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ZIMSEC O Level · 4051/1 · N2023

Principles of Accounting Paper 1 November 2023

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

Business activity
Which business activity provides a service?
  1. ABookseller
  2. BPetrol dealer
  3. CShoe manufacturer
  4. DWindow cleaner

Question 2

Accounting cycle
Which of the following is the correct sequence of an accounting cycle?
  1. ALedger -> trial balance -> financial statements
  2. BSubsidiary books -> trial balance -> ledger
  3. CTransaction -> financial statements -> subsidiary books
  4. DTransaction -> trial balance -> ledger

Question 3

Computers in accounting
Which of the following is a disadvantage of using electronic methods to process data?
  1. AIt is expensive to install.
  2. BIt has more errors.
  3. CIt requires big office space.
  4. DIt requires more labour.

Question 4

Computers in accounting
The following are computer hardware except
  1. Akeyboard.
  2. Bmonitor.
  3. Cmouse.
  4. Dpastel.

Question 5

Source documents
Which source document is used to record small payments made by the business?
  1. ACheque
  2. BInvoice
  3. CReceipt
  4. DVoucher

Question 6

Books of original entry
Sale of non-current assets on credit is recorded in the
  1. Ageneral journal.
  2. Bpurchases journal.
  3. Csales journal.
  4. Dsales returns journal.

Question 7

Division of the ledger
Which ledger section has accounts of credit suppliers?
  1. AGeneral ledger
  2. BPrivate ledger
  3. CTrade payables ledger
  4. DTrade receivables ledger

Question 8

Returns
In the ledger, returns of goods by a customer is
  1. Acredited in the returns inwards account.
  2. Bcredited in the returns outwards account.
  3. Cdebited in the returns inwards account.
  4. Ddebited in the returns outwards account.

Question 9

Correction of errors

A payment for insurance was recorded in the rent payable account in error.

This is an error of

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

Question 10

Trial balance
Which set of accounts has debit entries in the trial balance?
  1. ADiscount allowed account and returns inwards account
  2. BDiscount allowed account and returns outwards account
  3. CDiscount received account and returns inwards account
  4. DDiscount received account and returns outwards account

Question 11

Accounting concepts
Which accounting concept was used when a cash payment for rent and rates was recorded both in the cash book and rent and rates account?
  1. ADouble entry
  2. BGoing concern
  3. CMatching
  4. DPrudence

Question 12

Accounting concepts
Which accounting concept states that policies and methods adopted should be maintained?
  1. AConsistency
  2. BDouble entry
  3. CMatching
  4. DPrudence

Question 13

Final accounts
A statement that shows business performance for a specific period is
  1. Aa bank statement.
  2. Ba trial balance.
  3. Can income statement.
  4. Dan opening statement.

Question 14

Final accounts
A list of assets and liabilities of a business on a given date is a
  1. Abank statement.
  2. Bstatement of changes in equity.
  3. Cstatement of financial position.
  4. Dtrial balance.

Question 15

Accruals and prepayments
When preparing financial statements, unused stationery is shown as
  1. Aa liability.
  2. Ban asset.
  3. Can expense.
  4. Dincome.

Question 16

Accruals and prepayments
Rent received in advance at the end of a financial year
  1. Adecreases current liabilities.
  2. Bdecreases net profit.
  3. Cincreases current liabilities.
  4. Dincreases net profit.

Question 17

Bad debts and provisions

The closing entry for bad debts written off is

debitcredit
Abad debts accountprofit and loss account.
Bdebtors accountprofit and loss account.
Cprofit and loss accountbad debts account.
Dprofit and loss accountdebtors account.
  1. Adebit bad debts account, credit profit and loss account.
  2. Bdebit debtors account, credit profit and loss account.
  3. Cdebit profit and loss account, credit bad debts account.
  4. Ddebit profit and loss account, credit debtors account.

Question 18

Final accounts
Which one is shown as an expense in the preparation of an income statement?
  1. ACommission earned
  2. BDecrease in provision for bad debts
  3. CIncrease in provision for bad debts
  4. DInventory of stationery

Question 19

Control accounts
Which of the following items is debited in a trade receivables control account?
  1. ABad debts
  2. BDiscounts allowed
  3. CDishonoured cheques
  4. DReturns inwards

Question 20

Capital and revenue expenditure

Cost of repainting a building was treated as capital expenditure.

What was the effect on net profit and non - current assets?

Net profitNon - current assets
Aoverstatedoverstated
Boverstatedunderstated
Cunderstatedoverstated
Dunderstatedunderstated
  1. ANet profit overstated, non-current assets overstated
  2. BNet profit overstated, non-current assets understated
  3. CNet profit understated, non-current assets overstated
  4. DNet profit understated, non-current assets understated

Question 21

Capital and revenue expenditure
Which of the following is capital expenditure?
  1. AInstalling an air conditioning system in the building
  2. BPaying rent for the building
  3. CRenovating part of the building
  4. DRepainting the building

Question 22

Control accounts
What is the source of information for discount allowed in a trade receivables control account?
  1. ACash book
  2. BGeneral journal
  3. CPetty cash book
  4. DSales journal

Question 23

Bank reconciliation
Which of the following items is used to update a cash book?
  1. ABank charges
  2. BBank errors
  3. CUncredited deposits
  4. DUnpresented cheques

Question 24

Ratio analysis
Which of the following is a liquidity ratio?
  1. AMargin
  2. BMark up
  3. CNet profit percentage
  4. DRate of inventory turnover

Question 25

Clubs and societies
Which of the following items is included in the preparation of an income and expenditure account?
  1. APayments to suppliers
  2. BProceeds from disposal of non- current assets
  3. CProfit from sale of refreshments
  4. DPurchase of non-current assets

Question 26

Manufacturing accounts
Which of the following set of items has direct costs only?
  1. AManufacturing wages and supervisor's salary
  2. BPatent fees and depreciation of plant
  3. CPatent fees and supervisor's salary
  4. DRoyalties and manufacturing wages

Question 27

Petty cash

A trader maintained a petty cash book on imprest system with a weekly float of $500.

The following petty expenses were paid during the week:

$
Postage and stationery200
Travelling expenses150
Cleaning materials70

The amount required to restore the float was

  1. A$80.
  2. B$420.
  3. C$500.
  4. D$920.

Question 28

Correction of errors

A trader had a net profit of $12 800.

The following errors were discovered:

i. Sales were undercast by $3 500.
ii. Motor vehicle repairs of $1 200 were omitted from the books.

The adjusted net profit after correcting the errors was

  1. A$8 100.
  2. B$10 500.
  3. C$15 100.
  4. D$17 500.

Question 29

Correction of errors

A credit sale of goods for $5 000 was recorded in both the sales account and debtor's account as $4 500.

To correct the error,

debitcredit
Adebtor's account $500sales account $500.
Bdebtor's account $5 000sales account $5 000.
Csales account $500debtor's account $500.
Dsales account $5 000debtor's account $5 000.
  1. Adebit debtor's account $500, credit sales account $500.
  2. Bdebit debtor's account $5 000, credit sales account $5 000.
  3. Cdebit sales account $500, credit debtor's account $500.
  4. Ddebit sales account $5 000, credit debtor's account $5 000.

Question 30

Correction of errors

A cash payment for electricity of $205 was entered as $250 in the books.

What was the effect of the error on net profit?

  1. AOvercast by $45.
  2. BOvercast by $250.
  3. CUndercast by $45.
  4. DUndercast by $250.

Question 31

Accruals and prepayments

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

$
2020 January 1:Rent owing500
Rent paid during the year7 000
2020 December 31:Rent owing400

The amount for rent transferred to the income statement was

  1. A$6 900.
  2. B$7 100.
  3. C$7 400.
  4. D$7 900.

Question 32

Depreciation

A trader provided the following trial balance extract on 31 December 2020.

DR $CR $
Furniture, at cost200 000
Provision for depreciation : 1 January 202050 000

Furniture was depreciated by 20% using the reducing balance method.

The accumulated depreciation on 31 December 2020 was

  1. A$30 000.
  2. B$40 000.
  3. C$80 000.
  4. D$90 000.

Question 33

Disposal of non-current assets

The following was obtained from the books of a trader on 31 December 2020:

$
Machinery, at cost10 000
Provision for depreciation6 400

Machinery was sold for $3 000 on the same date.

Profit or loss on disposal was

  1. A$600 loss.
  2. B$600 profit.
  3. C$6 600 loss.
  4. D$6 600 profit.

Question 34

Capital and revenue expenditure

The following payments were done by a trader during the year 2020:

$
Purchase of inventory10 400
Import duty on inventory1 800
Purchase of machinery16 200
Import duty on machinery3 500

The total revenue expenditure was

  1. A$12 200.
  2. B$15 700.
  3. C$19 700.
  4. D$21 500.

Question 35

Control accounts

The following balance was extracted from a trade payables ledger:

$
2018 December 1 : Trade payables15 200

During the month the following transactions were recorded:

$
Credit purchases40 700
Set off2 300
Payments to suppliers8 200

Trade payables balance on 31 December 2018 was

  1. A$31 300.
  2. B$45 400.
  3. C$50 100.
  4. D$61 900.

Question 36

Bank reconciliation

The following details were obtained from the books of a trader on 31 December 2020.

$
Cash book balance1 400 Cr
Unpresented cheques3 500
Deposits not yet credited5 000

The balance as per bank statement was

  1. A$100 Cr.
  2. B$100 Dr.
  3. C$2 900 Cr.
  4. D$2 900 Dr.

Question 37

Ratio analysis

A trader provided the following information:

$
Turnover75 000
Cost of sales50 000
Gross profit25 000
Net profit15 000

Mark up is

  1. A20%.
  2. B30%.
  3. C33 1/3%.
  4. D50%.

Question 38

Manufacturing accounts

The following information relates to a manufacturing company:

$
Cost of raw materials consumed44 000
Manufacturing wages25 000
Supervisor's salary8 000
Patent fees12 000

Prime cost was

  1. A$69 000.
  2. B$77 000.
  3. C$81 000.
  4. D$89 000.

Question 39

Bank reconciliation
What is meant by a credit balance in the bank account of a trader?
  1. ABank overdraft
  2. BCash at bank
  3. CCheques paid
  4. DCheques received

Question 40

Accruals and prepayments

The following account was extracted from the nominal ledger of a trader.

Rent account

2020$2020$
Jan 1 Balance b/d3 700Jan 31 Income statement10 700
5 Cash9 20031 Balance c/d2 200
12 90012 900

The balance on 31 January 2020 represents

  1. Arent owing.
  2. Brent paid.
  3. Crent prepaid.
  4. Drent received.

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