Accounting for Managers

341. If opening stock is £3,000, closing stock £5,000, sales £40,000 and margin 20 per cent, then stock turn is:

  1. 7 ½ times
  2. 8 times
  3. 5 times
  4. 6 times
Correct answer: (B)
8 times

342. Which of the following should be charged in the Profit and Loss Account?

  1. Carriage on raw materials
  2. Work in progress
  3. Office rent
  4. Direct materials
Correct answer: (C)
Office rent

343. You are to buy an existing business which has assets valued at buildings £50,000, Motor vehicles £15,000, Fixtures £5,000 and Stock £40,000. You are to pay £140,000 for the business. This means that:

  1. You have made an arithmetical mistake
  2. You are paying £40,000 for Goodwill
  3. Buildings are costing you £30,000 more than their value
  4. You are paying £30,000 for Goodwill
Correct answer: (D)
You are paying £30,000 for Goodwill

344. A company wishes to pay out all available profits as dividends. Net profit is £26,600. There are 20,000 8% Preference shares of £1 each, and 50,000 Ordinary shares of £1 each. £5,000 is to be transferred to General Reserve. What Ordinary dividends are to be paid, in percentage terms?

  1. 40 per cent
  2. 60 per cent
  3. 10 per cent
  4. 20 per cent
Correct answer: (A)
40 per cent

345. Which of the following is not an asset?

  1. Buildings
  2. Debtors
  3. Loan from K Harris
  4. Cash balance
Correct answer: (C)
Loan from K Harris

346. Which of the following best describes the meaning of 'Purchases'?

  1. Goods bought on credit
  2. Goods paid for
  3. Goods bought for resale
  4. Items bought
Correct answer: (C)
Goods bought for resale

347. Which of the following best describes a trial balance?

  1. Shows all the entries in the books
  2. It is a list of balances on the books
  3. Shows the financial position of a business
  4. It is a special account
Correct answer: (B)
It is a list of balances on the books

348. The descending order in which current assets should be shown in the balance sheet is:

  1. Debtors, Stock, Bank, Cash
  2. Cash, Bank, Debtors, Stock
  3. Stock, Debtors, Cash, Bank
  4. Stock, Debtors, Bank, Cash
Correct answer: (D)
Stock, Debtors, Bank, Cash

349. The Sales Day Book is best described as:

  1. Containing customers' accounts
  2. Containing real accounts
  3. Part of the double entry system
  4. A list of credit sales
Correct answer: (D)
A list of credit sales

350. A debit balance of £100 in a cash account shows that:

  1. There was £100 cash in hand
  2. The total of cash received was less than £100
  3. £100 was the total of cash paid out
  4. Cash has been overspent by £100
Correct answer: (A)
There was £100 cash in hand
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