Oct/Nov 2025

Which of the following is not an example of a book-keeping entry?

Books of prime entry

Susanne works as a trader. She got a cheque for $300 from Zahir, who is a credit customer. However, this cheque was posted in error by debiting Zahir’s account and crediting the bank account. Which journal entry would put this error right?

Correction of errors

When a trial balance fails to balance, a suspense account is created. Which statement is incorrect?

Correction of errors

Once Lyn had obtained her bank statement, she brought her cash book up to date. Which of these entries would decrease the overdrawn balance shown in the cash book? 1. interest received from the bank 2. a credit transfer received 3. a direct debit payment

Bank reconciliation

Natalie is a customer of Gustav as well as one of Gustav’s suppliers. On 28 June, the balance on Gustav’s account in Natalie’s purchases ledger was a credit $295, while the balance on his account in Natalie’s sales ledger was a debit $140. Gustav wants to set one amount off against the other. Which entries should Gustav post in his control accounts?

Control accounts

Johnny drew up his sales ledger control account. The entries in it were taken from several different sources. Which statements are correct?

Control accounts

At the start of the year, on 1 January, Zac spent $420 on repairing equipment. He recorded this figure in the equipment account. By the close of the year, on 31 December, depreciation at 20% per annum was applied to the balance in the equipment account, using the straight-line method. What was the total impact on the carrying value of the equipment on 31 December?

Accounting for depreciation and disposal of non-current assets

Why must a business account for depreciation in its accounting records?

Accounting for depreciation and disposal of non-current assets

An asset that had an original cost of $20000 had accumulated depreciation of $15000 when it was sold for $3000. Which entry would appear in the disposal account to show the amount transferred to the income statement?

Accounting for depreciation and disposal of non-current assets

For what reason ought prepaid income to appear in a business’s financial statements?

Other payables and other receivables

What effect would overstating the value of closing inventory have on total assets and equity in the statement of financial position?

Valuation of inventory

What do liabilities mean?

Sole traders

Who is employed in a service business? 1. a hairdresser 2. an estate agent 3. a car mechanic 4. a car salesperson

Sole traders

At the start of the year on 1 January, clients owed Keith $1500 commission. Throughout the year, Keith collected $18000 commission. At the close of the year on 31 December, clients owed Keith $800 commission. How much commission should Keith show in his income statement for the year ended 31 December?

Other payables and other receivables

Jack and Gill are starting a business together as partners and are thinking about putting a partnership agreement in writing. What would not be included in any partnership agreement prepared by them?

Partnerships

Raj and Rohit are partners and share profits and losses in the ratio of 2:1. Raj receives an annual salary of $3000. For the year ended 31 December 2024, the profit was $14100. At 1 January 2024, Raj’s current account showed a debit balance of $1800. What was the credit balance on Raj’s current account on 1 January 2025?

Partnerships

BCD Limited gave the following figures. ordinary shares: $300\,000$, retained earnings: $200\,000$, debentures: $170\,000$. What were the equity and the capital employed of BCD Limited?

Limited companies

Which statement gives the correct description of called-up share capital?

Limited companies

A sports club was set up on 1 January. It has a clubhouse and also operates a snack bar for its members. Which items should be entered in the receipts and payments account for the first year ended 31 December? 1. new furniture for use in the clubhouse, paid by credit transfer 2. subscriptions received from club members in advance for the next financial year 3. subscriptions due from club members at the close of the financial year 4. snack bar wages due at the close of the financial year

Clubs and societies

A sports club began operating a café, selling hot and cold drinks and confectionery, on 1 January 2024. The following figures are provided for the year ended 31 December 2024: sales $3200$, purchases $1750$, wages paid to the café assistant $500$, inventory at 31 December 2024 $250$. Calculate the profit on the café for the year ended 31 December 2024?

Clubs and societies

A manufacturing business supplied the following figures. prime cost: $236\,000$, factory overheads: $42\,000$, opening work in progress: $8\,000$, closing work in progress: $6\,000$. What amount of factory cost of production was transferred to the income statement?

Manufacturing accounts

Gem has operated the business for many years. On 1 March, Gem bought a new factory. On that date, he paid $900$ for three months’ insurance on the factory. What amount should Gem record for insurance in his statement of financial position at 31 March?

Other payables and other receivables

Sally keeps a complete set of accounting records. She has recorded the following transactions in her cash book. 1. A cheque for $200 was received from a credit customer. 2. An insurance premium of $200 was paid by cheque. 3. Petrol for the delivery van was paid for in cash. 4. Total cash sales of $400 were received. Which of these transactions will then be posted to the nominal ledger?

Books of prime entry

Munira has not kept a complete set of accounting records. How could she work out her credit purchases figure for one month?

Incomplete records

Across a one-year period, a business’s assets rose by $22\,000$ while its liabilities fell by $6000$. In that same period, the owner added a further $4000$ of private funds to the business and removed $7000$ for personal use. What was the profit for the year?

Sole traders

Jonny gave the following details. inventory: $3500$, cash: $100$, bank overdraft: $1900$, trade receivables: $2400$, trade payables: $2100$. What was Jonny’s current ratio?

Calculation and understanding of accounting ratios

Jose runs a business offering accounting and book-keeping services. What is not relevant when examining his business financial statements?

Limitations of accounting statements

Jamila’s business sells only one product type. The information below was given. Year 1: units sold $1000$, sales revenue $8000$, inventory turnover rate $28$ days. Year 2: units sold $1000$, sales revenue $10\,800$, inventory turnover rate $31$ days. What changed in year 2?

Calculation and understanding of accounting ratios

Antionette chooses to record a calculator purchased for her large business as an expense rather than as a non-current asset, even though it is expected to be used for several years. Which principle did Antionette use when deciding to account for the calculator as an expense?

Accounting principles

An account in the purchases ledger of X Limited shows a debit balance. What is this balance indicating?

Control accounts

The account shown below was recorded in the books of Mary. Paul account: Debit side: April 1 balance b/d $90; April 14 sales $150; total $240. Credit side: April 21 returns $25; April 30 bank $88; discount $2; balance c/d $125; total $240. Which statement is correct?

Control accounts

A supplier has been sent a debit note by a customer. What is the supplier's use for this debit note?

Business documents

Sue offers a 2% cash discount to credit customers who pay their account within 28 days. Jane bought goods worth $200 from Sue on 10 September, but she returned them to Sue on 15 September. Which entry did Sue record for the transaction on 15 September?

Business documents

A trader drew up their trial balance, and the debit column total was $45000 while the credit column total came to $40000. The errors below were later found. 1. The balance on the discount received account of $500 had been entered in the debit column of the trial balance. 2. The balance on the returns outwards account of $250 had not been included in the trial balance. 3. The debit column of the trial balance had been overcast by $3750. After all the errors were corrected, the trial balance totals matched. What were the trial balance totals after the correction of errors?

Correction of errors

Ahmed’s trial balance totals were not in agreement. He put the difference into a suspense account. The following mistakes were found later. 1. A payment of $200 for a vehicle repair had been entered in the motor vehicles account on the debit side. 2. Drawings of $150, which had been entered correctly in the cash book, had not been transferred to the drawings account. 3. The sales journal had been undercast by $900. What was the original balance on Ahmed’s suspense account?

Correction of errors

What is one reason for calculating the profit of a sole trader?

Sole traders

Kate’s draft profit for the year came to $9800. She later found these errors. 1. Sales worth $120 had been entered as commission income. 2. A computer repair costing $95 had been entered as computer equipment. What is Kate’s revised profit for the year after the errors are corrected (ignore depreciation)?

Correction of errors

Which document is sent out at set intervals to record the transactions carried out between a business and its bank?

Bank reconciliation

A standing order used to pay rent has not been recorded in the accounting records of a business. Which of the following statements is correct?

Bank reconciliation

Which group of prime entry books can be used to provide information for preparing a sales ledger control account?

Control accounts

What items are contained in a purchases ledger control account?

Control accounts

An owner purchased machinery for her business at a cost of $5000. In the accounting records, this was recorded as revenue expenditure. She also put an extra $2000 of capital into the business and recorded this as a revenue receipt in the accounting records. What was the net effect of these errors on her profit for the year (ignore depreciation)?

Correction of errors

On 1 January 2022, T Limited purchased a motor vehicle for $30000. Depreciation was charged at 30% per annum by the reducing balance method. T Limited's financial year ends on 31 December. What is the net book value of the motor vehicle at 31 December 2024?

Accounting for depreciation and disposal of non-current assets

Susan operates as a trader. Her financial year ends on 5 April. On 6 April 2023, she purchased a motor vehicle for $10000. Depreciation was provided at 25% using the straight-line basis, and it was sold on 15 May 2025 for $3000. No depreciation was charged during the year of disposal. What was the profit or loss on disposal?

Accounting for depreciation and disposal of non-current assets

At the beginning of his first year of trading, Jimmy paid $9600 for insurance covering 20 months. What would the balance carried down look like in his insurance ledger account at the end of the first year of trading?

Other payables and other receivables

Which statement correctly describes a provision for doubtful debts?

Irrecoverable debts and provision for doubtful debts

What causes the owner’s capital to rise?

Sole traders

A company gave the information below about its closing inventory. cost price: $35 per unit (this includes carriage inwards of $2 per unit) net realisable value: $48 per unit Which unit value should the company choose when valuing its closing inventory?

Valuation of inventory

Tim wanted to start a new business. Why did he choose to operate as a sole trader instead of forming a limited company?

Sole traders

Why does it matter for a sole trader to draw up a statement of financial position for the business?

Sole traders

X and Y have formed a partnership, with profits shared in the ratio $2:1$. The trading profit in the first year was $33000$. X is allowed interest on capital of $2000$, and Y is paid a partner’s salary of $4000$. Interest charged on drawings is $200$ for X and $100$ for Y. Determine X’s share of the residual profit for the year.

Partnerships

What is the correct sequence for preparing accounts for a partnership?

Partnerships

A limited company obtained funds by issuing debentures. Which statement is right?

Limited companies

What item is excluded from a statement of changes in equity of a limited company for the year ended 31 March 2025?

Limited companies

For a club, the income and expenditure during the year were as follows: [table of income and expenditure shown]. What does the $170 figure show?

Clubs and societies

These figures refer to a manufacturing business for the year ended 30 September 2025: [table shown with prime cost $355000, factory overheads $114850, total production cost of finished goods $475000, inventory of raw materials at 30 September 2025 $4200, inventory of finished products at 30 September 2025 $1100]. Work in progress at 30 September 2024 stood at $9990. What was the business's total inventory at 30 September 2025?

Manufacturing accounts

A manufacturing account and income statement are being drawn up for a business that produces chairs and desks for schools. The business pays wages to these workers: 1. the carpenters who manufacture the chairs and desks 2. the cleaner who tidies the offices used by the accounts and sales staff 3. the lorry driver who transports the completed chairs and desks to schools 4. the supervisor responsible for the carpenters. Which wages will be recorded as an expense in the income statement?

Manufacturing accounts

Accounting data goes through several stages when the double entry system is used. Which stage verifies the arithmetical accuracy of the double entry?

The trial balance

A business keeping incomplete records supplied figures from its statement of affairs. Over the year, the owner added $6000 from his personal funds and took $3250 of the year’s profit for private use. [Table shown: opening statement of affairs - assets $40000, liabilities $15000; closing statement of affairs - assets $52000, liabilities $8000.] What was the profit for the year?

Incomplete records

Joseph does not keep a complete set of accounting records. He can provide the amount owed by his trade receivables at the beginning of the accounting year. What other figure is needed to work out Joseph’s credit sales for the year?

Incomplete records

Senga is worried that her business’s current ratio is deteriorating year by year. She has put forward the measures below. Which two measures would improve the current ratio of the business?

Calculation and understanding of accounting ratios

Ali owns a clothing shop and is comparing his accounting ratios with those of Hajar, who runs a comparable clothing shop. The information below is given. [Table provided: gross margin - Ali 45%, Hajar 20%; rate of inventory turnover - Ali 15 times, Hajar 20 times.] Which explanation fits these accounting ratios?

Inter-firm comparison

Which action shows the materiality principle being applied?

Accounting principles

Which factor concerning the quality of financial information means that such information is free from significant errors and bias?

Accounting principles

Ann trades as a trader. On 1 April, the account for Cindy in Ann’s ledger was showing a credit balance of $520. The following transactions occurred in April. April 2: Ann sent back goods worth $30 to Cindy. April 14: Ann purchased goods worth $210 from Cindy and settled the amount in cash. Which statement about the balance of Cindy’s account in Ann’s ledger on 30 April is correct?

The trial balance

Hasina purchases radios from Nazneen at a catalogue price of $10 per radio. In this month, Hasina ordered 12 radios and received a 20% trade discount together with a 4% cash discount. Two radios were defective and sent back to Nazneen. What was the total amount on the credit note issued by Nazneen?

Business documents

On 1 March, the bank column in a cash book showed a credit balance of $290. In March, cheques with a total value of $580 were received and cheques amounting to $610 were issued to suppliers. Bank charges of $12, which had been incurred in February, were also recorded in the cash book. What was the balance in the bank column of the cash book on 1 April?

Bank reconciliation

Which statement is accurate?

Accounting principles

The totals shown in a trial balance do not match because the debit total is higher than the credit total. Which error would need to be corrected in order for the trial balance to balance?

The trial balance

A trial balance failed to agree, so a suspense account was opened. Once the errors below had been corrected, the suspense account balanced and was closed. 1. The total of the discount allowed column in the cash book for November of $250 had been credited to the discount received account. 2. Cash sales of $50 had been entered correctly in the cash book, but they had not been posted to the sales account. What amount of difference was first recorded in the suspense account?

Correction of errors

On 31 March 2025, Zac’s bank statement showed an overdraft of $1665$, whereas the bank column in his cash book displayed a debit balance of $825$ on that same date. After checking, he found that the following items were listed on his bank statement but had not been entered in his cash book. The following items were entered in his cash book but were absent from his bank statement.

Bank reconciliation

Jaya is a trader. Her financial year finishes on 31 July. The totals shown in her trial balance at 31 July 2025 did not match. Jaya later found the following five errors:

Correction of errors

Ahmed runs a vehicle breakdown recovery business. He owns one recovery vehicle and has given the following details about it: Date of purchase: 1 October 2021 Purchase price: $80000 paid by bank transfer Estimated residual value: $30000 Estimated working life: 5 years Ahmed gives a full year’s depreciation in the year the vehicle is bought but records no depreciation in the year it is sold. His vehicles are depreciated by the reducing balance method at 20% per annum. The recovery vehicle is now 4 years old and is no longer dependable. Ahmed thought about replacing it on 31 August 2025. Ahmed’s financial year ends on 30 April.

Accounting for depreciation and disposal of non-current assets

AY Limited has supplied the performance data shown below for its last two years of trading. Every sale and purchase is made on credit and each carries a 30-day credit period.

Irrecoverable debts and provision for doubtful debts

GH Company makes car parts and has supplied the information below for the year ended 31 March 2025.

Manufacturing accounts

Sid runs a car-selling business. He uses a petty cash system and keeps the float at $350. On the first day of every month, the float is topped up from the business bank account. Sid has supplied the information below:

Books of prime entry

Jenny keeps a complete set of accounting records and produces control accounts at each month end. She has supplied the following details:

Control accounts

Rushil is a trader and has presented his statement of financial position at 30 September 2025. Rushil has also supplied the following additional information: 1 Inventory at 1 October 2024 stood at $30000. 2 The profit for the year in his statement of financial position was calculated after loan interest charges of $2450 had been deducted. 3 For the year ended 30 September 2025: • sales came to $482000 ($387000 were on credit; the rest were cash sales) • purchases came to $310000 (all on credit).

Calculation and understanding of accounting ratios

Talula runs a hairdressing salon. She also lets out part of her property to Sheila, who provides a range of beauty treatments. Talula supplied the information below for the year ended 30 September 2025.

Partnerships

P Limited is a retail business with a financial year ending on 30 June. Its accounts department is examining some recent capital and revenue expenditure and receipts.

Capital and revenue expenditure and receipts