Bellafides Private School

Level IGCSE
Term 2
Accounting Paper 1

Teacher: Miss Paulin May/June 2024

Time: 1 hour 15 minutes 70 Marks

You will need:

 Multiple choice answer sheet
 Soft clean eraser
 Soft pencil (type B or HB is recommended)
___________________________________________________________________________________
INSTRUCTIONS
 There are thirty-five questions on this paper. Answer all questions.
 Write your name at the top of the page.
 For each question there are four possible answers A, B, C and D. Choose the one you
consider correct and record your choice in soft pencil on the multiple-choice answer sheet.
 Follow the instructions on the multiple-choice answer sheet.
 Write in soft pencil.
 Write your name on the multiple-choice answer sheet in the spaces provided unless this
has been done for you.
 Do not use correction fluid.
 You may use a calculator.

INFORMATION
 The total mark for this paper is 70.
 Each correct answer will score one mark.
 Any rough working should be done on this question paper.
1. What is the accounting equation?

A. Assets = capital – liabilities

B. Assets = liabilities – capital

C. Assets – liabilities = capital

D. Assets + capital = liabilities

2. Which task would be carried out by a book-keeper?

A. Comparison of financial statements between years

B. Preparation of financial statements

C. Provision of information for decision-making

D. Recording financial transactions

3. What does the sales ledger of a business contain?

A. Accounts of trade payables

B. Accounts of trade receivables

C. Sales account

D. Sales ledger control account

4. Which action is an example of double entry book-keeping?

A. Making a journal entry to record the correction of an error made in the ledger

B. Making entries in the sales journal and the sales ledger to record goods sold on credit

C. Recording a cheque paid to a trade payable in the cash book and purchases ledger

D. Recording the purchase of goods on credit in the purchases journal and purchases account
5. Phillip started a business on 1 April 2023 with $30 000 of his own money. On 31 March 2024,

his assets and liabilities were as shown.

machinery at net book value 38 000

other assets 15 000

long-term loan from bank 16 500

What was Phillip’s capital on 31 March 2024?

A. $30 000 B. $36 500 C. $46 500 D. $53 000

6. Juliet has opened a suspense account. He has found that rent paid of $250 has been correctly

entered in the rent account but credited to the bank account as $520. Which entries will correct

this error?

Debit $ Credit $

A. bank account 270 suspense account 270

B. bank account 520 suspense account 520

C. suspense account 270 bank account 270

D. suspense account 520 bank account 520

7. Olivia sent a credit note to Miranda for goods returned. How would Miranda record this

transaction?

Accounts to be debited Accounts to be credited

A. purchases returns Olivia

B. sales returns Miranda

C. Olivia purchases returns

D. Miranda sales returns

 8. The discount column on the debit side of a trader’s cash book totalled $1300 and the discount

column on the credit side totalled $700. How much discount did the trader receive?

A. $600 B. $700 C. $1300 D. $2000

9. What is true about cash discounts received?

They are recorded in the They increase profit for

cash book the year

A √ √

. √ ×

B × √

. × ×

10. Goods sold on credit to J Sharp were debited in error to the account of T Sharpe. Which type

of error has been made?

A. Commission

B. Complete reversal

C. Original entry

D. Principle

11. Which actions could a clothing retailer take to improve his rate of inventory turnover?

1 increase the selling prices of all clothing

 2 offer discounts on last year’s designs

3 pay clothing suppliers as quickly as possible

A. 1 and 3 only B. 1, 2 and 3 C. 2 only D. 3 only

12. The work in progress of ZT Manufacturers on 1 January was valued at $6200. At the end of

the year it was valued at $5400.

What was the effect on the cost of production for the year?

A. Decrease $800

B. Decrease $11 600

C. Increase $800

D. Increase $11 600

13. Raj had a debit balance of $10 800 in the bank column of his cash book. He discovered that

purchases, $890, paid by cheque, had been recorded as $980.

The following appeared in the bank statement but had not been entered in the cash book.

Bank charges 76

Interest received 120

What was the debit balance in the bank column of Raj’s cash book after adjusting for these

items?

A. $10 514

B. $10 666

C. $10 754

D. $10 934

14. Which statement about a trial balance is correct?

A. It assists in locating arithmetical errors in the book-keeping records.

B. It is proof that the entries in the ledger accounts are free from error.

C. It reveals all book-keeping errors.

 D. It shows ledger account errors only

15. Kai bought office equipment from Leo and paid immediately by bank transfer. How should

Kai record this in his accounting records?

Accounts to be debited Accounts to be credited

A. bank Leo

B. bank Office equipment

C. Leo bank

D. Office equipment bank

16. Jabari maintains a petty cash book using the imprest system. The imprest is restored at the

end of each month.

Which amount restores the imprest at the end of a month?

A. The amount left in petty cash less the total of vouchers received

B. The amount left in petty cash plus the total of vouchers received

C. The imprest amount less the total of vouchers received

D. The total of vouchers received

17. Sarah sold goods on credit to Zafar.

How was this recorded in Sarah’s ledgers?

General ledger Sales ledger

A. credit sales account debit Zafar account

B. debit sales account credit Zafar account

C. credit Zafar account debit sales account

D. debit Zafar account credit sales account

18. A café owner made no entry in her accounts for increased competition when another café

opened nearby.

Which accounting principle was applied?

A. Historic cost

B. Materiality

C. Money measurement

D. Prudence

19. Melody is a music club. The club holds a music concert once every year. Prizes are

awarded to musicians selected by a judge.

The club provided the following information related to the latest music concert.

Sale of concert tickets 1500

Purchases of concert prizes 450

Sale of concert programmes 150

Payment of fee to the concert judge 250

What was the profit from the concert?

A. $950

B. $1050

C. $1450

D. $2100

20. What does the statement of financial position of a business show?

A. Assets and liabilities at a certain date

B. Calculation of the annual profit or loss

 C. Changes in equity during the financial year

D. Income and expenditure for the financial year

21. Waseem received a bank statement. He found that the bank had charged interest twice in

error and that a dividend had been received on an investment.

Waseem then updated the cash book and prepared a bank reconciliation statement.

Where did he record these two items?

Bank error Dividend

A. bank reconciliation statement bank reconciliation statement

B. bank reconciliation statement updated cash book

C. updated cash book bank reconciliation statement

D. updated cash book updated cash book

22. Khalid made entries in a suspense account to correct two errors found in his ledger

accounts. Once the errors were corrected, the suspense account was closed.

Error 1 $700 sales had been omitted from the sales account.

Error 2 The purchases journal had been overcast by $550.

Which entry was made in the suspense account to balance the trial balance?

A. Credit $150

B. Credit $1250

C. Debit $150

D. Debit $1250

23. A cheque received from Kate, a credit customer, was dishonoured.

How was this dishonoured cheque recorded?

Account debited Account credited

A. Bank Kate

B. Kate Bank
 C. Kate Sales

D. Sales Kate

24. What increases owner’s capital?

A. Bank loan extended from five to ten years

B. Purchase of inventory on credit

C. Purchase of machinery by cheque

D. Transfer of vehicle to business from private use

25. Shula’s financial year ends on 31 March. On 1 April 2024 there was a credit balance of

$100 on Yasmin’s account in Shula’s purchases ledger.

What does this mean?

A. Shula had paid $100 to Yasmin.

B. Shula owed $100 to Yasmin.

C. Yasmin had paid $100 to Shula.

D. Yasmin owed $100 to Shula.

26. Hasina buys radios from Nazneen at a list price of $10 each. Hasina bought 12 radios and

was offered 20% trade discount and 4% cash discount. Two radios were faulty and were

returned to Nazneen.

What was the total of the credit note issued by Nazneen?

A. $15.36

B. $16.00

C. $19.20

D. $20.00
27. Which items would be recorded in the general journal of a bakery?

1 correction of an error of principle relating to an oven repair

2 purchase of a delivery vehicle on credit

3 purchase of flour on credit

4 return by a customer of a faulty batch of bread

A. 1 and 2 B. 1 and 3 C. 2 and 4 D.

3 and 4

28. Which item would not be shown on a bank statement?

A. A cheque returned by the bank marked as ‘refer to drawer’

B. A monthly payment made for electricity by direct debit

C. Bank charges

D. Unpresented cheques

29. A business provided the following information.

long-term loan 20000

trade receivables 12000

trade payables 9700

bank overdraft 2000

prepaid insurance 400

accrued wages 1000

rent receivable prepaid 500

What was the total of the current liabilities?

 A. $13 200 B. $15 400 C. $31 200 D. $32 700

30. Sabeena runs a retail business. She plans to close her business in a few weeks’ time.

How should her fixtures and fittings be valued in the statement of financial position?

A. At book value

B. At expected sales value

C. At original cost

D. At replacement cost

31. At the end of his financial year, Zane opened a suspense account.

Why was it necessary to open this account?

A. the suspense account had been omitted from the ledger

B. the trial balance totals did not agree

C. to correct an error of commission

D. to make sure no errors were made in the ledger

32. After completing the trial balance, it was found that an amount of $4000 for motor vehicle

repairs had been entered in the motor vehicle account.

Which type of error is this?

A. Commission

B. Compensating

C. Omission

D. Principle

33. A trader prepared a trial balance at 31 December.

 Which statement about this trial balance is correct?

A. It shows a summary of the financial position at 31 December.

B. It shows the ledger account balances at 31 December.

C. It shows the profit for the year ended 31 December.

D. It shows the transactions for the year to 31 December.

34. Which items are shown on a statement of account?

A. Bank charges

B. Credit notes

C. Debit notes

D. Trade discounts

35. Ted, a manufacturer, purchased a machine on credit from T Limited.

How did Ted record this?

Account debited Account credited

A. T Limited machinery

B. T Limited purchases

C. machinery T Limited

D. purchases T Limited

36. What is an example of a compensating error?

A. A payment for office equipment repairs was debited to the office equipment account.

B. A purchase of goods from A Jones was credited to the account of A Johns.

C. The sale of goods, $65, to A Kemp was entered in the books as $56.

D. The wages account was undercast by $200 and the rent account was overcast by $200.

37. Why is a sales ledger control account usually prepared by a different member of staff than

the person who maintains the sales ledger?

 A. To deter fraud

B. To locate errors

C. To provide an instant total of trade receivables

D. To speed production of financial statements

38. Kyle provided the following information for March, his first month of trading.

Credit purchases 9100

Credit purchases returned 322

Total payment to credit suppliers 5358

During the month, Kyle overpaid a supplier by $94. He did not make any further purchases

from this supplier in March. What were the balances on Kyles’s purchases ledger control

account on 1 April?

Debit balance Credit balance

$ $

A. 0 3420

B. 0 3514

C. 94 3420

D. 94 3514

39. On 1 April 2023, commission receivable, $210, was outstanding. Commission received

during the year ended 31 March 2024 amounted to $4850. Which journal entry should have

been made at the end of the financial year on 31 March 2024?

Debit Credit
 A. commission receivable 4640
income statement 4640
B. commission receivable 5060
income statement 5060
C. income statement 4640
commission receivable 4640
D. income statement 5060
commission receivable 5060

40. Which statement about a debts recovered account is correct?

A. The account is used when an amount, previously written off, is received from a customer.

B. The account is used when doubtful debts are recovered.

C. The balance of the account is debited to the income statement at the end of the year.

D. The balance of the account is shown in the statement of financial position.

41. What are assets?

A. Items that are bought for long-term use by a business

B. Items that are expected to be turned into cash in the near future

C. Items that are owned by or owed by a business

D. Items that are owned by or owed to a business

42. Sami returns goods bought on credit from Javed. How does Javed record this in his books?

Account debited Account credited

A. Purchases returns Sami

B. Sales returns Sami

C. Sami Purchases returns

D. Sami Sales returns

43. Karim issued an invoice, a credit note and a receipt. What has happened?

A. Karim purchased goods and paid the supplier immediately.

B. Karim purchased goods on credit, made returns to the supplier and paid the balance due.

C. Karim sold goods and received immediate payment from the customer.

D. Karim sold goods on credit, received returns from the customer and received the balance

due.

44. A trader’s purchases on credit for April amounted to $2000. These purchases were subject

to a trade discount of 10% and also a cash discount of 5% for accounts paid within 30 days.

How much was entered in the purchases journal?

A. $1700

B. $1800

C. $1900

D. $2000

45. Which is part of the double entry system?

A. Cash book

B. General journal

C. Sales journal

D. Trial balance

46. Which error will be revealed by the preparation of a trial balance?

A. An amount recorded twice as a debit entry

B. A capital expenditure item treated as revenue expenditure

C. A double entry made using an incorrect amount

D. A transaction completely omitted from the books

47. The bank statement of a business showed a bank overdraft of $1640 on 1 October 2023. At

that date there were uncredited deposits of $380 and unpresented cheques of $460. What

was the cash book balance on 1 October 2023?

A. $1560 credit

B. $1560 debit

C. $1720 credit

D. $1720 debit

48. William paid $500 in cash to Sonia for rent. How did Sonia record this?

Account debited Account credited

A. Cash Rent receivable

B. Rent receivable Cash

C. Rent receivable William

D. William Rent receivable

49. Tasha’s financial year ends on 31 March. On 1 April 2024 there was a credit balance of

$350 on Yusra’s account in Tasha’s purchases ledger. What does this mean?

A. Tasha had paid $350 to Yusra.

B. Tasha owed $350 to Yusra.

C. Yusra had paid $350 to Tasha.

D. Yusra owed $350 to Tasha

50. Jamie sold goods on credit. Where did he first record the invoice he issued?

A. General journal

B. General ledger

C. Sales journal

D. Sales ledger
51. Which statements about a three-column cash book are correct?

1 It contains ledger accounts for bank and cash.

2 It contains ledger accounts for discounts allowed and received.

3 It records transactions before they are recorded in the ledgers.

A. 1 and 2 C. 2 and 3

B. 1 and 3 D. 3 only

52. Which statement is not true about a trial balance?

A. It is a list of ledger account balances at a certain date.

B. It can assist in finding arithmetical errors.

C. It is part of the double entry system.

D. It is useful in preparing financial statements.

53. Which error is an error of original entry?

A. Sale of surplus office equipment on credit to Janet for $230 entered as $320 in both

the disposal account and Janet’s account

B. Sale of surplus office equipment on credit to Janet for $230 entered in the office

equipment account and Jason’s account

C. Sale of surplus office equipment on credit to Janet for $230 entered in the sales

account and Janet’s account

D. Sale of surplus office equipment on credit to Janet for $230 not entered in any

accounts

54. A cheque, $75, received from Shakil, was credited to the account of Sammy. Which journal

entry corrects this error?

Debit Credit
 A. Bank 75
Shakil 75
B. Shakil 75
Sammy 75
C. Sammy 75
Bank 75
D. Sammy 75
Shakil 75

55. Which of the following is considered a book of prime entry in accounting?

A. Balance Sheet

B. Cash Book

C. Income Statement

D. Trial Balance

56.Which of the following is NOT a book of prime entry in accounting?

A. Cash Book

B. Sales Book

C. General Ledger

D. Purchases Book

57. Returns of unsatisfactory goods by the customer are recorded in which book of prime

entry?

A. Sales Day Book

B. Purchases Day Book

C. Sales Return Day Book

D. Purchases Return Day Book

58. If a transaction was recorded in the wrong account in the General Ledger, what corrective

action should be taken?

A. Void the transaction as it is not possible to correct it.

B. Make a correcting journal entry to transfer the amount to the correct account.

C. Ignore the error as it will not affect the trial balance.

D. Write off the transaction as a loss.

59.If an entry of $750 in the Sales Day Book was omitted, what should be done to rectify the

error?

A. Ignore the error as it is immaterial.

B. Add $750 to the Sales Day Book in the next accounting period.

C. Record the omitted entry in the Sales Returns Day Book.

D. Make a correcting entry in the Sales Day Book with a note explaining the omission.

60. An amount was incorrectly entered as $530 instead of $350 in the Purchases Day Book.

To rectify this error, which of the following steps should be taken?

A. Make a correcting entry in the Purchases Day Book with the correct amount.

B. Ignore the error as it will not affect the trial balance.

C. Write off the difference in the general ledger.

D. Adjust the entry by adding or subtracting the difference in the purchases account.

61.If a transaction was recorded twice in the Sales Day Book, which of the following steps

should be taken to correct the error?

A. Record the transaction again in the Sales Day Book with a note explaining the error.

B. Ignore the error as it will not impact the final accounts.

C. Void the duplicate entry in the Sales Day Book.

D. Make a correction entry in the Sales Returns Day Book.

62.What is the purpose of preparing a bank reconciliation statement?

A. To correct errors made by the bank

B. To adjust the cash book balance to match the bank statement balance

C. To identify discrepancies between the cash book and bank statement

D. To verify the accuracy of transactions recorded by the bank

63.In a bank reconciliation, outstanding checks are:

A. Added to the bank statement balance

B. Deducted from the bank statement balance

C. Added to the cash book balance

D. Deducted from the cash book balance

64. What is the purpose of a trial balance?

A. To record daily transactions

B. To ensure that all transactions have been correctly recorded in the ledger accounts

C. To calculate the net profit of the business

D. To prepare financial statements

65.Which of the following errors would NOT be revealed by a trial balance?

A. Error of omission

B. Error of commission

C. Error of principle

D. Error of duplication

66.If the trial balance does not balance, what is the likely cause?

A. There are errors in the ledger accounts

 B. There are errors in the financial statements

C. There are errors in the cash book

D. There are errors in the trial balance itself

67.Which of the following items would appear on the debit side of a trial balance?

A. Sales revenue

B. Bank overdraft

C. Purchases returns

D. Accounts payable

68.In a trial balance, total debits should equal total credits. What does this indicate?

A. The ledger accounts have been accurately updated

B. The financial statements will be error-free

C. The business has made a profit

D. The trial balance has been prepared correctly

69.Which of the following errors would cause the trial balance to balance but still result in

incorrect financial statements?

A. Error of omission

B. Error of principle

C. Error of commission

D. Error of duplication
70. If a transaction is omitted from the accounting records, what impact does it have on the trial

balance?

A. The trial balance will still balance

B. The trial balance will not balance

C. The trial balance will show a higher profit

D. The trial balance will show a lower profit