The following information relates to a business for a period.
Selling price per unit: 100; Variable costs per unit: 60; Total fixed costs: 90,000; Net profit: 15,000. How many units were sold in the period?
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I The following information relates to a business for a period.
selling price per unit
100 ($100 - $60)X - $90,000 = $15,000
variable costs per unit
60 Where X equals the number sold.
total fixed costs
90 000 You can plug in the 4 answers to find which one is right.
How many units were sold in the period?
A 1500 B 1750 C 2250 D 2625
2 A customer paid a deposit in advance for goods to be supplied at a later date. How should this be recorded in the seller's books?
A Cash Customer
B Cash Sales
C Customer Prepayment
D Customer Sales
I would answer D because you would debit (increase) the customers account and credit (reduce) sales.
Once the product is shipped, you would do the opposite and thereby increase sales.
3 A trial balance at 30 April 2003, before making end of year adjustments, showed:
Trade debtors $17,800
Provision for doubtful debts $580
Provision of 2% of trade debtors $360
- ($800) $940 Total Answer is C
At 30 April 2003 it was decided to write off a bad debt of $800 and to make a provision for
doubtful debts of 2 % of trade debtors. During the year an amount of $200 was received from a
customer relating to a debt that was written off in the year ended 30 April 2002.
What was the total bad and doubtful debts expense for the year ended 30 April 2003?
A $360 B $560 C $940 D $1,140
4 The table shows information relating to a company's fixed assets.
cost at 1 January 2002 $10,500
Answer is A
accumulated depreciation at 1
Jan-02 $4,900 Take beginning cost subtract accumulated depreciation add purchases for the year less disposals
purchases for the year ended
disposals for the year ended 3
Depreciation is 25% per annum on the reducing balance basis.
What is the depreciation charge for the year?
A $1850 B $2025 C $2200 D $3250
5 A business that purchases a shop incurs the following costs.
purchase price of the shop $680,000
Answer is B
legal fees incurred in the purchase $7,200
of the shop Purchase price of shop is part of it.
Legal fees to acquire the shop are as well.
Initial stock is inventory for sale and not a part of the cost of the shop.
cost of initial stock $12,500 Cost of installing aircon is not either, because that is something one is adding separate to the original shop.
cost of installing air conditioning $47,300
Which amount will be capitalised as the cost of the shop?
A $680 000 B $687 200 C $734 500 D $747 000
6 Which of the following is the definition of a business as a going concern? Answer D
A The assets owned by the business exceed its liabilities.
B The business has accumulated revenue reserves.
C The business is currently liquid and able to pay its creditors.
D The business will contnue in operational existence for the foreseeable future
7. A Sole trader pays private expenses from the business bank account and records them as drawings.
Which accounting principle is applied?
A business entity
B going concern Answer A
C matching The trader is the business entity.
8 Which of the following would prevent a trial balance from balancing?
A a credit note from a supplier entered in the sales journal Answer B as a discount allowed lowers sales.
B a discount allowed posted to the Discounts Received account A discount received lowers liabilities and doing so will cause an inbalance between assets and liabilities
C an invoice entered twice in the sales journal
D a refund to a customer wrongly posted to Discounts Allowed account
9 At 31 March 2003, a customer's bank statement shows that his bank account is overdrawn by $10,136
Further information is as follows.
Cheques drawn not presented $4998
Cheques paid in not credited $5896
Bank interest charged not in cash book $181
What is the correct bank balance to be shown in the customer's Balance Sheet at 3 Ma-o, et as ast 31 March 2003?
A $9057 overdrawn Answer A
B $9238 overdrawn 10,136 + 4,998 - 5,896 - 181 = 9057
D $11 034 overdrawn
10 The balance on the Sales Ledger Control account amounting to $43 000 has been entered r tt trial balance as $34 000. The difference on the trial balance has been entered in a Suspense account.
Which journal entry is required to correct the error?
Account to be debited Account to be credited
A. Sales ledger Control Account $9,000 Suspense Account $9,000
B Suspense Account $9,000
C Suspense Account $9,000
D Suspense Account $9,000 Sales Ledger Control account $9,000
Need to Debit (increase) Sales ledger and Credit (decrease) Suspense account