CXC CSEC Principles of Accounts — Paper 1 (Multiple Choice)
Total marks: 60 · Duration: 75 minutes
Instructions to candidates
- Answer ALL questions in this section.
- Each question is worth 3 marks.
- Write your answers on the Multiple Choice Answer Sheet provided.
- Shade the circle corresponding to the letter of your choice completely.
- If you need to change an answer, erase your first choice completely.
- Non-programmable calculators may be used.
- Work all calculations to two decimal places where applicable.
Paper
Section A — Multiple Choice (60 marks)
1. Which of the following is an example of a capital receipt?
A) Cash received from the sale of goods to customers
B) Commission received for services rendered
C) Proceeds from the sale of a motor vehicle used in the business
D) Interest received on a bank deposit
2. The accounting concept which requires that revenue should be recognized when it is earned, rather than when cash is received, is known as the
A) Materiality concept
B) Accruals concept
C) Money measurement concept
D) Prudence concept
3. A business purchased goods on credit from Thompson Ltd for $4,500. The correct double entry to record this transaction is:
A) Debit Purchases $4,500; Credit Thompson Ltd $4,500
B) Debit Thompson Ltd $4,500; Credit Purchases $4,500
C) Debit Sales $4,500; Credit Thompson Ltd $4,500
D) Debit Thompson Ltd $4,500; Credit Cash $4,500
4. Samuel's business has the following balances at 30 April 2023:
- Bank overdraft $2,400
- Accounts Receivable $8,600
- Inventory $5,200
- Accounts Payable $6,300
What is the value of Samuel's working capital?
A) $5,100
B) $7,500
C) $11,500
D) $13,900
5. A petty cash book operated on the imprest system had a float of $500. During the month, payments totalling $378 were made. How much cash should be reimbursed to restore the imprest?
A) $122
B) $378
C) $500
D) $878
6. Which of the following errors would be revealed by the trial balance?
A) A credit sale of $650 recorded as $560 in both the Sales Account and the customer's account
B) A cash purchase omitted entirely from the books
C) Rent paid debited to the Landlord's personal account
D) Discount received credited only to the Discount Received Account
7. A three-column cash book contains columns for
A) Cash, Bank and Petty Cash
B) Cash, Bank and VAT
C) Cash, Bank and Discount
D) Debit, Credit and Balance
8. The Provision for Depreciation Account is classified as
A) A liability
B) A contra asset
C) An expense
D) Capital
9. Marcus purchased a delivery van on 1 January 2021 for $48,000. He depreciates it at 25% per annum using the reducing balance method. What is the net book value of the van at 31 December 2022?
A) $12,000
B) $24,000
C) $27,000
D) $36,000
10. Bad debts written off during the year are recorded in the Income Statement as
A) An addition to Gross Profit
B) A deduction from Sales
C) An operating expense
D) A reduction in Assets
11. Marissa's business showed a net profit of $28,400 for the year ended 31 March 2023. Her drawings during the year were $15,600 and she introduced additional capital of $8,000. If her opening capital was $52,000, what is her closing capital?
A) $44,800
B) $64,800
C) $72,800
D) $88,800
12. Which of the following would appear in the Trading Account of a manufacturing business?
A) Carriage inwards
B) Carriage outwards
C) Discount allowed
D) Salaries of office staff
13. A club received $12,000 in subscriptions during the year. Subscriptions in arrears at the beginning of the year were $1,800 and at the end of the year were $2,200. Subscriptions in advance at the beginning of the year were $900 and at the end of the year were $1,400. What amount should be credited to the Income and Expenditure Account for subscriptions?
A) $10,700
B) $11,700
C) $12,300
D) $13,300
14. The difference between a Receipts and Payments Account and an Income and Expenditure Account is that the Receipts and Payments Account
A) Records only revenue items
B) Shows a surplus or deficit
C) Is prepared on an accruals basis
D) Includes capital receipts and payments
15. In partnership accounting, interest on drawings is
A) Debited to the Partner's Current Account and credited to the Profit and Loss Appropriation Account
B) Credited to the Partner's Current Account and debited to the Profit and Loss Appropriation Account
C) Debited to the Profit and Loss Account as an expense
D) Credited to the Partner's Capital Account
16. Brown and White are in partnership sharing profits and losses 3:2 respectively. The partnership agreement provides for interest on capital at 8% per annum. Brown's capital is $60,000 and White's capital is $40,000. If the net profit for the year was $34,000, what is Brown's total share of profit after interest on capital?
A) $16,800
B) $20,400
C) $21,600
D) $25,200
17. A Control Account is used to
A) Control the errors made by bookkeepers
B) Check the accuracy of entries in individual accounts in the ledger
C) Record all transactions with customers
D) Prepare the Trial Balance
18. Which of the following would be recorded in the Sales Ledger Control Account?
A) Cash purchases
B) Returns outwards
C) Bad debts written off
D) Discounts received
19. A company's authorized share capital is $500,000 divided into 500,000 ordinary shares of $1 each. The company has issued 300,000 shares, fully paid. What is the value of the issued capital?
A) $200,000
B) $300,000
C) $500,000
D) $800,000
20. The main purpose of an appropriation account for a limited company is to show how
A) Net profit has been calculated
B) Gross profit has been distributed
C) Net profit has been distributed
D) Capital has been raised