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ZIMSEC O Level · 4051/1 · N2020

Principles of Accounting Paper 1 November 2020

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

Accounting concepts
Which of the following are assets only?
  1. Acash, drawings, motor vehicles
  2. Bcash, fixtures, trade payables
  3. Cfurniture, inventory, stationery
  4. Dmachinery, cash, trade receivables

Question 2

Source documents
What is the source document for a sales returns journal?
  1. Acredit note
  2. Bdebit note
  3. Cpurchases invoice
  4. Dsales invoice

Question 3

Discounts

A trader buys goods on credit from a supplier for $5 000 less 5% trade discount.

The double entry is

  1. ADebit purchases account $4 750; Credit supplier's account $4 750.
  2. BDebit purchases account $5 000; Credit supplier's account $5 000.
  3. CDebit supplier's account $4 750; Credit purchases account $4 750.
  4. DDebit supplier's account $5 000; Credit purchase account $5 000.

Question 4

Books of original entry
Which of the following shows the correct order of the accounting cycle?
  1. Asubsidiary books → financial statements → trial balance
  2. Bsubsidiary books → ledger → trial balance
  3. Ctransaction → financial statements → trial balance
  4. Dtransaction → ledger → subsidiary books

Question 5

Discounts
Trade discount differs from cash discount in that it is
  1. Aan allowance for prompt payment.
  2. Bdeducted after cash discount.
  3. Cgiven for bulk buying.
  4. Drecorded in the purchases journal.

Question 6

Computers in accounting
Which of the following is a computer hardware device?
  1. AKeyboard
  2. BMicrosoft excel
  3. CMicrosoft word
  4. DPastel

Question 7

Division of the ledger

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

Purchases Account
Debit side: 2017 May 7 Cash 600;May14Bank600; May 14 Bank 1 200; total $1 800
Credit side: 2017 May 31 Income statement $1 800; total $1 800

In which ledger is this account found?

  1. AGeneral ledger.
  2. BPrivate ledger.
  3. CTrade payables ledger.
  4. DTrade receivables ledger.

Question 8

Correction of errors

Goods sold on credit to A. Moyo were recorded in B. Moyo's account.

This is an error of

  1. Acommission.
  2. Bomission.
  3. Cprinciple.
  4. Dtransposition.

Question 9

Discounts

A trader sold goods for $10 000 less 20% trade discount. A 5% cash discount is offered when payment is done within 30 days.

If a cheque was received after 45 days, how much was recorded in the cash book?

  1. A$7 500
  2. B$7 600
  3. C$8 000
  4. D$9 500

Question 10

Accounting concepts
The totals of a Trial balance agree as a result of which concept?
  1. Aconsistency concept
  2. Bdouble entry concept
  3. Cmatching concept
  4. Dprudence concept

Question 11

Final accounts
The delivery cost of goods to customers by a trader is recorded in her books as
  1. Acarriage inwards debited to Profit and Loss account.
  2. Bcarriage inwards debited to Trading account.
  3. Ccarriage outwards debited to Profit and Loss account.
  4. Dcarriage outwards debited to Trading account.

Question 12

Accruals and prepayments

On 1 January 2017 a trader obtained a loan of $25 000 at an interest rate of 5% per annum. During the year interest on loan paid was $250.

The interest on loan due on 31 December 2017 was

  1. A$250.
  2. B$1 000.
  3. C$1 250.
  4. D$1 500.

Question 13

Bad debts and provisions
Bad debts are written off by
  1. Acrediting bad debts account, debiting provision for bad debts account.
  2. Bdebiting bad debts account, crediting debtors' account.
  3. Cdebiting debtors' account, crediting bad debts account.
  4. Ddebiting provision for bad debts account, crediting bad debts account.

Question 14

Capital and revenue expenditure
Office equipment bought for use in the business is
  1. Acapital expenditure added to capital in the Statement of Financial position.
  2. Bcapital expenditure added to non-current assets in the Statement of Financial position.
  3. Crevenue expenditure added to operating expenses in the Income Statement.
  4. Drevenue expenditure added to purchases in the Trading account.

Question 15

Depreciation

On 1 January 2015 a trader had motor vehicles worth $50 000. Motor vehicles are depreciated at 10% per annum using the reducing balance method.

What was the net book value of the motor vehicles on 31 December 2016?

  1. A$5 000
  2. B$9 500
  3. C$40 500
  4. D$45 000

Question 16

Control accounts
What is the purpose of preparing control accounts?
  1. ATo calculate total debtors and total creditors.
  2. BTo calculate total sales and total purchases.
  3. CTo correct errors.
  4. DTo prevent fraud.

Question 17

Bank reconciliation
The amount deposited directly in a business bank account is a
  1. Acredit transfer.
  2. Bdirect debit.
  3. Cservice fee.
  4. Dstanding order.

Question 18

Capital and revenue expenditure

A trader bought an office computer at a cost of $3 300. The following expenses were incurred:

Carriage costs $500
Installation costs $100
Printing stationary $50

How much was debited in the office computer account?

  1. A$3 400
  2. B$3 800
  3. C$3 900
  4. D$3 950

Question 19

Ratio analysis
Which of the following transactions reduces working capital?
  1. Aadditional cash capital
  2. Bbuying goods on credit for resale
  3. Cbuying motor vehicles by cheque
  4. Dreceiving long term loan

Question 20

Incomplete records
The following method can be used to calculate net profit.
  1. Aclosing capital - opening capital - drawings
  2. Bclosing capital - opening capital + drawings
  3. Copening capital - closing capital - drawings
  4. Dopening capital + closing capital - drawings

Question 21

Clubs and societies
Regular amounts received by a Not for profit making organisation from members are
  1. Adonations.
  2. Bentrance fees.
  3. Clife membership fees.
  4. Dsubscriptions.

Question 22

Departmental accounts
What is the main purpose of preparing departmental trading accounts?
  1. Ato apportion operating expenses
  2. Bto calculate gross profit or loss for each department
  3. Cto calculate net profit or loss for each department
  4. Dto show the financial position of each department

Question 23

Bank reconciliation

A cash book had an opening debit balance of $1 100. The following information was available:

Dividends $3 500
Dishonoured cheques $200
Bank charges $50

What was the balance as per updated cash book?

  1. A$2 650
  2. B$4 350
  3. C$4 450
  4. D$4 750

Question 24

Manufacturing accounts
Cost of production is calculated as
  1. Acost of raw materials consumed + direct costs + indirect costs.
  2. Bcost of raw materials consumed + direct costs - indirect costs.
  3. Ccost of raw materials consumed - direct costs + indirect costs.
  4. Dcost of raw materials consumed - direct costs - indirect costs.

Question 25

Control accounts

The following details were obtained from the books of a trader.

2017
January 1 Purchases ledger control $6 800 credit
January 31 Credit purchases $28 400
Discount received $3 200
Cheques paid to creditors $19 700

The amount owed to creditors on 31 January 2017 was

  1. A$1 300.
  2. B$5 100.
  3. C$12 300.
  4. D$18 700.

Question 26

Partnerships
The double entry for a partner's salary is
  1. ADebit Appropriation account; Credit Current account.
  2. BDebit Current account; Credit Appropriation account.
  3. CDebit Current account; Credit Profit and loss account.
  4. DDebit Profit and loss account; Credit Current account.

Question 27

Limited companies
Debenture holders
  1. Aare owners of the company.
  2. Bare paid after shareholders.
  3. Cearn a fixed rate of dividend.
  4. Dearn a fixed rate of interest.

Question 28

Accounting concepts

A company manager prepares monthly reports timeously as per company policy.

Which business ethic is being observed?

  1. Acompliance
  2. Bconfidentiality
  3. Cintegrity
  4. Dobjectivity

Question 29

Ratio analysis

A business provided the following information.

Cash in hand $9 700
Trade payables $3 000
Trade receivables $4 400
Inventory $2 000

The working capital was

  1. A$10 300.
  2. B$13 100.
  3. C$16 100.
  4. D$19 100.

Question 30

Ledger accounts
Which of the following is an asset?
  1. ACredit balance in a Bank account.
  2. BCredit balance in a Creditor's account.
  3. CDebit balance in a Debtor's account.
  4. DDebit balance in a Drawings account.

Question 31

Correction of errors

A sale of goods for $500 was recorded in the books as $50.

Which error is this?

  1. Acompensating error
  2. Bcomplete reversal of entries
  3. Cerror of commission
  4. Derror of original entry

Question 32

Books of original entry
Credit notes issued by a business will be recorded in the
  1. Apurchases journal.
  2. Breturns inwards journal.
  3. Creturns outwards journal.
  4. Dsales journal.

Question 33

Incomplete records

A trader provided the following information:

Capital: 1 January 2017 $15 400
Capital: 31 December 2017 $13 300
Net profit for the year $1 900
Additional capital $600

Drawings amounted to

  1. A$2 100.
  2. B$3 400.
  3. C$4 000.
  4. D$4 600.

Question 34

Books of original entry
Individual entries in the sales day book are posted to the
  1. Acredit side of the individual Debtors account.
  2. Bcredit side of the Sales account.
  3. Cdebit side of the individual Debtors account.
  4. Ddebit side of the Sales account.

Question 35

Errors and the suspense account

A cash payment to a creditor was credited to the Cash account only.

To correct this error

  1. ADebit Cash account; Credit Suspense account.
  2. BDebit Creditor's account; Credit Suspense account.
  3. CDebit Suspense account; Credit Cash account.
  4. DDebit Suspense account; Credit Creditor's account.

Question 37

Departmental accounts

A departmental store had a clothing and electrical department which shared expenses in the ratio 2: 3 respectively.

Railage inwards $10 000
Customs duty $20 000

The total expenses paid by the electrical department was

  1. A$6 000.
  2. B$12 000.
  3. C$18 000.
  4. D$30 000.

Question 38

Ledger accounts
A debit balance in a debtor's account means
  1. Aamount owed by the debtor to the business.
  2. Bamount owed by the business to the debtor.
  3. Camount paid by the debtor to the business.
  4. Damount paid by the business to the debtor.

Question 39

Accruals and prepayments

The following nominal account appeared in the ledger of a business.

Motor fuel account
Debit side: 2016 January 5 Cash $2 500; January 20 Bank $7 200; total $9 700
Credit side: 2016 January 31 Income statement $9 200; January 31 Balance c/d 500;total500; total 9 700

The balance carried down on 31 January 2016 represents

  1. Amotor fuel not paid for at end of the month.
  2. Bmotor fuel paid for during the month.
  3. Cmotor fuel used during the month.
  4. Dmotor fuel not used at the end of the month.

Question 40

Errors and the suspense account

Discount allowed of $120 was credited to Discount received account.

To correct this error

  1. ADebit Discount allowed account $120; Credit Discount received account $120.
  2. BDebit Discount allowed account $120; Credit Suspense account $240.
  3. CDebit Discount received account $120; Credit Discount allowed account $120.
  4. DDebit Suspense account $240; Credit Discount allowed account $120.

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