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

 2 Vic’s receivables ledger balances total $50,000, which does not agree with his trade receivables control account. The following errors were found: 

(1) A credit note for $750 was not recorded in the receivables ledger

(2) A contra entry of $2,000 was entered in the control account but not in the receivables and payables ledgers. 

What should be the total of the balances on his receivables ledger after correcting the following errors? 

A $52,750 

B $50,000 

C $49,250 

D $47,250 

3 Christa pays her mortgage by instructing her bank to make monthly payments of a fixed amount from her current account. When the mortgage rate changes she issues revised instructions to the bank. 

Which method of payment is Christa using?

A Standing Order 

B Payable Order 

C Direct Debit 

D Crossed cheque 

4 A firm has a credit facility with a local trade supplier. An invoice for purchases has been credited to the supplier’s account and debited to the sales account. 

Which of the following journal entries will correct the error? 

A Dr Sales account            Cr Supplier account 

B Dr Supplier account       Cr Sales account 

C Dr Purchases account     Cr Sales account 

D Dr Sales account            Cr Bank account

5 Which of the following would be on the credit side of the receivables ledger control account? 

(1) Cash received 

(2) Irrecoverable debts 

(3) Discounts allowed 

(4) Sales 

A 1, 2 and 3 only

B 2 and 4 only 

C 1 and 4 only 

D 1, 2, 3 and 4

6 The following is a summary of the petty cash transactions for a week: 

Income              $      Expenditure      $ 

Opening balance 500   Travelling cost 150

Sale of stamps    10     Subsistence    250 

Sale of paper      50     expense

Petty cash is maintained using the imprest system. 

What sum should be reclaimed by the cashier at the end of the week? 

A $160 

B $340 

C $400 

D $500 

7 The balance on the payables ledger control account should be equal to which other figure in the accounting system? 

A The total of the balances on the individual customers’ accounts 

B The total of the balances on the individual suppliers’ accounts 

C The unreconciled balance on the receivables ledger control account 

D The balance on the receivables ledger control account reconciled for items in transit 

8 Louise introduces her car into her business. Which parts of the business’ accounting equation will change? 

A Assets and capital

B Capital and profit 

C Liabilities and assets 

D Capital and liabilities 

9 Freya started in business on 1 September. During September she made cash sales of $6,400 and issued credit sales invoices for $10,200 of which $8,600 had been paid. 

What would be the balance of the sales account in the general ledger at the end of September? 

A $6,400 

B $10,200 

C $8,000 

D $16,600

10 Which of the following journal entries correctly records the credit purchase of plant and equipment? 

A Dr Purchase ledger control account Cr Plant and Equipment 

B Dr Cash Cr Plant and Equipment 

C Dr Plant and Equipment Cr Purchase ledger control account 

D Dr Plant and Equipment Cr Cash