ACCAPAPER F3 FINANCIAL ACCOUNTING WEEK FOUR TOPIC – PART REVIEW QUESTIONS
1.The following control account has been prepared by a trainee accountant:
Receivables ledger control account
$ $
Opening balance 308,600 Cash received from credit customers 147,200
Credit sales 154,200 Discounts allowed to credit customers 1,400
Cash sales 88,100
Contras against credit balances in
payables ledger 4,600 Interest charged on overdue accounts 2,400
Irrecoverable debts written off 4,900
Receivable allowance 2,800
Closing balance 396,800
–––––––– ––––––––
555,500 555,500
———— ————
What should the closing balance be when all the errors made in preparing the receivables ledger control account have been corrected?
A $395,200 B $304,300 C $307,100 D $309,500 (2 marks)
2.Which of the following correctly describes the imprest system of operating petty cash?
A The petty cash float is replenished by regular periodic transfers of equal amount
B The petty cash float is replenished by periodic transfers of the actual expenditure in the period
C All expenses must be supported by a properly authorised voucher
D Petty cash is operated outside the business double entry accounting system (2 marks)
3. The following receivables ledger control account for December prepared by a trainee accountant contains a number of errors:
Receivables ledger control account
$ $
1 Dec Balance 614,000 30 Dec Credit sales 301,000
31 Dec Cash from credit Discounts allowed 3,400
Customers 311,000 Irrecoverable debts written off 32,000
Interest charged on overdue
Contras against amounts due to accounts 1,600
suppliers in payables ledger 8,650 Balance 595,650
–––––––– ––––––––
933,650 933,650
———— ————
What should the closing balance on the control account be after the errors in it have been corrected?
A $561,550 B $568,350 C $578,850 D $581,550 (2 marks)
4. The following receivables ledger control account for December has been prepared by a trainee accountant:
Receivables ledger control account
$ $ 1 Dec Balance 318,650 31 Dec Cash from credit customers 181,140 Credit sales 161,770 Interest charged on overdue accounts 280 Irrecoverable debts w/off 1,390 Cash sales 84,260 Sales returns from credit Discounts allowed to customers 3,990 credit customers 1,240 Balance 379,120 –––––––– –––––––– 565,920 565,920 ———— ————
What should the closing balance at 31 December be after correcting the errors in the account?
A $292,380 B $292,940 C $295,420 D $377,200 (2 marks)
5. Which of the following correctly describes the imprest system for operating petty cash?
A All expenditure out of petty cash must be supported by a properly authorised voucher
B A regular equal amount of cash is transferred into petty cash
C The exact amount of expenditure out of petty cash is reimbursed at intervals
D A budget is fixed for a period which petty cash expenditure must not exceed 6. (2marks) A trainee accountant has prepared the following receivables ledger total account to calculate the credit sales of a business which does not keep proper accounting records (all sales are on credit): Receivables ledger total account
$ $ Opening receivables 148,200 Credit sales 870,800 Cash received from customers 819,300
Discounts allowed to credit Customers 16,200 Irrecoverable debts written off 1,500
Returns from customers 38,700 Closing receivables 153,100 –––––––– –––––––– 1,023,900 1,023,900 ———— ————
The account contains several errors.
What is the sales figure when all the errors have been corrected?
A $835,400 B $848,200 C $877,600 D $880,600 (2 marks)
7. Johan enters into the following transactions with Marius, a supplier who is also a customer. Marius buys goods from Johan on credit terms. Johan agrees to make contra entries in Marius’ individual ledger accounts.
Which of Johan’s accounting records are affected by these transactions?
A Sales day book, payables ledger and sales ledger B Purchase day book, payables ledger and sales ledger C Sales day book and sales ledger D Purchases day book and purchases ledger (2 marks)
8. Peri’s bookkeeper made the following mistakes:
a. Discount allowed $3,840 was credited to discounts received account. b. Discount received $2,960 was debited to discounts allowed account.
Which of the following journal entries will correct the errors?
A Dr Discount allowed $7,680, Cr Discount received $5,920, Cr Suspense account $1,760
B Dr Discount allowed $880, Dr Discount received $880, Cr Suspense account $1,760
C Dr Discount allowed $6,800,
Cr Discount received $6,800
D Dr Discount allowed $3,840, Cr Discount received $2,960, 9. At the end of December Rock’s payables control account and its list of payables ledger balances fail to agree.
It is discovered that the total of the purchase day book for December has been recorded as $11,750. The correct figure is $17,150.
Which one of the following is the correct adjustment in the payables control account reconciliation?
A The control account balance should be reduced by $5,400 B The list of balances should be increased by $5,400 C The control account balance should be increased by $5,400 D The list of balances should be reduced by $5,400
10. At 31 October 2014 Osba had a receivables control account with a balance of $381,255. This balance was $782 more than the total on the list of receivables balances at the same date.
Correction of which ONE of the following errors alone would reconcile the two balances?
A A receipt from Ellie for $391 had been recorded on the debit side of Ellie’s account. Correct entries were made in the general ledger
B The total column in the sales day book had been overcast by $782
C A customer returned some goods to Osba on 30 November 2014. These had originally been invoiced at $782. Osba recorded a credit note in the sales day book which was debited to the customer’s account D An invoice to Plion plc for $391 had been recorded in the sales day book as a credit (2 mark note s)
11. A company operates an imprest system for petty cash. At 1 July there was a float of $150, but it was decided to increase this to $200 from 1 August onwards. During July, the petty cashier received $25 from staff for personal use of the photocopier and a personal cheque for $90 was cashed for an employee. During July the company took $500 from its bank account to make up the imprest balance for petty cash.
What was the total expense paid from petty cash in July?
A $385 B $435 C $515 D $615 (2 marks)
12. Patrick starts a new business. During the first year the entries in the sales ledger control account are: $ Sales 250,000 Bank receipts 225,000 Sales returns 2,500 Bad debts written off 3,000 Dishonoured cheques 3,500 Contra with purchase ledger control account 4,000 is the balance on the sales ledger control account at the end of the year?
A $12,000 B $19,000
C $25,000 D $27,000 (2 marks)
13. Norris operates an imprest system for petty cash. On 1 February, the float was $300. He decided that this should be increased to $375 at the end of February.
During February, the cashier paid $20 for window cleaning, $100 for stationery and $145 for coffee and biscuits. The cashier received $20 from staff for private use of the photocopier and $60 for a sundry cash sale.
What amount was drawn from the bank account for petty cash at the end of February?
A $185 B $260 C $315 D $375 (2 marks)
14. A sales tax registered company commenced trading on 1 December. In December, the company sold goods that attracted sales tax at 15% with a net value of $200,000, goods exempt from sales tax with a value of $50,000 and goods at 0% sales tax with a net value of $25,000.
All purchases in December, which were all subject to 15% sales tax, were $161,000, including sales tax.
What is the balance on the sales tax account at the end of December?
A Dr $9,000 B Dr $5,850 C Cr $5,850 D Cr $9,000 (2 marks)
15. Which of the following journal entries may be accepted as being correct according to their narratives? Dr Cr
$ $
Wages account 38,000 A Purchases account 49,000
Buildings account 87,000
Labour and materials used in construction of extension to factory
Directors’ personal accounts: B K 30,000
L 40,000
Directors’ remuneration 70,000 Directors’ bonuses transferred to their accounts
Suspense account 10,000 C
Sales account 10,000 Correction of error in addition – total of credit side of
sales account $10,000 understated
Discount received 7,000 D Trade payables 61,000
Bank 68,000
Payment to creditors after allowing for prompt payment discount (2 marks)
16. Which of the following journal entries is correct according to their narratives?
Dr Cr
$ $
Receivables ledger account 450 A
Irrecoverable debts account 450 Irrecoverable balance written off
Share premium 40,000 B
Share capital 40,000 Bonus issue of 80,000 shares of 50c each
Suspense account 1,000 C
Motor vehicles account 1,000 Correction of error – debit side of Motor vehicles
account undercast by $1,000
Wages 2,500 D
Buildings 2,500 Capitalisation of labour costs on self-constructed
building (2 marks)
17. Which of the following journal entries are correct, according to their narratives?
Dr Cr
$ $ Suspense account 18,000 A
Rent received account 18,000 Correction of error: $24,000 cash received for rent
was posted to the rent received account as $42,000
–––––––––––––––––––––––––––––––––––––––––––– X receivables account 22,000 B
Y receivables account 22,000 Correction of error: cash received from Y
wrongly entered to X’s account
–––––––––––––––––––––––––––––––––––––––––––– Share premium account 400,000 C
Share capital account 400,000 1 for 3 bonus issue on share capital
of 1,200,000 50c shares
ZX customer account 4,000 D ZX supplier account 4,000
Set off (contra) of amount due to supplier ZX
against amount due from customer ZX
(2 mark s)
18. What journal entry is required to record goods taken from inventory by the owner of a business?
A Debit Drawings/Credit Purchases B Debit Sales/Credit Drawings C Debit Drawings/Credit Inventory D Debit Purchases/Credit Drawings (2 marks)
19. Ewan, a sole trader, has taken goods during the year for his own use. This has not been recorded.
Which one of the following is the correct adjustment for the above?
A Dr Drawings and Cr Purchases
B Dr Drawings and Cr Closing inventory C Cr Drawings and Dr Purchases D Cr Drawings and Dr Closing inventory (2 marks)
20. Leonard, a sole trader, extracts a trial balance as at 30 April 2014. He subsequently discovers that drawings amounting to $38,100 have been debited to other expenses account in error.
What correcting entries must be made?
A Dr Capital account and Cr Other expenses account B Dr Other expenses account and Cr Capital account C Dr Drawings account and Cr Suspense account D Dr Suspense account and Cr Other expenses account (2 marks)
ANS
Answer 5 MCQs BOOKS OF PRIME ENTRY AND CONTROL ACCOUNTS
Item Answer Justification
1. C
Receivables ledger control account
$ $
Opening 308,600 Cash received 147,200
Credit sales 154,200 Discounts allowed 1,400
Interest charged 2,400 Irrecoverable debts 4,900
Contras 4,600 Closing 307,100 ––––––– –––––––
465,200 465,200
––––––– –––––––
Tutorial note: A receivables allowance is not recorded in the control account.
2. B C is also true of a non-imprest system.
3. A
Receivables ledger control account
$ $
Balance 614,000 Cash 311,000
Sales 301,000 Discounts 3,400
Interest 1,600 Contras 8,650
Irrecoverable debts 32,000
Balance 561,550
––––––– –––––––
916,600 916,600
––––––– –––––––
4. B Receivables ledger control account
$ $ Balance 318,650 Cash 181,140 Credit sales 161,770 Irrecoverable debts 1,390 Interest 280 Sales returns 3,990 Discounts allowed 1,240 Balance 292,940 ––––––– ––––––– 480,700 480,700 ––––––– –––––––
5. C
6. D Receivables ledger control account
$ $ Opening receivables 148,200 Cash received from customers 819,300 Sales (balancing figure) 880,600 Discounts allowed 16,200 Irrecoverable debts written off 1,500 Returns from customers 38,700 Closing receivables 153,100 –––––––– –––––––– 1,028,800 1,028,800 –––––––– ––––––––
7. A When Marius buys goods on credit, Johan enters this in the sales day book. Contra
entries are then made between the sales ledger and purchase ledger accounts.
8. B In full, the correcting entries will be:
Dr Cr
$ $
Discount allowed 3,840 2,960
Discount received 3,840 2,960
Suspense account 1,760
9. C The transposition error is $17,150 – $11,750 = $5,400. As the understatement is in
the purchase day book total it affects only the control account, which is understated
by $5,400 and so should be increased by that amount.
10. B An overcast of the total of invoices in the sales day book means that $782 will be debited to the control account but not to the receivables ledger.
11. A $
1 July float 150
Cash received from staff 25
Cheque cashed for employee (90)
Cash received from company bank account 500
Expenses paid from petty cash (385) ––––
st 1 August float 200
12. B
Sales ledger control account
$ $ Sales 250,000 Bank 225,000 Dishonoured cheque 3,500 Returns inwards 2,500 Bad debts 3,000 Contra 4,000 Closing balance 19,000 ––––––– –––––– 253,500 253,500 ––––––– ––––––
13. B $ Opening float 300 Window cleaning (20) Stationery (100) Coffee and biscuits (145) Photocopying receipts 20 Miscellaneous sales receipt 60 From bank 260 –––– Closing float 375 ––––
14. D Sales tax received from customers is $30,000 (15% × $200,000). Purchases made $161,000 15 inclusive of sales tax (i.e. gross) $161,000 × /115 = $21,000 sales tax charged by suppliers. $9,000 balance is a liability (i.e. credit).
15. C Debits and credits are the wrong way around in A and B, and discount received is a credit entry.
16. B Debits and credits are the wrong way around in A, C and D.
17. B Debit and credit are the wrong way round in A and D. Shares are 50c so amount should be $200,000.
18. A Goods take for own use are a reduction in purchases.
19. A As some items have been taken by the owner the purchases figure should be reduced (credited) and a debit shown in drawings.
20. A In the absence mentioning a drawings account capital should be debited, since drawings reduce the amount of the owner’s interest in the business. The amount of the correcting entry would be $76,200 (i.e. 2 × $38,100).
Tutorial note: The error is an error of principle; the amount that should have been debited against capital (a balance in the statement of financial position) was debited as an expense (in the statement of profit or loss). Therefore there is no possibility of balance arising on a suspense account. ––––
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