POLYMATH COLLEGE

CAMBRIDGE AS LEVEL
1ST TERM TEST – MARCH 2025
ACCOUNTING
Name:……………………………… Time: 1 hour Marks: 30

Instructions;
There are thirty questions on this paper.
Answer all questions.
 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.
 Do not use correction fluid.
 Do not write on any bar codes.
 You may use a calculator.

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 1. Which accounting concept is being applied when calculating depreciation?
Business
A entity B Matching C Materiality D Substance over form

2. A business decided not to treat the purchase of a stapler for use in its office as a non
current asset. Which accounting concept was the company applying?

Prudenc
A Consistency B Duality C Materiality D e

3. What is the advantage of keeping a full set of double entry books of account?
A Account balances are available through the year
B Business assets and owner’s assets can be kept separate
C It enables the book-keeper to check the bank statement for errors and omissions
It helps to assess performance of business by preparing
D
financial statements

4. Which book of prime entry is also used as a ledger account?

A Cash Book B Purchase Journal C Sales Journal D Journal

5. A company purchased a new delivery vehicle. Which items would appear in the income
statement?
1 Delivery cost of the delivery vehicle
2 Insurance for the delivery vehicle
3 Painting of the company name on the delivery vehicle
4 Purchase cost of the delivery vehicle

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

6. A company has two non-current assets. Details are as follows:

Date of Cost Depreciation method Residual

Asset Purchase $ Value
1000
X
01 Jan 2018 0 Straight line Method Life 5 Years $2,000
2000
Y
01 Jan 2018 0 Reducing Balance Method 20% p.a Nil
What was the total depreciation charge in the income statement for the year ended 31 December
2019?

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 A $4800 B $5200 C $5600 D $6000

7. A motor vehicle costing $8000 is depreciated by 25% per annum using the reducing
balance method. After depreciating it for two years it was sold for $4000. What is the
profit or loss on disposal?

A $500 Loss B $500 Profit C $2000 Loss D $2000 Profit

8. A business purchased a new delivery van. The total amount paid is made up of the basic
cost of the delivery and the following:
1 Changing the inside to carry tools and materials
2 One year’s insurance and servicing
3 Painting the exterior with the business name

Which items are included in the total to be entered in non-current assets?

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

9. John did not keep sales or purchases ledger control accounts. His trial balance did not
balance and a suspense account was opened. The following errors were discovered.
Sales of $200 had been entered as a credit in both a customer’s account and the sales
1
account
2 Purchases of $350 from J Brown had been entered as a credit in E Brown’s account.
3 Machinery repairs of $600 had been entered in the machinery at cost account
Returns inwards of $450 had been entered in the sales returns account but omitted from the
4
customer’s account

What was the amount of opening balance on the suspense account?

A $50 B $400 C $650 D $850

10. The difference on a trial balance is entered in a suspense account. It is discovered that a
discount received has been debited to the discount allowed account. Which journal entry
corrects the error?

Account(s) to be Debited Account(s) to be Credited

A Discount received Suspense
Discount allowed
B Suspense
Discount received
C Suspense Discount allowed

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 Discount allowed
D Suspense
Discount received

11. Which items will be entered in the debit side of the purchases ledger control account?
1 Contra with sales ledger control account
2 Discount received
3 Returns inwards

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

12. Which errors will result in a difference between the total of the individual customer
account balance in the sales ledger and the balance on the sales ledger control account?

1 An irrecoverable debt has been posted to the debit of a customer's account.

2 Discount allowed has only been credited to the customer’s account.
3 Returns by a customer have been omitted from the customer’s account.

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

13. A trader did not keep full accounting records. The following information was available
for 2020

$
3278
Trade payables on 1 January 5
4363
Trade payables on 31 December 0
Payments to suppliers during the 7283
year 0
Discounts received during the year 3450

What was the value of purchases?

A $58535 B $65435 C $80225 D $87125

14. The cost of repainting a property was debited to the property account. Which type of
error was made?

A Commission B Compensating C Original entry D Principle

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 15. At the year end a company discovers that some of its inventory is damaged. This
inventory originally cost $2000. It would normally sell for $2400 but can now only be
sold for $2200 if repairs costing $400 are undertaken.
What value of the damaged inventory should be shown in the financial statements?

A $1800 B $1900 C $2000 D $2200

16. The following information relates to rent receivable for the year ended 31 March 2020.

$
1 April 2019 rent owed by the
tenants 700
1 April 2019 rent prepaid by the 120
tenants 0
780
rent received during the year 0
31 March 2020 rent owed by the 100
tenants 0

How much is the rental income entered in the income statement for the year ended 31 March
2020?

A $6300 B $7300 C $8300 D $9300

17. A business has provided the following information. A provision for doubtful debts has
been calculated as $1750. It is based on 5% of trade receivables after an irrecoverable
debt of $4200 had been written off. What was the original amount of trade receivables
before making these adjustments?

A $29050 B $30800 C $37450 D $39200

18. A sole trader provides the following information

Start
End of
of
Year $
Year $
10000
Total assets 0 135000
Total liabilities excluding owner’s
capital 35000 40000

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During the year the owner took drawings of $18 000. What was the profit for the year?

A $12000 B $30000 C $35000 D $48000

19. A business prepaid its rent. What is the effect of this on the current assets and the rent
expense at the year end?

Current Assets Rent Expense

A Decrease Increase
B Increase Decrease
C Increase No Effect
D No Effect Increase

20. Why did Amitav prefer to form a partnership with Lennie rather than set up as a sole
trader?
A Amitav was certain they could work without disagreements
B Lennie had a different area of expertise to Amitav
C The financial statements of a partnership are not shared publicly
D The legal requirements in setting up the business would be reduced.

21. Which items would appear in a partnership’s appropriation account?

1 Partners’ interest on capital
2 Partners’ introduction of new capital
3 Salaries of employees
4 Salaries of partners

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

22. A business uses the first in first out (FIFO) inventory system. The following information
is available.

Date Details Units Per Unit Value $

1-Mar Opening inventory 1200 10.00
12-Mar Purchases 2000 10.20
22-Mar Sales 3000 15.00
26-Mar Purchases 800 10.50

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The inventory at 31 March could be sold for $10 800. What is the value of inventory to be
included in the statement of financial position at 31 March?

A $10000 B $10425 C $10440 D $10800

23. A business employs 20 workers as production staff. Each worker

works for 40 hours working week at a rate of $7.80 per hour. Overtime
rate is time and a half of normal rate. Workers had worked for 44hours
in a working week. What is the wage cost?

A $280.00 B $312.00 C $343.20 D $358.8

24. The value of inventory for a limited company at 31 May 2020 was overstated by $20 000.
What was the effect of this error on profit for the year?

Profit at 31 May 2020 Profit at 31 May 2021

A overstated by $20 000 no effect
B overstated by $20 000 understated by $20 000
C understated by $20 000 no effect
D understated by $20 000 overstated by $20 000

25. Which statements are correct?

1 When output increases, fixed costs per unit decrease.
2 When output increases, variable costs per unit stay the same
3 When output decreases, total fixed costs stay the same
4 When output decreases, total variable costs decrease

A 1, 2, 3 and 4 B 1 and 2 only C 1, 3 and 4 only D 2 and 3 only

26. What is the most suitable basis to apportion depreciation between two production
centres?
A Cost of machinery
B Maintenance cost of machinery
C Number of employees
D Number of units produced

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 27. The following budgeted data is available for July 2021.

$
Direct labour ($20 per hour) 80000
Indirect labour 12000
Factory expenses 36000
Depreciation on machinery 30000
Depreciation on office equipment 18000
Administrative expenses 44000

What is the budgeted overhead absorption rate per direct labour hour?

A $19.50 B $24 C $35 D $39.50

28. The following data is available for the production department of a manufacturing
company for a period. Overheads are absorbed on a direct labour hour basis.

Direct Labour Hours Total Overhead Costs $

Budgeted 96000 242880
Actual 97600 253760

What is the over or under absorption of overheads for the period?

A $6832 over absorbed
B $6832 under absorbed
C $10 880 over absorbed
D $10 880 under absorbed

29. The records of a company showed the following.

Machini Assembl
ng y
Total fixed overheads $150000 $60000
Machine hours 3000
Employee hours worked 2000

What is the hourly fixed overhead absorption rate for the machining department?

A $30 B $42 C $50 D $70

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 30. A company has two production departments, manufacturing and assembly, and a stores
service department. The overheads are apportioned to each department using the
appropriate costing information supplied.

Manufacturi Assembl Store

ng y
direct labour hours 8400 33600
machine hours 20160 6720
$3280
total cost of the stores department 0
number of store requisitions 3000 2000

What are the overhead absorption rates for the two production departments in respect of the
stores?

Manufacturing department Assembly department

A $0.39 direct labour hour $0.98 machine hour
B $0.58 direct labour hour $0.65 machine hour
C $0.65 machine hour $0.58 direct labour hour
D $0.98 machine hour $0.39 direct labour hour

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