BOOK KEEPING FIRST TERM EXAMINATION SS 1

EXAMINATION MALPRACTICES MAY LEAD TO A REPEAT OF THE SUBJECT OR SUSPENSIONS. DON’T BE INVOLVED.

SUBJECT: BOOK KEEPING
TIME: 2 HOURS 30 MINUTES
CLASS: SS 1

OBJECTIVES

1. Understand the concept and importance of book keeping.
2. Identify and describe key book keeping terms and concepts.
3. Apply book keeping principles to solve problems.

SECTION A

Choose the correct answer:

1. The preservation of records of all commercial transactions is referred to as:
   a. recording
   b. objective
   c. reporting
   d. posting
2. Credit transaction can create one of the following:
   a. debtor
   b. purchase
   c. sales
   d. depreciation
3. The recording of all financial transactions that take place in an enterprise is referred to as:
   a. accounting
   b. book keeping
   c. classification
   d. posting
4. One of the following can be referred to as the reduction in value of an asset:
   a. building
   b. depreciation
   c. income
   d. asset
5. Any good or property owned which has a money value is called:
   a. liabilities
   b. debts
   c. repayment
   d. assets
6. Which of the following is not a method of depreciation?
   a. diminishing balance
   b. residual value
   c. sinking fund
   d. straight
7. The sales day book will show goods sold for/on:
   a. cash and credit
   b. cash
   c. credit
   d. hire purchase
8. Which document is sent by the buyer to the seller stating the quantity, quality, description, and price of the goods?
   a. invoice
   b. debit note
   c. order
   d. receipt
9. The concept that assumes the business will continue to operate indefinitely is termed:
   a. going concern
   b. cost
   c. realization
   d. accrual
10. Current assets less current liabilities is:
    a. assets
    b. capital owned
    c. capital
    d. working capital
11. Provisions made in respect of the loss in the value of fixed assets such as equipment is referred to as:
    a. amortization
    b. depletion
    c. depreciation
    d. appreciation
12. Goods returned by the buyer are recorded in the seller’s books as:
    a. carriage inwards
    b. carriage outwards
    c. returns outward
    d. return inward
13. A subsidiary book is a book of:
    a. final account
    b. final entry
    c. ledger entry
    d. original entry
14. A book keeping error where motor vehicle account is debited instead of motor expenses account is an error of:
    a. commission
    b. original entry
    c. complete reversal of entry
    d. principle
15. Which of the following is an example of a subsidiary book?
    a. cash book
    b. bank statement
    c. control account
    d. trial balance
16. Debts or obligations due to creditors are called:
    a. assets
    b. debtor
    c. liabilities
    d. working capital
17. A vehicle costs #20,000 with a life span of 5 years and the residual value for the period was #500. Using the straight-line method, calculate the annual depreciation:
    a. #4,900
    b. #3,900
    c. #3,800
    d. #5,900
18. When a buyer returns damaged goods to the seller, he receives a:
    a. consignment note
    b. credit note
    c. debit note
    d. goods return
19. Umaru Enterprises Ltd bought 40 pairs of shoes at #45 each from Lebbi Shoe Factory on credit. The transaction will first be recorded by Umaru in the:
    a. cash book
    b. ledger
    c. principal journal
    d. purchases day book
20. Use the information below to answer questions 20-22:An asset that costs #40,000 is to be depreciated at the rate of 10% with a life span of 4 years. Using the diminishing balance method, what will be the depreciation charge for year 2?
    a. #1,536
    b. #1,920
    c. #2,400
    d. #3,600
21. Using the reducing balance method, what is the net book value of the asset at the end of year 2?
    a. #15,000
    b. #20,000
    c. #26,244
    d. #32,000
22. At the end of the third year, the accumulated depreciation using the straight-line method is:
    a. #10,000
    b. #12,000
    c. #15,000
    d. #16,000
23. The generally accepted approaches to the application of accounting concepts are known as:
    a. accounting concept
    b. accounting conventions
    c. accounting policies
    d. accounting bases
24. Assets – liabilities defines:
    a. capital
    b. debtor
    c. working
    d. working capital
25. The purchase of a typewriter for office use for #30,000 should be debited to:
    a. asset account
    b. bank account
    c. cash account
    d. purchases account
26. The document from which entries are transferred to the purchases day book is:
    a. waybill
    b. credit note
    c. purchase invoice
    d. sales invoice
27. The book keeping term used when making entries in the ledger accounts is termed:
    a. posting
    b. recording
    c. reporting
    d. classifying
28. When a debt cannot be recovered, it is called:
    a. doubtful debt
    b. bad debt
    c. provision
    d. reserves
29. The accounting concept that says every transaction must be in money terms is called:
    a. going concern
    b. money measurement
    c. business entity
    d. cost
30. Which of the following assets would not depreciate due to the passage of time?
    a. machine
    b. building
    c. land
    d. furniture
31. The double-entry system of book keeping was introduced by:
    a. Adam Smith
    b. A. R. Jennings
    c. Frank Wood
    d. Luca Pacioli
32. An item on the debit side of a petty cash book is:
    a. stationery
    b. transport
    c. float
    d. rent
33. Items classified as assets in the balance sheet include:
    a. overdraft
    b. drawings
    c. trademark
    d. creditors
34. Purchases day book and returns outwards book are records kept by the:
    a. seller
    b. buyer
    c. agent
    d. suppliers
35. Individual accounts of the suppliers are maintained in the:
    a. personal ledger
    b. sales ledger
    c. purchases ledger
    d. general ledger
36. The statement of account that performs the dual roles of a journal and a ledger is:
    a. cash book
    b. sales journal
    c. purchases journal
    d. trial balance
37. Exercise bought goods for #10,000 on credit and #4,500 for cash. He returned goods worth #1,500. The closing balance in his purchases account is:
    a. #16,000
    b. #14,500
    c. #13,000
    d. #8,500
38. Records of a customer’s financial transactions with the bank is contained in the bank:
    a. overdraft
    b. list
    c. statement
    d. account
39. An example of a source document is:
    a. general journal
    b. sales journal
    c. credit note
    d. cash book
40. Items in the debtors control account include:
    a. credit purchase
    b. cash paid
    c. discount received
    d. discount allowed

SECTION B

Answer two questions from this section:

1. a. Differentiate between accounting concept and convention.
   b. Explain any three accounting concepts and two conventions.
2. a. Define depreciation.
   b. State six methods of depreciation.
   c. Define bad debts.
3. a. State the causes of depreciation.
   b. Explain any five types of errors that do not affect the agreement of the trial balance.
4. a. Define ledger.
   b. State three errors that affect the trial balance.
   c. State two types of ledger.

SECTION C

Answer any three questions from this section:

1. An asset costs #80,000 and is to be depreciated at the rate of 20% with a life span of 5 years.
   a. Calculate the depreciation for 5 years using the reducing balance method.
   b. Show the ledger entries:
   • Asset account
   • Depreciation account
2. A business sells goods on credit to its customers and receives cash payments.
   a. Explain the entries to record the sales and cash receipts in the books.
   b. Discuss the impact of these transactions on the cash book.
3. A company purchased equipment worth #50,000.
   a. Using the straight-line method, calculate the annual depreciation if the useful life is 10 years with a residual value of #5,000.
   b. Show the calculation and ledger entries for depreciation.
4. Discuss the purpose of a trial balance and explain how it is used to identify errors in the accounting system.

End of Examination Paper