Accounting for Managers

391. Given opening capital of £16,500, closing capital as £11,350 and drawings were £3,300, then:

  1. Profit for the year was £8,450
  2. Loss for the year was £8,450
  3. Profit for the year was £1,850
  4. Loss for the year was £1,850
Correct answer: (D)
Loss for the year was £1,850

392. In the Manufacturing Account is calculated:

  1. The production costs paid in the year
  2. The total cost of goods produced
  3. The gross profit on goods sold
  4. The production cost of goods completed in the period
Correct answer: (D)
The production cost of goods completed in the period

393. Assets can be revalued in a partnership change because:

  1. The depreciation charged on them needs to be reversed
  2. It helps prevent injustice to some partners
  3. The law insists upon it
  4. Inflation affects all values
Correct answer: (B)
It helps prevent injustice to some partners

394. Is it true that the trial balance totals should agree?

  1. No, there are sometimes good reasons why they differ
  2. Yes, always
  3. Yes, except where the trial balance is extracted at the year end
  4. No, because it is not a balance sheet
Correct answer: (B)
Yes, always

395. Carriage inwards is charged to the trading account because:

  1. Carriage outwards goes in the profit and loss account
  2. It is an expense connected with buying goods
  3. It is not part of motor expenses
  4. It should not go in the balance sheet
Correct answer: (B)
It is an expense connected with buying goods

396. Suppliers' personal accounts are found in the:

  1. Sales ledger
  2. Nominal ledger
  3. Purchases ledger
  4. General ledger
Correct answer: (C)
Purchases ledger

397. £50 cash taken from the cash till and banked is entered:

  1. Debit cash column £50: Credit bank column £50
  2. Debit bank column £50: Credit bank column £50
  3. Debit bank column £50: Credit cash column £50
  4. Debit cash column £50: Credit cash column £50
Correct answer: (C)
Debit bank column £50: Credit cash column £50

398. The total of the 'Discounts Allowed' column in the Cash Book is posted to:

  1. The debit of the Discounts Received account
  2. The debit of the Discounts Allowed account
  3. The credit of the Discounts Allowed account
  4. The credit of the Discounts Received account
Correct answer: (B)
The debit of the Discounts Allowed account

399. The total of the Purchases Journal is transferred to the:

  1. Credit side of the Purchases Account
  2. Credit side of the Purchases Book
  3. Debit side of the Purchases Account
  4. Debit side of the Purchases Day Book
Correct answer: (C)
Debit side of the Purchases Account

400. A firm bought a machine for £16,000. It is expected to be used for 5 years then sold for £1,000. What is the annual amount of depreciation if the straight line method is used?

  1. £3,750
  2. £3,100
  3. £3,200
  4. £3,000
Correct answer: (D)
£3,000
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