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    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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    © BrainMass Inc. brainmass.com September 26, 2022, 5:47 pm ad1c9bdddf


    SOLUTION This solution is FREE courtesy of BrainMass!

    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.
    net profit
    15 000
    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?
    Debit Credit
    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:
    debit Credit

    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
    31-Dec-02 $2,500

    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.
    D prudence

    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
    C $l0853overdrawn
    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

    Answer A
    Need to Debit (increase) Sales ledger and Credit (decrease) Suspense account

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