Page 315 - GMAT 2017b_Neatb

Accounting Practice Test

ACCOUNTING PRACTICE TEST

101 QUESTIONS
60 MINUTES

Each question has four suggested answers (A), (B), (C), and (D). Decide
which one is the best answer, and on the answer sheet find the question
number that corresponds to the answer of the answer that you have selected
and darken the are with a soft pencil.

1. Sole traders differ from other types of trading Having regard to the fundamental accounting
organizations. Which of the following statements concepts, which of the following revised profit
correctly summarizes the key characteristics of a sole figures is correct when the above factors are
trader 's business? taken in to account?
(A) £480 000.
(A) Liability is limited to the providers of loan finance
(B) £460 000.
and only the trader takes an active part in managing
(C) £510 000.
the business.
(D) £475 000.
(B) The trader has unlimited liability and runs the
business in conjunction with the providers of loan 4.
finance. A company sells goods on credit valued at
£25 000 to a customer. At what point in the sales
(C) The trader has unlimited liability, and must have
cycle should this sale be recognized in the
the business account edited.
accounts?
(D) The trader has unlimited liability, takes no sole
(A) When the customer 's order is received.
responsibility for management of the business and
(B) When the goods are ready for dispatch to the
no audit is needed.
customer.
(C) When the goods are sent, accepted and invoiced.
2. Which of the following statements best describes the
(D) When the customer pays.
purpose of financial accounting in a limited liability
company?
5. Exe Ltd sells goods on credit to Wy Ltd for £3000.
(A) To assist in the day-to-day management of the
Which of the following accounting entries correctly
company.
records this transaction?
(B) To enable the business to pay the correct amount
(A) Debit sales, credit Wy Ltd £3000.
of tax.
(B) Debit Wy Ltd, credit sales £3000.
(C) To ensure that the business pays the correct
(C) Debit cash, credit sales £3000.
dividend.
(D) Debit Wy Ltd, Credit stock £3000.
(D) To help the directors discharge their obligations
to the shareholders.
6. The following items relate to the bank account of Exe
Ltd: balance at 1 January 2001 = £4500 (in hand),
3. A business has prepared its accounts for a financial year
total payments in 2001 were £45 800, total receipts in
and these show a profit of £500 000. The accounts do
2001 were £36 900, bank charges not yet entered
not include the following items:
into the bank account were £1200. What was the
a likely loss on a contract of $25,000;
correct closing bank balance at 31 December
a possible Court ruling in favour of the company which
2001?
is likely to increase profits by $10,000, a possible Court
(A) £5600 overdrawn.
ruling against the company which could result in
(B) £12 200 overdrawn.
damages of between $5,000 to $15,000.
(C) £4400 overdrawn.
(D) £13 400 overdrawn.
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