Saturday, 30 April 2016

FA1 Practice question set 3

21 Which one of the following is the correct posting from the purchase day book?

A Dr Purchases account Cr Payable's ledger control account

B Dr Purchases account Cr Cash book

C Dr Payable's ledger control account Cr Purchases account

D Dr Cash book Cr Purchases account

FA1 Practice question set 2

11 Marvin has a balance of $3,350 on his sales ledger control account but his list of customer balances totals $3,500.

Which of the following balances would explain the difference?

A The total of sales day book was overstated by $150

B A contra of $150 has been posted in the customer’s individual account but not the control account C A credit note of $150 has not been recorded in the sales day book

D An irrecoverable debt has been accounted for in the control account but not the individual customer account

FA1 Practice question set 4

31 Walter sells goods to Ninevah with a list price (exclusive of sales tax) of $4,300, offering a 4% trade discount. Sales tax is 17·5%

What amount should be recorded for this transaction in the sales account (to the nearest $1)?

A $4,850

B $4,128

C $5,053

D $3,513

What is debit note &credit note

*Debit note
Image result for debit note

*When the purchaser returns the goods to the seller the Purchaser sends a Debit Note to the seller & the Seller sends a Credit Note to the purchaser.

*A debit note or debit memorandum (memo) is a commercial document issued by a buyer to a seller as a means of formally requesting a credit note

FA1 Practice question set 1

ALL 25 questions are compulsory and MUST be attempted Please use the space provided on the inside cover of the Candidate Answer Booklet to indicate your chosen answer to each multiple choice question. Each question is worth 2 marks.

1 Which of the following is an example of capital expenditure?

A Paying for refurbishment as part of upgrading a building

B Paying carriage outwards in respect of selling goods

C Paying legal fees in order to recover customer debts

D Paying bonuses to production operatives

*What are sundry expenses?

* sundry expenses are expenses that are small in amount and do not occur often. Since these items are not significant, a company might use one general ledger account with the title Sundry Expenses for recording the debit amounts.

*If some items recorded in Sundry Expenses begin to occur frequently and/or become significant, the related amounts should be transferred to a new separate general ledger account.

Asset

*an asset is defined as a "resource controlled by an entity as a result of past event and from which future economic benefits are expected to flow to the entity"

*An asset is a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit.

What is sales tax

Sales tax

* A sales tax is added to the price of goods and services taken by customer

*A sales tax is a consumption tax imposed by the government on the sale of goods and services.

* A conventional sales tax is levied at the point of sale, collected by the retailer and passed on to the government.

*Discount Allowed

*There is discount allowed when the seller of goods or services gives a discount to the buyer upon payment.

*Sellers commonly give price reductions as incentives to encourage early payment on credit sales.

*Sellers also allow discounts for other reasons, such as cash up-front payments, volume orders, promotional offers, clearance sales and as a loyalty reward.

*Discount

*An amount or rate by which the catalog, list, or retail price of an item

is reduced when sold to a re-seller.

*A discount specifically refers to terms which is used when goods are sold at a less than its nominal or par value.

What is a 'Journal' with practice question 1

*Journal

*. In accounting, a first recording of financial transactions as they occur in time, so that they can then be used for future reconciling and transfer to other official accounting records such as the general ledger.

* A journal will state the date of the transaction, which account(s) were affected and the amounts, usually in a double-entry bookkeeping method.

Double Entry

*Every transaction has two effects. For example, if someone transacts a purchase of a drink from a local store, he pays cash to the shopkeeper and in return, he gets a bottle of dink.

*Double entry is the fundamental concept underlying present-day bookkeeping and accounting.

What is a Liability

*Liability

1.A liability is a company's legal debt or obligation that arises during the course of business operations.

2.Liabilities are settled over time through the transfer of economic benefits including money, goods or services.

what is expense

*Expense

1.the amount of money that is needed to pay for buying something

2.the amount of money that must be spent especially regularly to pay for something

3.An expense consists of the economic costs that a business incurs through its operations to earn revenue.

1.ABC Co. Ltd, a construction company, purchases raw materials for use in its ongoing projects. Which of the following may be included in the cost of inventory?

*Inventory

Inventories are assets:

(a) Which is held for sale in the ordinary course of business;

(b) Which would result in the process of production for such sale; or

(c) in the form of materials or supplies to be consumed in the production process or in the rendering of services. (IAS2)

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