Mid-year revision sheet

Name:…………………………………………………………………………………

School:……………………………………………………………………………..

Prepared By: Mrs. Ingy El Shafei

1
Question 1:
Wilson maintains a three-column cash book in his business.
On 1 March 2019 the following balances were available.
$
Cash 10
Bank overdraft 35
During March the following transactions occurred.
March 3 Cash sales, $570

10 Paid wages, $65, and general expenses, $19, in cash

12 Banked cash, $420

18 Cheque, $40, received from Glover in February was returned by the bank
marked ‘refer to drawer’

20 Settled Lou’s account of $250 by cheque after deducting 4% cash discount

25 Drawings taken $50 in cash, and $300 by cheque

30 Received a cheque, $285, from Fred after he had deducted 5% cash

discount. This was paid into the bank.

REQUIRED
(a) Prepare the three-column cash book for March 2019 on the next page.
Balance the cash book and bring down the balances on 1 April 2019

2
 Wilson
Cashbook

Date Details Discount Cash Bank Date Details Discount Cash Bank
$ $ $ $ $ $
…….. …………………………… ………. ……… …….. …….. ………………………… ………… ……… ………

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3
(b) Complete the table by placing a tick (√) in the appropriate box to indicate how the cash
book can be classified.

as a ledger account only as a book of prime as a ledger account and a

(original) entry only book of prime (original) entry

[1]
(c) Name the type of entry made in the cash book on 12 March.
....................................................................................................................................... [1]
(d) State two possible reasons why the bank returned the cheque from Glover on 18 March.

1.......................................................................................................................................
........................................................................................................................................
2 ....................................................................................................................................
.................................................................................................................................... [2]

(e) State the purpose of allowing Fred cash discount on 30 March.

………………………………………………………………………………………………………
…………………………………………………………………………………………………...[1]

4
Question 2:
Catherine prepared a trial balance on 30 April 2019. The trial balance did not agree.
She opened a suspense account. On inspection of the books, she found the following errors.

1 Motor vehicle expenses, $500, had been debited to the bank account and credited to the
motor vehicle expenses account.
2 Wages, $800, had been debited in the rent payable account.
3 A return of goods to a supplier, Ahmed, $595, had been incorrectly recorded in the
purchases returns journal as $295.
4 The discount received total in the cash book, $68, had not been entered in the discount
received account.
5 A cash sale, $125, had been entered in the sales account as $215.
REQUIRED
(a) Prepare journal entries to correct the errors 1 – 5. Narratives are not required.
General journal
Dr Cr
$ $

5
(b) Name the type of error in 1 – 3.

1..................................................................................................................................

2..................................................................................................................................

3...............................................................................................................................[3]

(c) Prepare the suspense account after the correction of errors 1 – 5.

Show the original difference recorded in the trial balance.
Suspense account

Date Details $ Date Details $

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6
Question 3:
Mikaela purchases goods from Steve. On 1 March 2019 Mikaela owed Steve $900.
Mikaela provided the following information for the month of March 2019.

March 5 Received an invoice from Steve, $730

9 Received a refund by cheque from Steve, $80, for overpayment made in

February.

18 Sent a cheque to Steve for the balance owing on 1 March after taking
2% discount

23 Received a credit note from Steve, $45

REQUIRED
(a) Prepare the account of Steve in the books of Mikaela for the month of March.
Balance the account and bring down the balance on 1 April 2019.
Steve account
Date Details $ Date Details $

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7
(b) Name the book of prime (original) entry in which Mikaela would record the following transactions.

Date Details Book of prime (original) entry

March 5 Received an invoice from Steve, $730

9 Received a refund by cheque from Steve,

$80, for overpayment made in February

18 Sent a cheque to Steve for the balance owing

on 1 March after taking 2% discount

23 Received a credit note from Steve, $45

(c) Name the subdivision of Mikaela’s ledger that would contain the account of Steve.

........................................................................................................................................[1]

Mikaela extracted the following balances from her ledger on 31 March 2019.
She was aware that there were a number of errors in the ledger.

$
Revenue 9 900
Purchases 5 500
Inventory 1 750
Sales returns 150
Carriage inwards 600
Trade receivables 1 750
Discount received 200
Purchases returns 150
Trade payables 1 300
Non-current assets (book value) 4 000
Bank overdraft 1 150
6% bank loan 1 500
Capital 4 750
Drawings 2 500
General expenses 3 300

8
REQUIRED
(d) Prepare the trial balance at 31 March 2019, including a suitable balancing entry.

Mikaela Trial Balance at 31 March 2019

Dr Cr
$ $
Revenue
Purchases
Inventory
Sales returns
Carriage inwards
Trade receivables
Discount received
Purchases returns
Trade payables
Non-current assets (book value)
Bank overdraft
6% bank loan
Capital
Drawings
General expenses

(e) State why some errors will affect the balancing of a trial balance and other errors will
not affect the balancing of a trial balance.
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[2]

9
Question 4:

Complete the following table:

Account debited Account credited Transaction

Bank Sales Goods sold and the proceeds paid into the
business bank

Office expenses Bank

Rashida Purchases returns

Bank Commission receivable

Office equipment Capital

Bank loan Bank

Question 5:

State whether the following sentences are true or false.

True or false

A trial balance is a list of the assets and liabilities on a certain date.

A trial balance is a list of balances in the ledger on a certain date.

A trial balance proves the arithmetical accuracy of the double entry

book-keeping.
A trial balance proves that the double entries in the ledger are
correct.

10
Question 6:

Rashmi did not maintain accounting records during her first year of trading. At the start of her
second year in business on 1 March 2019, Rashmi decided to start recording her financial
transactions. On that date she had fixtures valued at $13 900, a motor vehicle valued at $8 750
and inventory valued at $3 218. Her credit customers owed $4 056 and she owed her credit
suppliers $5 238. She had a bank overdraft of $1 260 and petty cash of $45.
Prepare the journal entry Rashmi would make on 1 March 2019.
A narrative is required.

Rashmi
Journal

Date Details Debit Credit

$ $

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11
Question 7:

Complete the table to name the book of prime entry in which Rashid, who sells and repairs
motors, would record each of the following.

Transaction Book of prime entry

Purchase of motors on credit

Purchase of stationery on credit

Sale of old breakdown truck on credit

Withdrawal from bank for personal use

Motor taken for personal use

Cash paid for taxi fare

Faulty motor returned by credit customer

Question 8:
Simran’s statement of financial position was prepared on 31 January 2017. It showed the
following assets and liabilities.

$
Equipment at net book value 7200
Inventory 800
Trade receivables 1300
Trade payables 830
Other payables 510
Bank 180 debit
Cash 250

12
(a) Calculate Capital at 31 January 2017.

………………………………………………………………………………………………………
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On 1 February 2017 Simran had the following transactions.

1 Took cash, $100, as drawings.

2 Paid remaining cash into the bank.

3 Transferred her private motor vehicle, value $2500, to the business.

4 Sent a cheque, $48, to Neel, a credit supplier. Simran received 4% cash discount
when making this payment.

5 Paid wages, $350, for January 2017, by credit transfer.

(b) Complete the following table stating the double entry needed to record each transaction.
The first has been completed as an example.

Account(s) debited $ Account(s) credited $

1 Drawings 100 Cash 100

13
(c) Identify the following:
(i) The transaction which increased Simran’s profit and capital.
Transaction number .......................
(ii) The transaction which increased Simran’s capital but not profit
Transaction number .......................
(iii) The transaction which increased working capital.
Transaction number .......................

Question 9:

Harum is a trader. All goods are bought and sold on credit terms.

On 1 March 2017 Kalgi, a credit customer, owed Harum $520.

The following took place during March 2017.

March 4 Harum sold goods on credit to Kalgi, list price $280, less 20% trade discount

10 Kalgi paid the balance due on 1 March by cheque

12 Kalgi returned goods, list price $120, purchased on 4 March

18 The bank returned Kalgi’s cheque received on 10 March because of insufficient

funds in his account.

28 Kalgi paid $600 in cash

30 Harum wrote off the balance on Kalgi’s account

14
Write up the account of Kalgi as it would appear in the ledger of Harum for the month
of March 2017.
Harum
Kalgi account

Date Details $ Date Details $

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Question 10:

From the following information, write up the account of Sanele in the books of Thomas for
the month of July 2011.

June 1 Sanele owed Thomas $450

6 Sanele purchased goods, $1200, on credit from Thomas

10 Sanele returned goods, $50, to Thomas

14 Sanele paid $250 to Thomas in cash

20 Sanele purchased goods, $590, on credit from Thomas

26 Sanele paid $1000 b cheque to Thomas

15
 Thomas books

Sanele’s account

Date Details $ Date Details $

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Question 11:

The following accounts appeared in the ledger of Akinola. Explain each entry in each of the
accounts and also state where the double entry for each entry will be found.

Akinola
Anwar account
Date Details Folio $ Date Details Folio $
2016 20-6
Mar 1 Balance b/d 250 Mar 12 Returns 30
9 Sales 870 18 Bank 800
31 Balance c/d 200
1120 1120
2016
April 1 Balance b/d 290

16
March 1: Balance b/d

Explanation………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
Double entry ………………………………………………………………………………………

March 9: Sales

Explanation………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
Double entry ………………………………………………………………………………………

March 12: Returns

Explanation………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
Double entry ………………………………………………………………………………………

March 18: Bank

Explanation………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
Double entry ………………………………………………………………………………………

March 31: Balance c/d

Explanation………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
Double entry ………………………………………………………………………………………

17
 Akinola
Drawings account
Date Details Folio $ Date Details Folio $

2016 2016

Mar 10 Bank 100 Mar 31 Capital 365

28 Purchases 265

365 365

March 10: Bank

Explanation………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
Double entry ………………………………………………………………………………………

March 28: Purchases

Explanation………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
Double entry ………………………………………………………………………………………

March 31: Capital

Explanation……………………………………………………………………..…………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
Double entry ………………………………………………………………………………………

18
Question 12:

Annie is a wholesaler of ladies’ clothing, selling to retail stores on credit terms. She provided the
following information at the end of her second year of trading on 31 December 2015.

$
Revenue 40 000
Cost of sales 30 500
Profit for the year 3 800
Inventory 1 January 2015 3 600
Inventory 31 December 2015 4 800
Capital employed 1 January 2015 92 000
Trade receivables at 31 December 2015 4 350

Annie decided to compare her results with those of her two brothers, Mark and Tony, who
formed a partnership six years ago to operate a wholesale food business.

(a) Complete the table on the opposite page to show the ratios for Annie’s business for the year
ended 31 December 2015.

You may use the space below for your workings.

Workings

19
 Ratio Annie Mark and Tony

Percentage of gross profit to revenue 23.75% 16.50%

Percentage of profit for the year to revenue 9.50% 11.35%

Rate of inventory turnover (to two decimal places) …………times 20.15 times

Percentage of profit for the year to opening

capital employed (ROCE) (to two decimal places) ……………..% 10.35 %

Trade receivables turnover

(rounded up to the next whole day) …………..days 34 days

(b) Explain one reason for the difference between the percentages of gross profit to revenue of
Annie and her brothers.

............................................................................................................................................
............................................................................................................................................
............................................................................................................................................
(c) Comment on the possible effects of Annie increasing the selling price of her goods.
............................................................................................................................................
...........................................................................................................................................
............................................................................................................................................
(d) State whose business had better control over its expenses. Give a reason for your answer.
Business ...............................................................
Reason ..............................................................................................................................
............................................................................................................................................
(e) Explain one reason for the difference in the rate of inventory turnover.
............................................................................................................................................
............................................................................................................................................
............................................................................................................................................

20
(f) Suggest one way in which Annie could increase her rate of inventory turnover.
..........................................................................................................................................
..........................................................................................................................................
(g) Suggest one way in which Annie could improve her return on capital employed (ROCE).
............................................................................................................................................
............................................................................................................................................
(h) State whose business had the better trade receivables turnover.
Give a reason for your answer.
Business ..............................................................
Reason ............................................................................................................................
.........................................................................................................................................
(i) Suggest two factors, excluding those provided in the question, which should be
considered when comparing Annie’s results with those of her brothers.

1 ......................................................................................................................................
2 ......................................................................................................................................

Annie has a bank overdraft but believes that her current ratio could be improved. She is
considering four courses of action.

(j) Complete the following table by placing a tick (✓) in the correct column to show how each of
the courses of action would affect Annie’s current ratio.

Increase Decrease No effect

Delay payments to credit suppliers

Obtain a long-term loan

Obtain permission from the bank to increase the overdraft

21
Question 13:

The financial year of Joda Limited ends on 31 January. The following information is available for
the year ended 31 January 2015.

$
Revenue 164 000
Cost of sales 125 542
Expenses 24 748

(a) Calculate the gross profit as a percentage of revenue. The calculation should be correct to
two decimal places.

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
(b) Suggest two reasons why the gross profit as a percentage of revenue is lower than it was for
the previous financial years.

1. …………………………………………………………………………………………………
…………………………………………………………………………………………………
2. …………………………………………………………………………………………………
…………………………………………………………………………………………………

(c) Calculate the profit for the year as a percentage of revenue. The calculation should be correct
to two decimal places.

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………

22
 Joda Limited provided the following information at 31 January 2015.

$
Inventory 18 150
Bank overdraft 7 150
Trade receivables 15 300
Trade payables 10 960
Petty cash 120

(d) Calculate the current ratio. The calculation should be correct to two decimal places.
………………………………………………………………………………………………………
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………………………………………………………………………………………………………

(e) Comment on your answer to (d).

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(f) Calculate the liquid ratio. The calculation should be correct to two decimal places.

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(g) Suggest one reason why the liquid ratio is lower than it was in the previous financial years.

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………

23
Joda Limited provided the following information for the year ended 31 January 2015.

1. The total revenue was

$
Cash sales 9 600
Credit sales 154 400

Credit customers are allowed a credit period of 30 days.

2. The total of the trade receivables on 31 January 2015 amounted to $15 300.

(h) Calculate the trade receivables turnover. Round your answer up to the next whole day.

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
(i) State whether Joda Limited would be satisfied with the trade receivables turnover. Give a
reason for your answer.

Satisfied or unsatisfied…………………………………………………………………………..
Reason……………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………

24
Question 14:
Annie Rongsen maintains both a three column cash book and a petty cash book. She
maintains the petty cash book on the imprest system with an imprest amount of $90.
She supplied the following information for the month ending 31 March 2013.

$
March 1 Petty cash balance 23
Petty cash restored to imprest amount ?
4 Paid postage 19
8 Paid taxi fares 16
13 An employee returned a loan paid out of petty cash in February 20
19 Paid parcel post 4
23 Paid R Singh, a credit supplier 24
29 Paid window cleaner 12

(a) State two reasons for maintaining a petty cash book in addition to a main cash book.

1. …………………………………………………………………………………………….
……………………………………………………………………………………………..
2. …………………………………………………………………………………………….
…………………………………………………………………………………………….

(b) State one advantage of using the imprest system of petty cash.
………………………………………………………………………………………………………
………………………………………………………………………………………………………

(c) Enter the above transactions in Annie Rongsen’s petty cash book on the page
opposite. Balance the book on 31 March 2013 and carry down the balance.
Make the entry on 1 April 2013 to restore the petty cash to the imprest amount.

(d) Explain how the double entry will be completed for the items shown in the postage
column of the petty cash book.

………………………………………………………………………………………………………

………………………………………………………………………………………………………

………………………………………………………………………………………………………

25
26
Question 15:

Jayden is in business buying and selling goods on credit. The following information is
available for the month of March 2019.

$
Balance at 1 March 2019
Inventory 40 000
Total for the month of March 2019
Cost of sales 77 000
Balances at 31 March 2019
Inventory 30 000
Bank overdraft 25 000
Trade payables 75 000
Trade receivables 60 000

(a) Calculate the following ratios to one decimal place. The previous month’s ratios are shown in
the last column.

Workings March 2019 February 2019

1.4 times
Rate of turnover of
Inventory

1.3:1
Working capital ratio
(current ratio)

0.9:1
Liquid ratio
(acid test ratio)

(b) Comment on the ability of Jayden to pay the trade payables.

...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
............................................................................................................................................. [2]
On 1 April 2019 Jayden decided to introduce a new marketing policy. He decided to:
decrease his mark-up to 50% to increase his sales revenue
offer trade receivables a cash discount for early payment.
Jayden hoped to end the month with a positive bank balance.

27
 The summarised transactions for the month of April 2019 were:
$
Credit purchases 115 000
Credit sales 180 000
Paid to trade payables by cheque 135 000
Paid for expenses by cheque 50 000
Received from trade receivables by cheque 200 000
after deducting $5000 cash discount

(c) Calculate the following at 30 April 2019.

Workings Answer
$

Inventory

Trade receivables

Trade payables

Bank

28
(d) Comment on the success of Jayden’s new marketing policy.
Support your answer by considering the effect on his current assets and current liabilities.

...................................................................................................................................................
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............................................................................................................................................. [4]

29
Question 16:

Uzma Khan runs a dress-making business. She maintains a full set of accounting records. Her
financial year ends on 28 February.
On 28 February 2014 she opened a suspense account and entered a credit balance of $2027.

(a) State two reasons why it was necessary for Uzma Khan to open a suspense account.

1. …………………………………………………………………………………………………

…………………………………………………………………………………………………

2. …………………………………………………………………………………………………

…………………………………………………………………………………………………

Uzma Khan discovered the following errors had been made in her accounting records.

1. Rent of premises, $250, had been debited to the rent account as $520.

2. $400 withdrawn from the bank for personal use had been debited to the wages account.

3. The total of the discount allowed column in the main cash book, $43, had not been
transferred to the discount allowed account in the ledger.

4. $2000 received from Amina had been credited to the account of Mona as $200.

30
(b) Prepare the entries in Uzma Khan’s journal to correct the four errors.
Narratives are required.
Uzma Khan
Journal
Debit Credit
$ $

31
(c) Complete the table below to show what effect each of the four errors had on Uzma Khan’s profit
for the year ended 28 February 2014.

The first one has been completed as an example.

Effect on profit for the year

Error Overstated Understated No Effect

1 270

Question 17:

Entry required to correct the error

Error Debit Credit
Account $ Account $

Goods returned, $310, to Ali, a credit

supplier, had been entered into the
account of Alam.

Wages paid in cash, $1200, had been

correctly entered in the cash book but
posted to the wages account as $2100.

The total of the general expenses

column in the petty cash book, $48,
had not been posted to the general
expenses account.
The total of the discount received
column in the cash book, $114, had
been debited to the discount allowed
account.

32
Question 18:

Heng is a wholesaler. He maintains a full set of double entry accounting records.

(a) Name the accounting principle Heng is applying in his accounting records.
.............................................................................................................................................. [1]
Heng’s financial year ends on 31 December. He opened a suspense account on
31 December 2016 and entered a debit balance of $430.

(b) State two reasons why it was necessary for Heng to open a suspense account.
1 ................................................................................................................................................
...................................................................................................................................................
2 ................................................................................................................................................
.............................................................................................................................................. [2]

Heng discovered that the following errors had been made in his accounting records.

1. Repairs to office equipment, $281, had been correctly entered in the cash book, but had
been entered in the office equipment account.

2. A sales invoice issued to AB Stores had been overcast by $100.

3. The balance of the petty cash book, $150, had not been entered in the trial balance.

4. General expenses, $1120, had been correctly entered in the cash book, but had been
entered in the general expenses account as $1210.

5. The total of the discount allowed column in the cash book, $1024, had not been transferred
to the discount allowed account in the ledger.

6. A cheque, $2060, paid to AK Suppliers, had been debited in the cash book (which had a
positive balance) and credited to the account of AK Suppliers.

7. The total of the purchases returns account, $454, had not been entered in the trial balance.

33
(c) Prepare the suspense account in Heng’s ledger to show the required entries.
The account should be balanced or totalled as necessary.
Heng
Suspense account

Details $ Details $

……………………………… ……….. ……………………………. …………

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(d) State whether all the errors in Heng’s books have been discovered.
Give a reason for your answer.
Have all errors been discovered? .......................................
Reason ...........................................................................................................................
................................................................................................................................... [2]
(d) Complete the table to show the effect of each of the errors. Where an error has no
effect, write ‘No effect’. The first one has been completed as an example.

Profit for the year Non-current assets Current assets Current liabilities
Error
$ $ $ $
1 281 overstated 281 overstated No effect No effect
2
3
4
5
6
7

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