1) A restaurant owner returned some equipment to a credit supplier because it was damaged. Which book of prime entry would this be recorded in? a) sales returns journal b) general journal c) purchases journal d) purchases returns journal 2) A payment for vehicle repairs was recorded in the vehicles account. Which entries would correct this error? a) Dr bank Cr vehicle repairs b) Cr bank Dr vehicle repairs c) Dr vehicle repairs Cr vehicles d) Dr vehicles Cr vehicle repairs 3) Trade receivables b/d £14,000, Trade receivables c/d £12,000, credit sales £210,000. What are receipts from credit customers? a) £236,000 b) £208,000 c) £212,000 d) £194,000 4) Opening capital £32,000, closing capital £29,000, drawings £11,000. What is the sole trader's profit or loss for the year? a) profit £8,000 b) profit £14,000 c) loss £8,000 d) loss £14,000 5) Which statement shows the value of a business? a) income statement b) bank statement c) statement of changes in equity d) statement of financial position 6) An item of inventory which originally cost £50 can be sold for £70 after being repaired at a cost of £25. How much should the inventory be valued at? a) £25 b) £45 c) £50 d) £75 7) A business received rent in the year of £7,000. It was owed £500 in rental income at the end of the year. What figure should be shown in the SOFP? a) current asset £500 b) current liability £500 c) non-current asset £500 d) non-current liability £500 8) If closing inventory is increased at the year end what will be the effect on profit and current assets? a) profit decreases, current assets decreases b) profit decreases, current assets increase c) profit increases, current assets decrease d) profit increases, current assets increases 9) Which of the following is the formula for trade receivable days? a) trade receivables x 100 / credit sales b) trade receivables x 365 / credit sales c) trade receivables x 100 total sales d) trade receivables x 365 / total sales 10) Which of the following sources of long-term finance does not incur an interest charge? a) bank loan b) debenture c) mortgage d) ordinary shares 11) A cheque received from trade receivables has been dishonoured. Which is the source document for this transaction? a) bank statement b) cheque counterfoil c) credit note d) paying-in slip counterfoil 12) On a break-even chart which would be represented by a horizontal straight line? a) total revenue b) fixed costs c) total costs d) variable costs 13) As a result of output increasing, an additional warehouse is required. Which type of cost describes the total cost of warehousing? a) fixed cost b) semi-variable cost c) stepped cost d) variable cost 14) The balance on a sales ledger account is £43,875. The following need to be entered - a dishonoured cheque of £2,495, a contra of £1,355. What is the balance after these adjustments? a) £40,025 b) £40,735 c) £45,015 d) £45,725 15) Fixed costs £120,000, unit selling price £40, unit variable cost £10. What is the break-even quantity? a) 2,400 b) 3,000 c) 4,000 d) 12,000 16) Which of these errors is revealed by a trial balance? a) commission b) compensating c) original entry d) partial omission 17) Which are all credit entries in the cost of sales section of an income statement? a) carriage inwards, closing inventory, purchases b) carriage inwards, opening inventory, purchases c) closing inventory, goods for own use, returns outwards d) goods for own use, opening inventory, returns outwards 18) If a sole trader converts into a private limited company and becomes the only shareholder, which would be a consequence? a) loses limited liability b) ownership is diluted c) profits will be subject to corporation tax d) receives more capital 19) what is the double entry for taking inventory for own use? a) Dr drawings Cr purchases b) Dr drawings Cr inventory c) Dr purchases Cr drawings d) Dr drawings Cr bank 20) A business paid wages of £18,250 for the year. Wages of £2,190 were owing at the start of the year and £2,740 were owing at the end of the year. What is the expense for the year? What is the wages expense for the year?  a) £13,320 b) £17,700 c) £18,800 d) £23,180

Multiple Choice Year 1 - Set 3

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