstated by $1 000

Question 37

Control accounts

A business provided the following information:

2016$
Sept 1Total trade receivables2 500
30Credit sales16 100
Cheques from credit customers5 300
Customer's cheques dishonoured1 600

Trade receivables on 30 September 2016 were

  1. A$14 900.
  2. B$11 700.
  3. C$ 9 900.
  4. D$ 6 700.

Question 38

Accruals and prepayments

The following information was extracted from the ledger of a trader.

2016$
Jan 1Insurance unexpired4 600
Dec 31Cheques issued for insurance12 500

Included in $12 500 is $1 000 for 2017.

The profit and loss account figure for 2016 was

  1. A$5 600.
  2. B$6 900.
  3. C$8 900.
  4. D$16 100.

Question 39

Ledger accounts

A trader provided the following account.

Rent Received Account

2016$2016$
Jan 1 Balance b/d700Dec 31 Bank10 000
Dec 31 Profit and Loss8 100
Dec 31 Balance c/d1 200
10 00010 000

What does the entry 'Bank $10 000' represent?

  1. Acheques paid to tenant
  2. Bcheques received for rent
  3. Crent receivable for the year
  4. Drent received in advance

Question 40

Departmental accounts

A departmental store had a hardware and an electrical department.

The shop paid for the following:

$
Warehouse wages4 000
Carriage inwards7 000

The expenses were allocated to the departments as follows:

2/5 hardware
3/5 electrical

The total expenses for the hardware department were

  1. A$1 600.
  2. B$2 800.
  3. C$4 400.
  4. D$11 000.

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