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ZIMSEC O Level · 4051/1 · J2020

Principles of Accounting Paper 1 June 2020

Questions
37
Syllabus code
4051/1

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Questions
37
Pass mark
23
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Answer every question in the printed order, get marked at the end, then see the answers.

The questions

Question 1

Bad debts and provisions
A decrease in the provision for bad debts is recorded as a
  1. Acredit in the bad debts account.
  2. Bcredit in the provision for bad debts account.
  3. Cdebit in the profit and loss account.
  4. Ddebit in the provision for bad debts account.

Question 2

Introduction to accounting
The purpose of bookkeeping is to
  1. Ainterpret the double entry records.
  2. Bprepare financial statements at regular intervals.
  3. Crecord all the financial transactions of a business.
  4. Dsummarise the financial position of a business.

Question 3

Partnerships
One of the advantages of partnerships is that
  1. Adecision making is fast.
  2. Bmore capital is raised.
  3. Cpartners have unlimited liability.
  4. Dprofits are shared.

Question 4

Accounting information systems
Which component of a computer stores accounting information?
  1. Acentral processing unit
  2. Bkeyboard
  3. Cprinter
  4. Dvisual display unit

Question 5

Control accounts
Which item appears in a purchases ledger control account?
  1. Abad debts
  2. Bdiscount allowed
  3. Creturns inwards
  4. Dreturns outwards

Question 6

Source documents
Which source document is used to record goods sold on credit?
  1. Acredit note
  2. Bdebit note
  3. Cinvoice
  4. Dvoucher

Question 7

Books of original entry
Shop fittings bought on credit for $24 000 are first entered in the
  1. Acash book.
  2. Bgeneral journal.
  3. Cpurchases journal.
  4. Dpurchases ledger.

Question 8

Discounts

On 1 July 2016 Makaya received an invoice of $32 000 less 10% trade discount and 2% cash discount if paid within ten days.

The amount paid by Makaya on 8 July 2016 was

  1. A$28 160.
  2. B$28 224.
  3. C$28 800.
  4. D$31 360.

Question 9

Bad debts and provisions

A business decides to write off Mvundla's debt of $500.

Which journal entry records this?

  1. Adebit bad debts account, credit Mvundla account
  2. Bdebit bad debts account, credit provision for bad debts account
  3. Cdebit Mvundla account, credit bad debts account
  4. Ddebit provision for bad debts account, credit bad debts account

Question 11

Books of original entry
The total of the sales returns journal is posted to the
  1. Acredit side of the returns inwards account.
  2. Bcredit side of the returns outwards account.
  3. Cdebit side of the returns inwards account.
  4. Ddebit side of the returns outwards account.

Question 12

Discounts
Traders offer trade discount to customers to
  1. Aencourage bulk buying.
  2. Bencourage prompt payment.
  3. Cincrease the customer's profit.
  4. Dreduce the trader's profit.

Question 15

Classification of accounts
Nominal accounts are for
  1. Aassets and liabilities.
  2. Bcustomers and suppliers.
  3. Cexpenses and liabilities.
  4. Dincome and expenses.

Question 16

Double entry
The double entry for recording goods returned to O. Phiri a supplier is
  1. Adebit O. Phiri account, credit purchases account.
  2. Bdebit O. Phiri account, credit returns outwards account.
  3. Cdebit purchases account, credit O. Phiri account.
  4. Ddebit returns outwards account, credit O. Phiri account.

Question 17

Trial balance
A trial balance is prepared in order to
  1. Acalculate gross profit.
  2. Bfind out the amount owed by debtors.
  3. Ccheck the arithmetical accuracy of the ledger.
  4. Dcorrect errors in the ledger accounts.

Question 18

Bank reconciliation

A trader provided the following information:

Cash book balance $7 800 debit
Uncleared deposits $4 400
Unpresented cheques $1 200

The balance as per bank statement was

  1. A$4 600 credit.
  2. B$4 600 debit.
  3. C$11 000 credit.
  4. D$11 000 debit.

Question 19

Errors and suspense accounts

The sale of machinery for $3 000 is entered in the sales account.

This is an error of

  1. Acommission.
  2. Bcomplete reversal of entries.
  3. Coriginal entry.
  4. Dprinciple.

Question 20

Financial statements

The following information was given on 31 December 2016.

Sales $40 000
Returns inwards $1 500
Carriage on sales $10 000

Turnover amounted to

  1. A$28 500.
  2. B$31 500.
  3. C$38 500.
  4. D$48 500.

Question 21

Financial statements

A trader received a five year loan of $10 000 from the bank.

The effect of this transaction is to

  1. Aincrease current liabilities.
  2. Bincrease non-current liabilities.
  3. Creduce current liabilities.
  4. Dreduce non-current liabilities.

Question 22

Partnerships
What does a credit balance in a partner's account represent?
  1. Abank overdraft
  2. Boverdrawn profits
  3. Cundrawn profits
  4. Dunpaid salary

Question 23

Errors and suspense accounts
Which error is revealed by a trial balance?
  1. Acapital expenditure treated as revenue expenditure
  2. Bcomplete omission of a transaction
  3. Cincorrect amount entered both as a debit and a credit
  4. Dovercast sales day book total

Question 24

Partnerships
Which item would appear in the appropriation account of a partnership?
  1. Ainterest on capital
  2. Binterest on debentures
  3. Cinterest on loan
  4. Dinterest on overdraft

Question 25

Accounting concepts
Which set of items contains accounting concepts only?
  1. Acompetence, consistency
  2. Bdouble entry, integrity
  3. Cprofessionalism, going concern
  4. Dprudence, historical cost

Question 26

Manufacturing accounts

Given:

Prime cost $183 000
Factory overheads $11 000
Work in progress, 1 January 2016 $3 500
Work in progress, 31 December 2016 $1 200

What is the cost of production?

  1. A$194 000
  2. B$196 300
  3. C$197 500
  4. D$198 700

Question 27

Depreciation and disposals
A loss on the disposal of an asset is debited to the
  1. Aasset account.
  2. Basset disposal account.
  3. Cprofit and loss account.
  4. Dprovision for depreciation account.

Question 28

Bad debts and provisions

A business provided the following information on 31 December 2016.

Trade receivables $12 000
Provision for bad debts 5%
Provision for discount allowed 2%

The provision for discount allowed on 31 December 2016 was

  1. A$228.
  2. B$240.
  3. C$600.
  4. D$840.

Question 29

Interpretation of accounts
If total liabilities exceed total assets the business is
  1. Abankrupt.
  2. Bliquid.
  3. Cprofitable.
  4. Dsolvent.

Question 30

Bank reconciliation
A cheque paid by the business but has not yet passed through the banking system is
  1. Aa dishonoured cheque.
  2. Ba post dated cheque.
  3. Can expired cheque.
  4. Dan unpresented cheque.

Question 31

Depreciation and disposals

Trial Balance extract as at 31 December 2016.

Machinery at cost, Dr $120 000
Provision for depreciation, 31 December 2016, Cr $72 400

The machinery was sold for $46 500 cash on 1 January 2017.

What was the loss on disposal?

  1. A$1 100
  2. B$25 900
  3. C$47 600
  4. D$73 500

Question 32

Financial statements
The order of liquidity for current assets is
  1. Aaccounts receivable, bank, cash, inventory.
  2. Bbank, cash, accounts receivable, inventory.
  3. Cinventory, accounts receivable, bank, cash.
  4. Dinventory, accounts receivable, cash, bank.

Question 33

Interpretation of accounts
Which transaction affects the amount of working capital?
  1. Acash sales of $4 000 deposited into the bank
  2. Bcheque of $2 500 received from a debtor
  3. Ccheque payment of $3 100 to a creditor
  4. Dsale of old office equipment on credit for $2 000

Question 34

Limited companies

The following information relates to a public limited company.

Authorised share capital $250 000
Issued and paid up share capital $200 000
General reserve $30 000
Profit and loss account $15 000
10% Debentures $20 000

What is the total shareholders' fund?

  1. A$245 000
  2. B$265 000
  3. C$315 000
  4. D$495 000

Question 35

Interpretation of accounts

The following information was provided by a trader on 31 December 2016.

Inventory $10 000
Trade receivables $5 000
Total current assets $50 000
Current liabilities $25 000

The acid test ratio was

  1. A0,6: 1.
  2. B1,6: 1.
  3. C2: 1.
  4. D2,6: 1.

Question 36

Non-trading organisations
The income and expenditure account is used to calculate the
  1. Aaccumulated fund.
  2. Bamount owed to bar trade payables.
  3. Cbank balance.
  4. Dexcess of income over expenditure.

Question 37

Partnerships

Shem and Saul are in an equal partnership. Their net profit was $70 000 before taking the following into account.

Interest on capital $15 000
Shem's salary $6 000
Interest on drawings $1 000

Saul's share of profit after appropriations was

  1. A$25 000.
  2. B$31 000.
  3. C$35 000.
  4. D$50 000.

Question 38

Limited companies
Which item appears in the appropriation account of a limited company?
  1. Adebenture interest
  2. Bdirectors' salaries
  3. Cproposed dividends
  4. Dshare capital

Question 39

Financial statements
If closing inventory is understated then
  1. Agross profit and net profit would be overstated.
  2. Bgross profit and net profit would be understated.
  3. Cgross profit only would be overstated.
  4. Dgross profit only would be understated.

Question 40

Incomplete records

The following information was provided by a sole trader.

Total assets, 1 January 2016 $28 000
Total liabilities, 1 January 2016 $20 000
Net profit for the year $12 000
Capital introduced during 2016 $15 000
Drawings for the year $9 000

The capital on 31 December 2016 was

  1. A$11 000.
  2. B$18 000.
  3. C$23 000.
  4. D$26 000.

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