Reference no: EM132358263
Questions -
Q1. Which of the following will be considered as a business organisation with a profit motive?
(1) Companies; close corporations, sole traders and educational institutions.
(2) Partnerships; sole traders, companies and close corporations.
(3) Associations, close corporations, sole traders and partnerships.
(4) Sole traders, charitable organisations, companies and clubs.
(5) Close corporations, charitable organisations, clubs and sole traders.
Q2. Non-current liabilities are long-term debts, which have to be settled after one year of the date of the statement of financial position. Which of the following will be considered as non-current liabilities for a business entity?
(1) Mortgages, trade and other payables, debentures and bank overdraft.
(2) Trade and other payables, long-term loans, debentures and mortgages.
(3) Bank overdraft, trade and other payables, mortgages.
(4) Long-term loans, debentures and mortgages.
(5) Bank overdraft, long-term loans and debentures.
Q3. Luna's Transport Services transported Mr Y Chang's household furniture to his new residence in Midrand on 1 September 20.8. Luna's Transport Services rendered this service to Mr Y Chnag for R10 000 on credit. What effect will the above transaction have on the accounting equation?
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Account debited
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Account credited
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A =
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E +
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L
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(1)
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Trade and other receivables
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Services rendered
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0
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+R10 000
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+R10 000
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(2)
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Services rendered
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Trade and other receivables
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+R10 000 -R10 0000
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0
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0
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(3)
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Services rendered
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Trade and other receivables
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0
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+R10 000
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+R10 000
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(4)
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Services rendered
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Trade and other receivables
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+R10 000
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+R10 000
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0
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(5)
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Trade and other receivables
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Services rendered
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+R10 000
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+R10 000
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0
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Q4. Luna's Transport Services paid Gizmo Packaging, R20 000 via an electronic transfer into Gizmo's bank account. In which journal will the bookkeeper of Luna's Transport Services enter the transaction?
(1) The cash payments journal
(2) The cash receipts journal
(3) The general journal
(4) The sales journal
(5) The sales returns journal
Q5. Mr B Smith, a debtor of Luna Transport Services, settled his account of R10 000 in cash on 5 February 20.8. A settlement discount of R1 000 was granted to Mr B Smith on 7 February 20.8. The credit balance of the debtors account will be disclosed as ... in the statement of financial position.
(1) Trade and other receivables
(2) Inventory
(3) Prepaid expenses
(4) Income received in advance
(5) Trade and other payables
Q6. The financial year-end of Luna's Transport Services is 28 February 20.8. Luna Transport Services paid R24 000 on 28 February 20.8 to Vice Insurance for January 20.8 to 31 December 20.8. The monthly insurance premium is R2 000. Which of the following represents the correct entry for the closing transfer at the year-end?
(1) The prepaid expenses account in the general ledger will be credited with R4 000 and the insurance account in the general ledger will be debited with R4 000.
(2) The prepaid expenses account in the general ledger will be credited with R24 000 and the insurance account in the general ledger will be debited with R24 000.
(3) The prepaid expenses account in the general ledger be debited with R20 000 and the insurance account in the general ledger will be credited with R20 000.
(4) The prepaid expenses account in the general ledger will be debited with R24 000 and the insurance account in the general ledger will be credited with R24 000.
(5) The prepaid expenses account in the general ledger will be credited with R20 000 and the insurance account in the general ledger will be debited with R20 000.
Q7. Gromit Dealers sells merchandise for R6 325 (15% VAT inclusive) to Lovely Flowers. The mark-up on selling price is 25%. What is the cost price of the merchandise?
(1) 1 375
(2) 4 400
(3) 1 250
(4) 4 125
(5) 1 100
Q8. Gromit Dealers had merchandise delivered to their Gauteng branch. The delivery cost on the merchandise purchased is R1 500 which was paid in cash. Gromit Dealers uses the periodic inventory system. Which of the following is the correct entries in the general ledger for this transaction?
(1) The inventory account in the general ledger will be debited with R1 500 and the bank account in the general ledger will be credited with R1 500.
(2) The carriage on purchases account in the general ledger will be debited with R1 500 and the bank account in the general ledger will be credited with R1 500.
(3) The inventory account in the general ledger will be credited with R1 500 and the bank accounting in the general ledger will be debited with R1 500.
(4) The carriage on purchases account in the general ledger will be credited with R1 500 and the bank account in the general ledger will be debited with R1 500.
(5) The drawings account in the general ledger will be debited with R1 500 and the bank the bank account in the general ledger will be credited with R1 500.
Q9. Mrs L Smith owes Luna's Transport Services R150 000. Her account is overdue for eight months. Interest must still be charged at 12% per annum. Which of the following is the correct entries in the general ledger for this transaction?
(1) The trade receivables control account will be debited with R18 000 and the interest income account will be credited with R18 000.
(2) The interest income account will be debited with R18 000 and the trade receivables control account will be credited with R18 000.
(3) The trade receivables account will be debited with R12 000 and the interest income account will be credited with R12 000.
(4) The interest income account will be debited with R12 000 and the trade receivables account will be credited with R12 000.
(5) The trade receivables account will be debited with R12 000 and the interest expense account will be credited with R12 000.
Q10. On 23 November 20.7 cheque no:200 was issued by Crazee Dealers to Plumbing Wizards for repair work done. However cheque no:200 was still not presented for payment on 30 May 20.8. In which journal will you enter the above transaction on 30 May 20.8?
(1) The cash receipts journal
(2) The cash payments journal
(3) The general journal
(4) The purchases journal
(5) The sales journal
Q11. A debit order for the annual subscription fees of R1 000 to worldwide Dealers magazine was noted on the bank statement for the month of February 20.8. Which of the following statement is correct?
(1) The debit order for R1 000 will be recorded in the cash receipts journal.
(2) The debit order for R1 000 will be recorded in the general journal.
(3) The debit order for R1 000 will be recorded in the cash payments journal.
(4) The debit order for R1 000 will be recorded in the purchases journal.
(5) The debit order for R1 000 will be recorded in the sales journal.
Q12. Bank charges for the month of February 20.8 was R350 and interest on overdraft was R200. Which of the following statements is correct?
(1) Bank charges of R350 will be recorded in the cash receipts journal and interest on overdraft of R200 will be recorded in the cash payments journal.
(2) Bank charges of R550 will be recorded in the cash payments journal.
(3) Bank charges of R550 will be recorded in the cash receipts journal.
(4) Bank charges of R350 and interest on overdraft of R200 will be recorded in the cash payments journal as separate entries.
(5) Bank charges of R350 will be recorded in the cash payments journal and interest on overdraft of R200 will be recorded in the cash receipts journal.
Q13. On 1 March 20.7 Luna Transport Services had a balance for allowance for credit losses of R3 500 and a trade receivables control balance of R40 000 on 28 February 20.8. Luna Transport Services determined that the allowance for credit losses account should be adjusted to R2 800 at 28 February 20.8.
(1) The allowance for credit losses account in the general ledger will be debited with R700 and the credit losses account in the general ledger will be credited with R700.
(2) The credit losses account in the general ledger will be debited with R700 and the allowance for credit losses account in the general ledger will be credited with R700.
(3) The allowance for credit losses account in the general ledger will be debited with R700 and the trade receivables account in the general ledger will be credited with R700.
(4) The credit losses account in the general ledger will be debited with R700 and the trading account in the general ledger will be credited with R700.
(5) The credit losses account in the general ledger will be debited with 700 and the trade payable control account in the general ledger will be credited with R700.
Use the following information to answer questions 14 and 15:
The following information was obtained from the financial records of Luna's Transport Services.
- The sales journal of Luna's Transport Services for February 20.8 was overcast by R500.
- Balance of trade receivables control account on 31 January 20.8 was R18 000.
- The trade receivables column in the cash receipts journal for February 20.8 was R12 000.
- The settlement discount granted column in the cash receipts journal for February 20.8 was R1 000.
- The trade receivables column in the sales journal for February 20.8 had a total of R2 000.
- The trade receivables column in the sales returns journal for February 20.8 had a total of R200.
Q14. Which of the following statements is correct?
(1) The trade receivables control account in the general ledger will be credited with a sales amount of R1 500.
(2) The trade receivables control account in the general ledger will be credited with a sales amount of R2 500.
(3) The trade receivables control account in the general ledger will be debited with a sales amount of R1 500.
(4) The trade receivables control account in the general ledger will be debited with a sales amount of R2 500.
(5) The trade receivables control account in the general ledger will be debited with a sales returns amount of R200.
Q15. Which of the following statements is correct?
(1) The trade receivables control account in the general ledger will be credited with a bank amount of R12 000.
(2) The trade receivables control account in the general ledger will be debited with a bank amount of R12 000.
(3) The trade receivables control account in the general ledger will be credited with a bank amount of R11 000.
(4) The trade receivables control account in the general ledger will be debited with a bank amount of R11 000.
(5) The trade receivables control account in the general ledger will be credited with a bank amount of R13 000.