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
 

12 Albert sold 15 units of inventory with a list price of $40 per unit to Michael. He gives Michael a 10% trade discount and a 5% settlement discount if Michael pays within 30 days. 

What will be the total of the invoice that Albert issues to Michael for this transaction? 

A $540 

B $600 

C $510 

D $513 

13 Which of the following errors would be found by extracting a trial balance? 

A A transaction has been completely missed in the accounts 

B The double entries have been made the wrong way round 

C Different figures have been entered for the debit and credit entries 

D An expense item has been posted to a non-current asset account. 

14 Dion performed a purchase ledger control account reconciliation and found the following errors: (1) The purchase day book was overstated by $720 (2) A credit note for $380 was omitted from the day books altogether 

Which of the following shows the necessary adjustments to ensure that the balances reconcile at the correct amount? 

A Dr Purchase ledger control account $1,100, Subtract $380 from the list of supplier balances 

B Dr Purchase ledger control account $1,100, Add $380 to the list of supplier balances 

C Cr Purchase ledger control account $1,100, Subtract $380 from the list of supplier balances 

D Cr Purchase ledger control account $1,100, Add $380 to the list of supplier balances 

15 Which of the following are benefits of an effective document retention policy to a small business? (1) To ensure all documents are stored forever 

(2) To meet legal and tax requirements of the business 

(3) To mitigate risks arising from internal and external disputes of the business 

(4) To increase operational efficiency and maintain control over costs 

A 1 and 3 only

B 2, 3 and 4 only 

C 1, 2 and 4 only 

D 1, 2, 3 and 4 

16 Hywel purchases goods on credit with a list price of $100. The supplier gives Hywel a trade discount of 15% and also offers a cash discount of 10% for payment within 30 days. 

What is the amount that Hywel will debit to his purchases account? 

A $115·00 

B $85·00 

C $76·50 

D $75·00 

17 Which of the following are valid reasons for keeping a payables ledger control account?

(1) To obtain a figure for payables to be included in the statement of financial position
(2) To assist in the location of errors

(3) To check the accuracy of entries made in personal accounts 

A 1 and 2 only

B 2 and 3 only 

C 1, 2 and 3 

D 1 and 3 only 

18 A credit sale of goods for $51 to J Davis was entered in the accounts as $15. What type of error has occurred? 

A Compensating error 

B Error of omission 

C Error of principle 

D Error of transposition 

19 Which of the following represents the correct imprest amount in an imprest petty cash system?

A Notes and coins in the cash box – vouchers for payments – IOUs 

B Notes and coins in the cash box + vouchers for payments – IOUs 

C Notes and coins in the cash box – vouchers for payments + IOUs 

D Notes and coins in the cash box + vouchers for payments + IOUs

20 Which of the following statements are true about a good coding system for financial transactions? 

(1) It enables a company to easily extract data for management analysis 

(2) It provides a unique code for each item within the system 

(3) It provides codes that are uniform in format 

(4) It requires management authorisation before creation of new codes 

A 1 and 2 only 

B 3 and 4 only 

C 2, 3 and 4 only 

D 1,2, 3 and 4