Title 2023. PILOT TEST.pdf ✅

PILOT TEST Unit: PRINCIPLES OF ACCOUNTING. Unit Code: BSA2001-E I. Multiple Choice Question: Students must write the answers in the following table: Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 Q19 Q20 1. A building is offered for sale at $500,000 but is currently assessed at $400,000. The purchaser of the building believes the building is worth $475,000, but ultimately purchases the building for $450,000. The purchaser records the building at: a. $400,000. b. $450,000. c. $475,000. d. $500,000. 2. On December 30 of the current year, KPMG signs a $150,000 contract to provide accounting services to one of its clients in the next year. KPMG has a December 31 year-end. Which accounting principle or assumption requires KPMG to record the accounting services revenue from this client in the next year and not in the current year? a. Business entity assumption b. Revenue recognition c. Monetary unit assumption d. Cost principle 3. If the assets of a company increase by $100,000 during the year and its liabilities increase by $35,000 during the same year, then the change in equity of the company during the year must have been: a. An increase of $135,000. b. A decrease of $135,000. c. A decrease of $65,000. d. An increase of $65,000. 4. Brunswick borrows $50,000 cash from Third National Bank. How does this transaction affect the accounting equation for Brunswick? FACULTY OF ACCOUNTING AND AUDITING

13. Which of the following is a business event that is not considered a recordable transaction? a. A company receives a product previously ordered. b. A company pays an employee for work performed. c. A customer inquiry about the availability of a service. d. A customer purchases a service. 14. Which of the following is not a Book of Prime Entry? a. Sales Journal b. Cashbook c. Purchases Journal d. Sales Ledger 15. A credit customer returned some damaged goods to the business. This transaction will record in: a. Sales Return Journal b. Purchase Return Journal c. Purchase Journal d. Sales Journal 16. A receipt is used as a source document for a. Credit sales b. Credit purchases c. Payment of cash d. Return of goods to supplier 17. The controller for Tires and More, Inc. has recorded the following transactions during the month: the purchase of equipment for $8,500 cash; payment of $6,300 for 3 months rent; and, collection of $2,400 from a customer for services performed. At the beginning of the month the owner established the business by making an investment of $15,000 cash. What is the balance in the Cash account at the end of the month, and is the balance a debit or a credit? a. $2,600 debit. b. $2,600 credit. c. $6,800 debit. d. $15,200 debit. 18. A sole trader is £5,000 overdrawn at her bank and receives £1,000 from a credit customer in respect of its account. Which element(s) of the accounting equation will change due to this transaction? a. Assets and liabilities b. Liabilities only c. Assets only d. Assets, liabilities and capital 19. A sole trader had trade receivables of £2,700 at 1 May and during May made cash sales of £7,200, credit sales of £16,500 and received £15,300 from his credit customers. The balance on his trade receivables account at the end of May was: a. £1,500 b. £3,900 c. £8,700 d. £11,100 20. Information is relevant if it is capable of making a difference in the decisions made by users. According to the IASB's Conceptual Framework, financial information is capable of making a difference in decisions if it has which of the following? 1 Predictive value 2 Comparative value 3 Historic value 4 Confirmatory value a. 1 and 3 only b. 2 and 4 only c. 1 and 4 only d. 2 and 3 only II. Short question:
Given that Company ABC's fiscal year ends on December 31st, and the utility bill for the month of December is expected to be received on January 5th. Assuming that the estimated utility expense for December is $2,000. Should the company record the utility expense in its financial statements for the year ending December 31st? Provide explanation. III. Exercises: Demo Exercise 1: Andrew Joel is a market trader. The company’s trial balance as at 31 December 20X8, appears below: $ $ Sales 71,600 Purchases 29,050 Salaries 4,650 Rent and business rates 2,500 Prepay – Insurance 3,900 Motor expenses 21,860 Fixtures 35,000 Cash in hand 5,000 Cash at bank 3,500 Drawings 24,000 Capital 61,810 Account Receivable 23,450 Account Payable 19,500 152,910 152,910 During the month of January, the company completed the following transactions: January Transfers $700 of his savings into a business bank account 1 Borrows $3,000 from LLoydwest Bank, repayable in three years’ time 2 Buys goods for resale on time, $80 from S.Holmes 3 Buys goods for resale, paying cash $55 4 Goods returned by us to S.Holmes, $20 5 Sale goods $650, customer paying by cheque $500 6 Sale goods on time, $120 to D.Moore 7 Goods returned to us by D.Moore $20 8 Pays staff wages for January, $400 cash 9 Purchases goods from C.Swiff $400, less 10% trade discount, pays by cash 10 Insurance is still unexpired of $3,000 11 Inventory on 31 January 20X9 is 7,547 Required: a. Record all the transactions. b. Prepare a Trial Balance as at the end of the month. c. Prepare Income Statement for the month. d. Prepare a Balance Sheet at the end of the period.