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ZIMSEC O Level · 7112/1 · N2015

Principles of Accounting Paper 1 November 2015

Questions
40
Syllabus code
7112/1

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Questions
40
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

Division of the ledger
An example of a personal account is
  1. Acapital account.
  2. Bmachinery account.
  3. Cpurchases account.
  4. Dstationery account.

Question 2

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 3

Source documents
Which document increases the amount owing on an invoice?
  1. Acredit note
  2. Bdebit note
  3. Creceipt
  4. Dvoucher

Question 4

Source documents
A document that shows the amount to be paid by a customer is a
  1. Abank statement.
  2. Bcheque stub.
  3. Ccredit note.
  4. Dstatement of account.

Question 5

Computers in accounting
Which is a computer software?
  1. Amonitor
  2. Bmouse
  3. Cpastel
  4. Dspeaker

Question 6

Computers in accounting
Which component of a computer manipulates accounting information?
  1. Athe central processing unit
  2. Bthe input device
  3. Cthe output device
  4. Dthe visual display unit

Question 7

Forms of business organisation
A disadvantage of sole proprietorships is that
  1. Adecision making is faster.
  2. Bformation is easy.
  3. Cowner enjoys all the profits.
  4. Dthere is unlimited liability.

Question 8

Source documents

Which items match?

Subsidiary BookSource Document
Acash bookbank statement
Bgeneral journalcheque stub
Cpetty cash bookreceipt
Dsales returns journalinvoice
  1. Acash book — bank statement
  2. Bgeneral journal — cheque stub
  3. Cpetty cash book — receipt
  4. Dsales returns journal — invoice

Question 9

Double entry

The double entry for the purchase of equipment on credit is

DebitCredit
Acreditorequipment
Bcreditorpurchases
Cequipmentcreditor
Dpurchasescreditor
  1. Adebit creditor, credit equipment
  2. Bdebit creditor, credit purchases
  3. Cdebit equipment, credit creditor
  4. Ddebit purchases, credit creditor

Question 10

Drawings

The owner of a business took stock at selling price for own use.

Which account is credited?

  1. Acapital account
  2. Bdrawings account
  3. Cpurchases account
  4. Dsales account

Question 11

Capital and revenue expenditure
Which item is revenue expenditure?
  1. Abuying equipment for the business
  2. Bcost of redecorating the manager's office
  3. Ccost of new tyres for a new van
  4. Dpainting premises for the first time

Question 12

Control accounts
Control accounts are prepared to
  1. Acalculate credit sales.
  2. Bcorrect errors.
  3. Clocate errors.
  4. Dprevent fraud.

Question 13

Manufacturing accounts

The following information was provided by a manufacturer.

Raw materials:$
Opening stock/inventory3 000
Purchases91 000
Closing stock/inventory5 000
Direct wages50 000

What is the cost of raw materials consumed?

  1. A$83 000
  2. B$89 000
  3. C$99 000
  4. D$139 000

Question 14

Control accounts

The following account was taken from the general ledger of a trader.

Sales ledger control account

2012$2012$
Oct 1Balance b/d5 000Oct 31Bank30 000
31Sales120 000Returns inwards4 000
Interest1 000Bad debts12 000

The amount for debtors entered in the balance sheet on 31 October is

  1. A$5 000.
  2. B$80 000.
  3. C$120 000.
  4. D$126 000.

Question 15

Errors and the suspense account

A cash payment of $25 for insurance was entered correctly in the cash book but was posted as $52 to the insurance account.

The journal entry to correct the error is

debitcredit
Acash account $25insurance account $25
Binsurance account $25cash account $25
Cinsurance account $27suspense account $27
Dsuspense account $27insurance account $27
  1. Adebit cash account $25, credit insurance account $25
  2. Bdebit insurance account $25, credit cash account $25
  3. Cdebit insurance account $27, credit suspense account $27
  4. Ddebit suspense account $27, credit insurance account $27

Question 16

Bank reconciliation
Which item increases a bank statement balance?
  1. Adishonoured cheques
  2. Bcredit transfers
  3. Cservice fees
  4. Dstop orders

Question 17

Bank reconciliation
Which items are used to update a cashbook?
  1. Abank lodgements and dishonoured cheques
  2. Bcredit transfers and unpresented cheques
  3. Cdividends and standing orders
  4. Dservice fees and uncleared deposits

Question 18

Bank reconciliation

A cash book had an overdraft of $2 000. The bank statement showed interest received of $5 000. Unpresented cheques were $7 000 and uncleared deposits totalled $1 000.

The balance as per bank statement is

  1. A$1 000 debit.
  2. B$3 000 debit.
  3. C$9 000 credit.
  4. D$11 000 credit.

Question 19

Adjustments
A credit balance in the rent received account represents rent
  1. Anot yet paid.
  2. Bpaid during the year.
  3. Creceived during the year.
  4. Dreceived in advance.

Question 20

Incomplete records

A trader provided the following information:

$
Opening capital11 000
Additional capital5 000
Drawings3 000
Closing capital25 000

What was the net profit for the year?

  1. A$6 000
  2. B$12 000
  3. C$17 000
  4. D$23 000

Question 21

Final accounts

What is the double entry for net profit?

DebitCredit
Acapital accountnet profit
Bcapital accountprofit and loss account
Cnet profitcapital account
Dprofit and loss accountcapital account
  1. Adebit capital account, credit net profit
  2. Bdebit capital account, credit profit and loss account
  3. Cdebit net profit, credit capital account
  4. Ddebit profit and loss account, credit capital account

Question 22

Depreciation

The following balances were extracted from the books of a trader on 31 December 2011.

$
Motor vehicles, cost60 000 Debit
Provision for depreciation (01.01.11)6 000 Credit

The motor vehicle was bought on 1 January 2009.

What is the depreciation charge on 31 December 2011 using the straight line method?

  1. A$3 000
  2. B$6 000
  3. C$54 000
  4. D$66 000

Question 23

Bad debts and provisions

A trader created a provision for doubtful debts of 10% of debtors and a provision for discount allowed of 1% of good debtors.

Debtors at the end of the year were $20 000.

The amount of net debtors was

  1. A$17 800.
  2. B$17 820.
  3. C$18 000.
  4. D$18 200.

Question 24

Final accounts

The following information was provided by a trader.

$
Cost of sales100 000
Total expenses10 000
Net profit40 000

What is the turnover?

  1. A$50 000
  2. B$110 000
  3. C$140 000
  4. D$150 000

Question 25

Ratios and interpretation
Which transaction reduces working capital?
  1. Abuying stock for cash
  2. Bdonating $1 000 cash to charity
  3. Cpaying $50 cash to creditors
  4. Dselling stock to Farai on credit

Question 26

Errors and the suspense account
Which error causes an increase in the gross profit?
  1. Aclosing stock/inventory undervalued
  2. Bopening stock/inventory omitted from a trading account
  3. Cpurchases recorded before deduction of trade discount
  4. Dsales invoices omitted from the sales journal

Question 27

Final accounts

A business provided the following information.

$
Working capital5 000
Owner's equity12 000
Non-current/Fixed assets15 000

What is the value of non-current/long-term liabilities?

  1. A$8 000.
  2. B$17 000.
  3. C$20 000.
  4. D$22 000.

Question 28

Ratios and interpretation
Money used to carry out the day-to-day operations of a business is referred to as
  1. Aborrowed capital.
  2. Bcapital employed.
  3. Ccapital invested.
  4. Dworking capital.

Question 29

The accounting equation

After preparing a balance sheet/statement of financial position, a cheque for $60 was received from a debtor.

The effect on the balance sheet/statement of financial position is

  1. Aa decrease in debtors and a decrease in bank.
  2. Ba decrease in debtors and an increase in bank.
  3. Can increase in debtors and a decrease in bank.
  4. Dan increase in debtors and an increase in bank.

Question 30

Partnerships
At the end of a financial year, partners' drawings and share of profits are entered in the
  1. Aappropriation account.
  2. Bcapital account.
  3. Ccurrent account.
  4. Dprofit and loss account.

Question 31

Ratios and interpretation

A business provides the following information.

$
Total fixed assets/Non-current assets600 000
Current assets250 000
Long term /Non-current liabilities80 000
Current liabilities100 000

What is the current ratio?

  1. A0,8: 1
  2. B1,3: 1
  3. C2,4: 1
  4. D2,5: 1

Question 32

Partnerships
Which item is entered in a partnership profit and loss account?
  1. Ainterest on capital
  2. Binterest on current account
  3. Cinterest on drawings
  4. Dinterest on loan

Question 33

Goodwill
The excess of purchase price over net assets taken over is
  1. Aa deficit.
  2. Ba surplus.
  3. Cgoodwill.
  4. Dprofit.

Question 34

Partnerships

The partnership agreement of Sharon and Stella shows that Sharon is entitled to an annual salary of $10 000 and Stella $6 000.

During the year ended 31 December 2013, Sharon was paid $7 000.

What amount is credited to Sharon's current account?

  1. A$3 000
  2. B$7 000
  3. C$10 000
  4. D$17 000

Question 35

Non-profit making organisations

The following ledger account was extracted from the books of a club.

Subscriptions account

2012$2012$
Jan 1Balance b/d5 000Jan 1Balance b/d2 000
Dec 31Income and Expenditure15 000Dec 31Bank11 000
Dec 31Balance c/d7 000
20 00020 000

What does the entry "balance c/d 7 000" on 31 December 2012 represent?

  1. Asubscriptions for 2012
  2. Bsubscriptions in arrears
  3. Csubscriptions paid in advance
  4. Dsubscriptions received in cash

Question 36

Manufacturing accounts

A manufacturer had the following stocks/inventories:

(i) raw materials
(ii) finished goods
(iii) work in progress

Which stocks are part of cost of production?

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

Question 37

Non-profit making organisations
The purpose of a receipts and payments account is to
  1. Acalculate closing cash and bank balance.
  2. Bcalculate subscriptions for the year.
  3. Cshow fixed assets bought in previous years.
  4. Dshow profit from sale of refreshments.

Question 38

Limited companies

A joint stock company had the following issued share capital.

200 000 10% preference shares at $3 each.
An interim dividend of $40 000 was paid.

The final dividend was

  1. A$20 000.
  2. B$40 000.
  3. C$60 000.
  4. D$160 000.

Question 39

Limited companies
Which capital represents the actual cash received by a joint stock company?
  1. Aauthorised share capital
  2. Bcalled up share capital
  3. Cissued share capital
  4. Dpaid up share capital

Question 40

Final accounts

The account given below was taken from the books of a trader.

Capital Account

2012$2012$
Dec 31Drawings1 000Jan 1Balance b/d5 000
31Profit and Loss2 000Dec 31Cash4 000
31Balance c/d6 000
9 0009 000

What does the entry "Profit and loss 2 000" represent?

  1. Aadditional capital introduced
  2. Bcapital for the year
  3. Cnet loss for the year
  4. Dnet profit for the year

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