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UNIVERSITY OF CAMBRIDGE
INTERNATIONAL EXAMINATIONS
International General
Certificate of Secondary Education
ACCOUNTING 0452/01
Paper 1 Multiple Choice
May/June 2008 Time : 1 hour
1
Why does the owner of a
business calculate profit?
A
to find out how much debtors
owe him
B
to find out how much he owes
to creditors
C
to know how much money may be
taken as drawings without reducing capital
D
to reconcile the cash book
balance with the balance on the bank statement
2
Which are assets of a
business?
1 creditors
2 loan from bank
3 motor vehicle
4 telephone bill prepaid
A
1, 2 and 3
B
1 and 3 only
C
2, 3 and 4
D
3 and 4 only
3
A sole trader makes a net
loss in a financial year.
Where is this shown in his
final accounts?
trading account profit and
loss account balance sheet
4
What is a balance sheet?
A
a statement of all assets and
liabilities on a certain date
B
a statement of all the
balances in the ledger accounts on a certain date
C
a statement showing all the
receipts and payments for a financial year
D
a statement showing the
income and expenditure for a financial year
3
5
What is meant by the business
entity principle?
A
All businesses must account
for items in the same manner.
B
All businesses must maintain
accounting records.
C
The business is expected to
be able to continue operating.
D
The financial affairs of a
business and its owner are kept separate.
6
A business records a
transaction in its accounting records as follows.$ debit
purchases account 100 credit bank account 100
Which accounting principle is
being applied?
A
duality
B
matching
C
prudence
D
realisation
7
A business applies the money
measurement principle. Which would be recorded in its
accounting records?
A
the benefits of staff
training
B
the cost of property owned
C
the effect of new laws
D
the value of the manager’s
skills
8
What is an application of the
consistency principle?
A
comparing income received
with expenses paid for a financial year
B
providing for all foreseeable
losses in the annual accounts
C
recording income received
when goods are delivered to the customer
D
using the same method of
stock valuation each year
4
9
Beth sold goods on credit to
Peter. It was later discovered that Peter had been
overcharged. Which document will Beth send to Peter to correct
the error?
A
credit note
B
debit note
C
invoice
D
statement
10
In which book of prime
(original) entry are invoices issued by a trader recorded?
A
purchases journal
B
purchases returns journal
C
sales journal
D
sales returns journal
11
Stephen buys 20 items costing
$18 each and receives an invoice showing the amount payable.
He returns 5 items and
receives a credit note.
Which amount is shown as due
on the statement he receives at the end of the month?
A
$90
B
$270
C
$360
D
$450
12
What is cash discount?
A
an allowance given to a
customer for paying in cash
B
an allowance given to a
customer for prompt payment
C
a deduction from the list
price of goods bought by a customer
D
a deduction from the list
price of goods for bulk buying by a customer
13
On 1 April Mary had a bank
overdraft of $1450. On 2 April she paid $250 cash into the
bank and
paid rent, $390, by cheque.
What is Mary’s bank overdraft
after the transactions on 2 April?
A
$810
B
$1310
C
$1590
D
$2090
5
© UCLES 2008 0452/01/M/J/08
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14
The following is an extract
from Jane’s sales journal.
2008
goods at list price
$
trade discount
$
goods at net price
$
May 1 K. Smith 400 100 300
How will this sale be
recorded in K. Smith’s account in Jane’s ledger?
A
$300 credit
B
$300 debit
C
$400 credit
D
$400 debit
15
Jacob bought goods on credit
from Mark.
What is the double entry in
Jacob’s ledger?
account to be
debited
account to be
credited
A
Jacob purchases
B
purchases Jacob
C
Mark purchases
D
purchases Mark
16
Ali receives a cheque from
Hassan, a debtor, in payment for goods purchased by Hassan on
credit.
Where will Ali enter this
payment?
A
cash book and sales ledger
B
cash book and purchases
ledger
C
nominal ledger and sales
ledger
D
nominal ledger and purchases
ledger
17
Which will appear on the
credit side of a trial balance?
A
loan interest paid
B
motor vehicles at cost
C
rent paid
D
sales
6
© UCLES 2008 0452/01/M/J/08
18
Why does a business draw up a
trial balance?
A
to balance off ledger
accounts
B
to calculate profit or loss
C
to check the arithmetical
accuracy of the books
D
to summarise the sales and
purchases ledgers
19
James receives payment from a
debtor. He debits the debtor’s account and credits the bank
account.
Which type of error is this?
A
compensating
B
complete reversal
C
original entry
D
principle
20
Which would appear on a bank
statement?
A
cheques issued but not yet
presented
B
cheques paid but not yet
credited
C
dishonoured cheques
D
lost cheques
21
A trader rents a shop. On 1
January 2007, his rent payable account had a credit balance of
$600.
During 2007 he paid $4000
rent. At 31 December 2007, he owed $400 rent.
What was the rent payable for
the year 2007?
A
$3600
B
$3800
C
$4200
D
$4400
22
Khalid’s financial year ends
on 30 September. On 1 July 2007 $2000 was paid for insurance
for
six months to 31 December
2007.
What will be recorded in
Khalid’s balance sheet on 30 September 2007?
A
accrual of $1000
B
prepayment of $1000
C
accrual of $2000
D
prepayment of $2000
7
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23
What is the purpose of
depreciating a fixed asset?
A
to estimate the length of the
asset’s useful life
B
to find the value of the
asset at the end of its useful life
C
to provide money for a
replacement at the end of the asset’s useful life
D
to spread the cost of the
asset over its expected useful life
24
An office machine cost $8500
and is estimated to have a useful life of four years. Its
scrap value
at the end of this time is
estimated at $1000.
What is the annual charge for
depreciation using the straight-line method?
A
$1000
B
$1875
C
$2125
D
$2375
25
David owes $1000 to Parvinder.
He pays 90 % of the debt. Parvinder writes off the remaining
debt.
What entry will Parvinder
make to write off the bad debt?
account to be debited $
account to be credited $
A
bad debts 100 David 100
B
David 100 bad debts 100
C
bad debts 900 David 900
D
David 900 bad debts 900
26
Amina lists her current
assets in increasing order of liquidity.
In which order will the
current assets appear?
A
bank, cash, stock, debtors
B
cash, bank, debtors, stock
C
debtors, stock, bank, cash
D
stock, debtors, bank, cash
8
© UCLES 2008 0452/01/M/J/08
27
A trader takes cash drawings
from the business.
How will this affect the net
profit and the current assets?
net profit current assets
A
decrease no effect
B
increase no effect
C
no effect decrease
D
no effect increase
28
Martin and Sally are in
partnership.
In which final account is
their net profit calculated?
A
appropriation account
B
balance sheet
C
profit and loss account
D
trading account
29
Pat and Mike are in
partnership. Pat is credited with an annual salary of $20 000.
The balance of
the partnership’s net profit
is shared equally between the partners. The net profit for the
year was
$100 000.
What is the total amount
credited to Pat’s current account for the year?
A
$40 000
B
$50 000
C
$60 000
D
$70 000
30
Emily is a trader. She
provided the following information on 30 April 2008.
$
fixed assets 25 000
current assets 15 000
current liabilities 12 000
Her capital on 1 May 2007 was
$20 000. She did not make any drawings during the year.
What is Emily’s net profit
for the year ended 30 April 2008?
A
$8000
B
$23 000
C
$32 000
D
$48 000
9
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31
Carl does not keep a full set
of accounting records. He provides the following information.
$
creditors on 1 January 2007
14 000
creditors on 31 December 2007
16 500
payments made to creditors
during the
year ended 31 December 2007
17 000
What were the credit
purchases for the year ended 31 December 2007?
A
$14 500
B
$16 500
C
$17 000
D
$19 500
32
A business provides the
following information.
$
accruals 5 000
bank overdraft 6 000
debtors 20 000
goodwill 7 000
prepayments 3 000
stock 8 000
What is the total of the
current assets?
A
$31 000
B
$33 000
C
$37 000
D
$38 000
33
Which group contains an
intangible asset?
A
bank, creditors, fixtures
B
bank loan, debtors, motor
vehicles
C
bank overdraft, cash,
goodwill
D
mortgage, premises, stock
10
© UCLES 2008 0452/01/M/J/08
34
Omar’s balance sheet included
the following.
$
fixed assets 45 000
current assets 25 000
current liabilities 10 000
capital 40 000
What is the total of the long
term liabilities?
A
$20 0000
B
$30 000
C
$50 000
D
$60 000
35
A trader provides the
following information.
$
cost of sales 50 000
gross profit 12 500
expenses 4 500
What is the percentage of
gross profit to sales?
A
12.8 %
B
16.0 %
C
20.0 %
D
25.0 %
36
A business provides the
following information.
$
fixed assets 55 000
current assets 15 000
current liabilities 10 000
net profit for the year 7 500
What is the return on capital
employed (ROCE)?
A
10.71 %
B
12.50 %
C
13.64 %
D
15.00 %
37
How is the rate of stock
turnover calculated?
A
average stock
÷
cost of goods sold
B
average stock
÷
total sales
C
cost of goods sold
÷
average stock
D
total sales
÷
average stock
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