Accounting for Managers

1. The credit entry for net profit is on the credit side of:

  1. The trading account
  2. The drawings account
  3. The capital account
  4. The profit and loss account
Correct answer: (C)
The capital account

2. When banking money in to your current account you should always use:

  1. A general ledger
  2. A cheque book
  3. A cash book
  4. A paying-in slip
Correct answer: (D)
A paying-in slip

3. The total of the Sales Journal is entered on:

  1. The debit side of the Sales Account in the General Ledger
  2. The credit side of the General Account in the Sales Ledger
  3. The credit side of the Sales Account in the General Ledger
  4. The debit side of the Sales Day Book
Correct answer: (C)
The credit side of the Sales Account in the General Ledger

4. Depreciation is:

  1. The salvage value of a fixed asset
  2. The amount of money spent in replacing assets
  3. The part of the cost of the fixed asset consumed during its period of use by the firm
  4. The amount spent to buy a fixed asset
Correct answer: (C)
The part of the cost of the fixed asset consumed during its period of use by the firm

5. When the final accounts are prepared, the Bad Debts Account is closed by a transfer to the:

  1. Trading Account
  2. Provision for Doubtful Debts Account
  3. Balance Sheet
  4. Profit and Loss Account
Correct answer: (D)
Profit and Loss Account

6. Capital Expenditure is:

  1. The costs of running the business on a day-to-day basis
  2. Money spent on buying fixed assets or adding value to them
  3. Money spent on selling fixed assets
  4. The extra capital paid in by the proprietor
Correct answer: (B)
Money spent on buying fixed assets or adding value to them

7. A Bank Reconciliation Statement is a statement:

  1. Sent by the bank when we have made an error
  2. Drawn up by the bank to verify the cash book
  3. Sent by the bank when the account is overdrawn
  4. Drawn up by us to verify our cash book balance with the bank statement balance
Correct answer: (D)
Drawn up by us to verify our cash book balance with the bank statement balance

8. When a petty cash book is kept there will be:

  1. No entries made at all in the general ledger for items paid by petty cash
  2. The same number of entries in the general ledger
  3. Fewer entries made in the general ledger
  4. More entries made in the general ledger
Correct answer: (C)
Fewer entries made in the general ledger

9. If a trial balance totals do not agree, the difference must be entered in:

  1. The Profit and Loss Account
  2. A Nominal Account
  3. The Capital Account
  4. A Suspense Account
Correct answer: (D)
A Suspense Account

10. Given cost of goods sold £16,000 and margin of 20 per cent, then sales figure is:

  1. £21,000
  2. £20,000
  3. £13,600
  4. £20,160
Correct answer: (B)
£20,000
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