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Accounting & Auditing Paper 2009 - 1
2009 Which of the following transactions represent an expense?
a) The owner withdrew Rs. 1,600 from the business for personal use
b) Purchased a photocopying machine for Rs. 2,750 cash
c) Purchased medical supplies for cash from Healthcare Labs. Rs. 1,630
d) Received a telephone bill amounting to Rs. 550 to be paid within ten days.
Unearned discount is?
a) An expense
b) An income
c) A liability
d) An asset
Which of the following statements about accounting procedures is not correct?
a) The journal shows in one place all the information about specific transactions arranged in chronological order.
b) A ledger account shows in one place all the information about changes in a specific asset or liability or owner’s equity.
c) Posting is the process of transferring information from ledger accounts to the journal.
d) The product of the accounting cycle is the formal financial statements such as balance sheet and income statement.
Which of the following financial statements reflects the overall financial position of the business?
a) Statement of cash flows
b) Income Statement
c) Balance Sheet
d) Statement of owner’s equity
Trial Balance is prepared?
a) To ensure arithmetical accuracy of accounting records.
b) To establish complete accuracy of accounting records.
c) To determine the amounts payable to suppliers for purchase of goods on credit.
d) To ensure efficient use of resources of the business
The net sales of Fresh Foods were Rs. 200,000 for the current month. If the cost of goods available for sale was Rs. 180,000 and the gross profit rate was 35%, the ending inventory must have been?
a) Rs. 70,000
b) Rs. 1,30,000
c) Rs. 50,000
d) Rs. 63,000
e) 200,000 - 180, 000 - X = 70, 000
0.35* 200,000 = 70,000 = X= 50, 000
In the accounting cycle?
a) Closing entries are made before adjusting entries.
b) Closing entries are made after the adjusting entries.
c) Adjusting entries are made after financial statements are prepared.
d) Financial statements are prepared after closing trial balance.
Which of the following is an intangible asset?
a) An investment in marketable securities
b) Leasehold land.
c) Loose tools.
d) Copy rights.
Expense is recorded in the accounting records when?
a) Cash is paid
b) The purchase order is placed with the supplier
c) Purchases are made
d) None of these
The cash basis of accounting?
a) Is widely used by manufacturing firms.
b) Is often used by merchandising firms.
c) Usually results in a larger amount of tax than under accrual basis accounting
d) Can not be used in filing income tax returns.
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