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ZIMSEC O Level · 4051/1 · N2022

Principles of Accounting Paper 1 November 2022

Questions
40
Syllabus code
4051/1

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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

Forms of business organisation
Which business is classified as a service provider?
  1. AA business which repairs vehicles.
  2. BA business which sells lubricant oils.
  3. CA motor vehicles dealer.
  4. DA spare parts supplier.

Question 2

Source documents
Which stage is missing from the following accounting cycle?
Transaction -> ? -> Subsidiary books -> Ledger.
  1. AIncome statement
  2. BSource documents
  3. CStatement of financial position
  4. DTrial balance

Question 3

Computers in accounting
One of the disadvantages of using computers for processing accounting data is
  1. Acomputers are expensive to install and maintain.
  2. Bcomputers can store large volumes of information.
  3. Ccomputers can process information quickly.
  4. Dcomputers can provide accurate information.

Question 4

Discounts
A trader bought goods for $30 000 less 10% trade discount and 5% cash discount.
The credit purchases were
  1. A$3 000.
  2. B$4 500.
  3. C$25 500.
  4. D$27 000.

Question 5

Source documents
Which source document is issued when furniture is sold on credit?
  1. ACredit note
  2. BDebit note
  3. CInvoice
  4. DVoucher

Question 6

Double entry
Motor van bought on credit from ABC Motors is recorded as follows:
  1. Adebit ABC Motors account, credit Motor van account.
  2. Bdebit ABC Motors account, credit Purchases account.
  3. Cdebit Motor Van account, credit ABC Motors account.
  4. Ddebit Purchases account, credit ABC Motors account.

Question 7

Errors and the suspense account
Which error is revealed by a Trial balance?
  1. ADiscount allowed and discount received were both overcast by $25.
  2. BFurniture bought on credit from Peter for $245 was entered in the books as $254.
  3. CGoods sold to Tendai for $1 500 were only recorded in Tendai's account.
  4. DOffice salaries of $300 were debited to the Office equipment account.

Question 8

Accounting concepts
A trader created an allowance for bad and doubtful debts.
This is an application of which concept?
  1. AGoing concern
  2. BHistorical cost
  3. CMatching
  4. DPrudence

Question 9

Errors and the suspense account
A trial balance totals failed to agree. Total debits were greater by $200.
The balance transferred to the Suspense account was
  1. A$200 credit.
  2. B$200 debit.
  3. C$400 credit.
  4. D$400 debit.

Question 10

Bad debts and provisions
An increase in the provision for bad and doubtful debts will
  1. Adecrease the gross profit.
  2. Bdecrease the net profit.
  3. Cincrease the gross profit.
  4. Dincrease the net profit.

Question 11

Bad debts and provisions
A provision for bad and doubtful debts is created to show
  1. Aactual bad debts.
  2. Bactual debtors.
  3. Cpossible bad debts.
  4. Dpossible debtors.

Question 12

Capital and revenue expenditure
Painting costs for a new building were shown in the Income statement.
What was the effect of this error on net profit and non-current assets?
  1. ANet profit decreased; Non-current assets decreased
  2. BNet profit decreased; Non-current assets increased
  3. CNet profit increased; Non-current assets decreased
  4. DNet profit increased; Non-current assets increased

Question 13

Control accounts
Which item is included in a Creditor's control account?
  1. Acash purchases
  2. Bcredit purchases
  3. Cdiscount allowed
  4. Dreturns inwards

Question 14

Bank reconciliation
Which of the following increases a bank overdraft in the cash book?
  1. ABank charges
  2. BCredit transfer
  3. CDividends received
  4. DInterest received

Question 15

Clubs and societies
Abantu sports club provided the following details:
Subscriptions received $7 900
Profit on disposal of furniture $500
Club secretary expenses $400
Clubhouse depreciation for the year $300
The excess of income over expenditure was
  1. A$6 700.
  2. B$7 200.
  3. C$7 700.
  4. D$8 000.

Question 16

Ratio analysis
Which of the following is a profitability ratio?
  1. Acurrent ratio
  2. Bnet profit percentage
  3. Cquick ratio
  4. Drate of inventory turnover

Question 17

Final accounts
Which of A,B,C or D shows the calculation of gross profit?
  1. Anet profit + total expenses
  2. Bnet profit - total expenses
  3. Cturnover + cost of sales
  4. Dturnover - total expenses

Question 18

Disposal of non-current assets
Office equipment bought for $45 000 was sold for $10 700. Accumulated depreciation on disposal was $35 500.
What was the profit or loss on disposal?
  1. A$1 200 loss
  2. B$1 200 profit
  3. C$20 200 loss
  4. D$20 200 profit

Question 19

Clubs and societies
What reduces accumulated fund?
  1. AExcess of expenditure over income.
  2. BExcess of income over expenditure.
  3. CNet loss.
  4. DNet profit.

Question 20

Manufacturing accounts
Which of the following cost is not easily traceable to the product being manufactured?
  1. Afactory electricity
  2. Bmachine operator's wages
  3. Cpatent fees
  4. Draw materials

Question 21

Partnerships
Which items are credited to a Partnership Appropriation account?
  1. Adrawings and partner's salary
  2. Binterest on drawings and net profit
  3. Cshare of losses and drawings
  4. Dshare of profits and interest on drawings

Question 22

Disposal of non-current assets
A motor van with a cost price of $7 000 had an accumulated depreciation of $2 500. It was sold for $3 000.
The profit or loss made on the transaction was
  1. A$1 500 loss.
  2. B$1 500 profit.
  3. C$4 000 loss.
  4. D$4 000 profit.

Question 23

Limited companies
What is the reward obtained by a shareholder for investing in a company?
  1. Acommission
  2. Bdividend
  3. Cinterest
  4. Dsalary

Question 24

Business ethics
An employee revealed business information to a competitor.
Which business ethic was not observed?
  1. Acompetence
  2. Bconfidentiality
  3. Cobjectivity
  4. Dsubjectivity

Question 25

Division of the ledger
Which of the following is a nominal account?
  1. ACreditor's account
  2. BDebtor's account
  3. CMachinery account
  4. DRent received account

Question 26

Double entry
A sole proprietor took goods worth $700 at cost price for own use.
What is the effect of this transaction?
  1. ADecrease drawings by $700; Increase purchases by $700
  2. BDecrease drawings by $700; Increase sales by $700
  3. CDecrease purchases by $700; Increase drawings by $700
  4. DDecrease sales by $700; Increase drawings by $700

Question 27

Final accounts
A trader had the following information:
Sales $15 500
Returns outwards $2 000
Returns inwards $2 500
Purchases $8 000
Carriage inwards $3 000
What is the gross profit for the year?
  1. A$4 000
  2. B$5 000
  3. C$7 000
  4. D$9 000

Question 28

Books of original entry
Which subsidiary book is part of double entry?
  1. ACash book
  2. BPurchases day book
  3. CReturns outwards book
  4. DSales day book

Question 29

Division of the ledger
Which of the following is a real account?
  1. ACapital account
  2. BFittings account
  3. CSales account
  4. DStationery account

Question 30

Errors and the suspense account
Which error is revealed by a Trial balance?
  1. AArithmetic error
  2. BCompensating error
  3. CError of commission
  4. DError of principle

Question 31

Disposal of non-current assets
Profit on disposal of non-current assets is recorded on the
  1. Acredit side of a Disposal account.
  2. Bcredit side of an Asset account.
  3. Cdebit side of a Disposal account.
  4. Ddebit side of an Income Statement.

Question 32

Final accounts
If credit sales are omitted from the Income statement, the effect is to
  1. Adecrease gross profit, decrease net profit.
  2. Bdecrease gross profit, increase net profit.
  3. Cincrease gross profit, decrease net profit.
  4. Dincrease gross profit, increase net profit.

Question 33

Limited companies
What makes up the shareholders' funds?
  1. AAuthorised share capital and retained profits.
  2. BIssued share capital and retained profits.
  3. CLoan capital and issued share capital.
  4. DLoan capital and retained profits.

Question 34

Partnerships
The following information is for a partner in a partnership business.
January 1 2017 Capital $100 000
On 30 June 2017 the partner introduced additional capital of $20 000. The partnership agreement states that interest on capital is charged at 10% per annum.
The interest on capital debited to the Appropriation account was
  1. A$2 000.
  2. B$10 000.
  3. C$11 000.
  4. D$12 000.

Question 35

Partnerships
The following information relates to a partner in a partnership business.
2017
January 1 Current account 4 000 credit
December 31 Share of profits 13 200
Partner's salary due 1 600
Drawings 7 000
Interest on capital 900
The current account balance on 31 December 2017 was
  1. A$9 500.
  2. B$10 900.
  3. C$11 100.
  4. D$12 700.

Question 36

Limited companies
The share capital of a company is made up of the following:
Authorised share capital
1 600 000 Ordinary shares of $0,50 each $800 000
Issued share capital
1 000 000 Ordinary shares of $0,50 each, fully paid $500 000
The directors of the company recommended an ordinary share dividend of 5 cents per share.
The ordinary share dividend was
  1. A$25 000.
  2. B$40 000.
  3. C$50 000.
  4. D$80 000.

Question 37

Bank reconciliation
A business bank statement showed an overdraft of $400. The following information was available:
Unpresented cheques $300
Deposits not credited $1 400
The balance as per Cash book was
  1. A$700 credit.
  2. B$700 debit.
  3. C$1 500 credit.
  4. D$1 500 debit.

Question 38

Ratio analysis
A trader had the following assets and liabilities on 31 December 2016.
Current assets $2 000
Current liabilities $1 000
Non-current liabilities $5 000
Non-current assets $3 000
The current ratio was
  1. A0.5: 1.
  2. B0.8: 1.
  3. C2: 1.
  4. D3: 1.

Question 39

Incomplete records
A business provided the following information.
Opening capital $61 000
Additional capital $4 800
Drawings $3 300
Closing capital $76 700
The net profit was
  1. A$14 200.
  2. B$15 700.
  3. C$19 000.
  4. D$23 800.

Question 40

Errors and the suspense account
The following details relate to a trader's General journal on 31 December 2017.
General Journal
Suspense account Dr $400
Discount allowed Cr $200
Discount received Cr $200
Which error was corrected?
  1. ADiscount allowed and discount received were both overcast.
  2. BDiscount allowed and discount received were both undercast.
  3. CDiscount received debited in error to discount received.
  4. DDiscount received debited in error to discount allowed account.

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