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Accounting Practice Test

(C) £47 000. (C) £95 000.
(D) £57 000. (D) £93 000.

15. Which is the correct figure for the capital 19. The following figures relate to the rent and rates
employed in the business? payable expense for a business in 2001.
(a) £20 000. £000
(B) £25 000 Rent paid in advance in January 2001 5
Rates in arrears at 1 January 2001 2
(C) 47 000
Payments in 2001 35
(D) £57 000 Rates paid in advance at December 2001 4
Rent in arrears at 31 December 2001 6
16. Which of the following statements regarding the Which is the correct figure for rent and rates expense
retained profit of £5000 for the year is correct? in the profit and loss account for the year ended
(A) It is the net profit of the period. 31 December 2001?
(B) It is the net profit kept in the business after (A) £34 000.
owner’s drawing. (B) £35 000.
(C) It is the amount of surplus cash in the
business. (C) £36 000.
(D) It is the amount of profit the owner can take (D) £40 000.
out of the business.
20. A company owns some land and buildings for
17. The following trial balance is incorrect:
which the following details are relevant:
£000 £000
Cost of land £50,000; cost of buildings £100,000;
Stock 10
estimated life of buildings 20 years; estimated residual
Capital 15
Bank Overdraft 15 value of buildings £2,000; estimated residual value of
Trade creditors 30 land £50,000.
Fixed assets 25 The company uses the straight line depreciation
Trade debtors 10 method. Which is the correct annual depreciation
Cash 2 charge for this asset?
Trade investments 13 (A) £4000.
Sales 100 (B) £4900.
Purchases 50
(C) £7400.
Operating expenses 50
(D) £7500.
160 160
Which of the following groups of items, if moved to the
21. A company has trade debtors at its year end amounting
correct side of the trial balance, will correct it?
to £218 000. One of the debtors, value £8000, is now
(A) Capital, investments, cash, sales, purchases and
operating expenses. known to be uncollectable. The company takes a 5%
(B) Capital, cash, investments. provision for bad debts each year and last year’s
(C) Capital, bank overdraft provision amounted to £2000. Which figure will
(D) Sales, purchases, operating expenses. appear in the profit and loss account as the total bad
debt charge for the year?
18. A business has the following items in its accounts at its (A) £18 900.
year end 31 December 2001
(B) £18 500.
£000
Opening Stock at 1 January 2001 5 (C) £16 500.
Closing stock at 31 December 2001 10 (D) £10 500
Purchases for 2001 90
Purchases returns in 2001 2
22. Which of the following accounting concepts are being
Which is the correct figure for cost of goods sold in
followed when a company operates a provision for
2001?
bad debts account?
(A) £85 000.
(B) £83 000.
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