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ZIMSEC O Level · 4051/1 · J2025

Principles of Accounting Paper 1 June 2025

Questions
39 of 40
Syllabus code
4051/1

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Questions
39
Pass mark
24
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Answer every question in the printed order, get marked at the end, then see the answers.

The questions

Question 1

Forms of business organisation
Which of the following business organisations has an advantage of raising more capital?
  1. APartnership
  2. BPrivate limited company
  3. CPublic limited company
  4. DSole proprietor

Question 2

Computers in accounting
Which of the following is an advantage of using manual method of processing data?
  1. ACheap to use
  2. BFaster to process data
  3. CMinimises errors
  4. DStores more information

Question 3

Source documents

A trader bought goods on credit.

Which source document was used?

  1. ACheque
  2. BPurchases invoice
  3. CReceipt
  4. DSales invoice

Question 4

Source documents
What is the source document for the sales returns journal?
  1. ACredit note
  2. BDebit note
  3. CInvoice
  4. DReceipt

Question 5

Books of original entry
Office equipment sold on credit is recorded in the
  1. Acash book.
  2. Bgeneral journal.
  3. Csales journal.
  4. Dpurchases journal.

Question 6

Division of the ledger
Which of the following accounts is found in the private ledger?
  1. ABank account
  2. BCapital account
  3. CTrade receivables account
  4. DWages and salaries account

Question 7

Correction of errors

Goods bought by cheque were recorded in the purchases account and omitted in the bank account.

To correct the error

debitcredit
Abank accountsuspense account.
Bpurchases accountsuspense account.
Csuspense accountbank account.
Dsuspense accountpurchases account.
  1. Adebit bank account, credit suspense account.
  2. Bdebit purchases account, credit suspense account.
  3. Cdebit suspense account, credit bank account.
  4. Ddebit suspense account, credit purchases account.

Question 8

Accounting concepts

A trader decides to create a provision for bad debts.

This is in accordance to the

  1. Aconsistency concept.
  2. Bdouble entry concept.
  3. Cmatching concept.
  4. Dprudence concept.

Question 9

Statement of financial position
In a statement of financial position of a sole trader, what makes up owner's equity?
  1. AOpening capital - net loss - drawings
  2. BOpening capital + net loss + drawings
  3. COpening capital - net profit - drawings
  4. DOpening capital + net profit + drawings

Question 10

Statement of financial position
In the preparation of statement of financial position which items are classified as current liabilities?
  1. AIncome owing and inventory of stationery
  2. BIncome owing and rates accrued
  3. CIncome prepaid and inventory of stationery
  4. DIncome prepaid and rates accrued

Question 11

Capital and revenue expenditure

The following transactions appeared in the books of a trader.

(i) Bought a delivery van
(ii) Paid for rent and rates
(iii) Paid for carriage on purchases
(iv) Paid for carriage on delivery van

Which transactions fall under capital expenditure?

  1. A( i ) and ( ii )
  2. B( i ) and ( iv )
  3. C( ii ) and ( iii )
  4. D( iii ) and ( iv )

Question 12

Control accounts
Items entered on the debit side of a trade payables control account include
  1. Acredit purchases and discount received.
  2. Breturns outwards and credit purchases.
  3. Creturns outwards and discount received.
  4. Dset off and cash refund.

Question 13

Control accounts
Information entered in control accounts is extracted from the
  1. Aledger accounts.
  2. Bsource documents.
  3. Csubsidiary books.
  4. Dtrial balance.

Question 14

Bank reconciliation
Which of the following is used on the preparation of a bank reconciliation statement?
  1. ABank charges
  2. BCash book error
  3. CCredit transfer
  4. DUnpresented cheques

Question 15

Bank reconciliation
Which of the following items are used to update the cash book?
  1. ABank charges and standing order
  2. BDeposits not yet credited and standing order
  3. CUnpresented cheques and bank charges
  4. DUnpresented cheques and standing order

Question 16

Ratio analysis
Margin is
  1. Agross profit expressed as a percentage of cost of sales.
  2. Bgross profit expressed as a percentage of turnover.
  3. Cnet profit expressed as a percentage of cost of sales.
  4. Dnet profit expressed as a percentage of turnover.

Question 17

Incomplete records
Which of the following can be used to calculate purchases?
  1. ACost of sales - opening inventory - closing inventory
  2. BCost of sales - opening inventory + closing inventory
  3. CCost of sales + opening inventory - closing inventory
  4. DCost of sales + opening inventory + closing inventory

Question 18

Clubs and societies
Which of the following items is shown in the receipts and payments account?
  1. ACash at end of period
  2. BInventory of stationery
  3. CSubscriptions owing at end of period
  4. DSurplus at end of period

Question 19

Clubs and societies
Which of the following items is credited in an income and expenditure account?
  1. ADepreciation of office furniture
  2. BMotor vehicles repairs
  3. CStationery
  4. DSubscriptions

Question 20

Manufacturing accounts
Which of the following inventories is part of total cost of production?
  1. AClosing inventory for raw materials
  2. BClosing inventory for work in progress
  3. COpening inventory for finished goods
  4. DOpening inventory for work in progress

Question 21

Manufacturing accounts
Which of the following is part of prime cost for a furniture manufacturing company?
  1. ACarriage on furniture
  2. BCarriage on timber
  3. CWages of factory supervisor
  4. DWages of office supervisor

Question 22

Manufacturing accounts
Cost of unfinished goods at the end of a given period is
  1. Acost of raw materials consumed.
  2. Binventory of raw materials.
  3. Cinventory of work in progress.
  4. Dprime cost of production.

Question 23

Partnerships
Which of the following items is shown on the credit side of a partnership appropriation account?
  1. AInterest on capital
  2. BInterest on drawings
  3. CSalaries to partners
  4. DShare of profits

Question 24

Partnerships
One of the advantages of forming partnerships is that
  1. Abusiness risks are shared.
  2. Bdecision making takes long.
  3. Cpartners have unlimited liability.
  4. Dprofits are shared.

Question 25

Limited companies
Which of the following set of items are shown in the statement of changes in equity?
  1. ADividends paid and interest on debentures
  2. BDividends proposed and interest on debentures
  3. CTransfer to reserves and dividends paid
  4. DTransfer to reserves and dividends proposed

Question 26

Ethics in accounting
Which business ethic will a company apply if it requires its employees to keep company information to themselves?
  1. ACompetence
  2. BCompliance
  3. CConfidentiality
  4. DObjectivity

Question 27

Correction of errors

A trader's trial balance failed to agree. It was discovered that sales returns were overcast by $800.

The effect of this error on the trial balance was to

  1. Aincrease the credit side by $800.
  2. Bincrease the debit side by $800.
  3. Creduce the credit side by $800.
  4. Dreduce the debit side by $800.

Question 28

Trial balance

The following balances were extracted from the ledger of a business:

$
Provision for depreciation: office equipment12 500
Drawings7 800
Returns outwards2 600
Returns inwards1 900
Discount allowed800

Total debit balances in the trial balance amounted to

  1. A$10 200.
  2. B$10 500.
  3. C$15 100.
  4. D$23 000.

Question 29

Depreciation

A trader provided the following information:

2020 January 1 Office equipment at cost $35 000.

During the year the following transactions took place.

(i) Office equipment with a cost price of $4 000 was sold.
(ii) Additional equipment was purchased for $12 500.

On 31 December 2020 office equipment was valued at $29 200.

The depreciation charge for office equipment on 31 December 2020 was

  1. A$1 800.
  2. B$5 800.
  3. C$14 300.
  4. D$18 300.

Question 30

Final accounts

A trader provided the following information at the end of a financial year:

$
Gross profit25 600
Loan interest paid800
Discount allowed2 500
Loan10 000

Interest on loan was 10% per annum.

The net profit for the year was

  1. A$22 100.
  2. B$22 300.
  3. C$22 900.
  4. D$27 100.

Question 31

Capital and revenue expenditure

A trader bought printing machinery for $3 500.

The following expenses were incurred:

$
Cost of installing the machine705
Carriage cost of the machine210
Printing stationery60

The amount debited to the machinery account was

  1. A$3 710.
  2. B$4 205.
  3. C$4 415.
  4. D$4 475.

Question 32

Bank reconciliation

A trader provided the following information:

$
Balance as per bank statement14 100 Cr
Cheques not yet presented for payment5 600
Deposits not yet credited9 700

The bank credited the account of the trader by $7 100 in error.

What was the balance as per cash book?

  1. A$2 900
  2. B$11 100
  3. C$17 100
  4. D$25 300

Question 33

Ratio analysis

A trader provided the following information:

$
Cost of sales60 000
Gross profit30 000
Net profit10 000
Turnover90 000

What was the mark up?

  1. A1/9
  2. B1/6
  3. C1/3
  4. D1/2

Question 35

Clubs and societies

On 1 January 2020 a softball club had the following assets and liabilities:

$
Subscriptions in arrears1 200
Subscriptions in advance800
Sports equipment12 300
Wages outstanding650
Insurance prepaid100

What was the accumulated fund?

  1. A$11 350
  2. B$12 150
  3. C$13 250
  4. D$15 050

Question 36

Departmental accounts

A trader had a shop with two departments.

The following information was provided:

Hardware $Clothing $
Opening inventory20 00032 500
Purchases51 10077 100
Carriage inwards3 1504 200

During the year the owner took clothes worth $1 600 for personal use.

The cost of sales for the clothing department was

  1. A$109 600.
  2. B$112 200.
  3. C$113 800.
  4. D$115 400.

Question 37

Departmental accounts

A departmental store provided the following information:

$
Gross profit: Department A12 600
Department B15 100
Commission received6 300
Carriage on sales2 400

The combined profit and loss account showed a net profit of

  1. A$16 500.
  2. B$19 000.
  3. C$31 600.
  4. D$34 000.

Question 38

Limited companies

A private limited company provided the following information:

Issued share capital

200 000 Ordinary shares of $2 each
600 000 10% Preference shares of 50c each

The total issued share capital was

  1. A$260 000.
  2. B$430 000.
  3. C$700 000.
  4. D$800 000.

Question 39

Ledger accounts

The following ledger account appeared in the books of a trader.

Packaging materials account

2020$2020$
Aug 1 Balance b/d11 300Aug 31 Income statement30 000
7 Bank8 90031 Balance c/d500
15 Farai booksellers10 300
30 50030 500

What is meant by the entry on 15 August 2020?

  1. APackaging materials bought for cash from Farai booksellers
  2. BPackaging materials bought on credit from Farai booksellers
  3. CPackaging materials sold for cash to Farai booksellers
  4. DPackaging materials sold to Farai booksellers on credit

Question 40

Bad debts and provisions

The following ledger account was obtained from the books of a trader:

Provision for doubtful debts account

2020$2020$
Dec 31 Income statement1 200Jan 1 Balance b/d6 500
31 Balance c/d5 300
6 5006 500

The entry "income statement $1 200" represents

  1. Adecrease in provision for doubtful debts credited to the income statement.
  2. Bdecrease in provision for doubtful debts debited to the income statement.
  3. Cincrease in provision for doubtful debts credited to the income statement.
  4. Dincrease in provision for doubtful debts debited to the income statement.

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