Accounting for Managers

371. In the business of C Songster, who owns a clothing store, which of the following is Capital Expenditure?

  1. Shop fixtures bought
  2. Wages of assistants
  3. New van bought
  4. Petrol for van
  1. (ii) and (iv)
  2. (i) and (iii)
  3. (i) and (ii)
  4. (ii) and (iii)
Correct answer: (B)
(i) and (iii)

372. Which of the following should be entered in the Journal?

  1. Payment for cash purchases
  2. Fixtures bought on credit
  3. Credit sale of goods
  4. Sale of surplus machinery.
  1. and (iv)
  2. and (iv)
  3. and (iv)
  4. and (iii)
Correct answer: (B)
(ii) and (iv)

373. Which of the following are not errors of principle?

  1. Motor expenses entered in Motor Vehicles account
  2. Purchases of machinery entered in Purchases account
  3. Sale of £250 to C Phillips completely omitted from books
  4. Sale to A Henriques entered in A Henry's account.
  1. (iii) and (iv)
  2. (ii) and (iii)
  3. (i) and (ii)
  4. (i) and (iv)
Correct answer: (A)
(iii) and (iv)

374. Given opening debtors of £11,500, Sales £48,000 and receipts from debtors £45,000, the closing debtors should total:

  1. £14,500
  2. £83,500
  3. £18,500
  4. £8,500
Correct answer: (A)
£14,500

375. If creditors at 1 January 20X3 were £2,500, creditors at 31 December 20X3 £4,200 and payments to creditors £32,000, then purchases for 20X3 are:

  1. £31,600
  2. £38,700
  3. £33,700
  4. £30,300
Correct answer: (C)
£33,700

376. The best method of departmental accounts is:

  1. To allocate expenses in proportion to purchases
  2. To allocate expenses in proportion to sales
  3. To charge against each department its uncontrollable costs
  4. To charge against each department its controllable costs
Correct answer: (D)
To charge against each department its controllable costs

377. Any loss on revaluation is:

  1. Debited to old partners in old profit-sharing ratios
  2. Credited to old partners in old profit-sharing ratios
  3. Credited to new partners in new profit-sharing ratios
  4. Debited to new partners in new profit-sharing ratios
Correct answer: (A)
Debited to old partners in old profit-sharing ratios

378. The Issued Capital of a company is:

  1. Always the same as the Authorized Capital
  2. The same as Preference Share Capital
  3. Equal to the reserves of the company
  4. None of the above
Correct answer: (D)
None of the above

379. Which of the following is correct?

  1. Profit reduces capital
  2. Profit increases capital
  3. Capital can only come from profit
  4. Profit does not alter capital
Correct answer: (B)
Profit increases capital

380. Gross profit is:

  1. Cost of goods sold + Opening stock
  2. Excess of sales over cost of goods sold
  3. Sales less Purchases
  4. Net profit less expenses of the period.
Correct answer: (B)
Excess of sales over cost of goods sold
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