Question 1

At the end of the year,Terraplane company has inventory in hand at a selling price of £20,600.What was the cost of inventory assuming inventory is sold at a margin of 60%?
A) £12,875
B) £8,000
C) £8,240
D) £12,360

Accepted Answer

The selling price is £20,600, and the margin is 60%. This means the cost is 100% - 60% = 40% of the selling price. So, the cost is 40% of £20,600, which is £20,600 * 0.4 = £8,240.

Question 2

Debits are increases to liabilities and revenues

Accepted Answer

Debits are actually increases to assets and expenses, while credits are increases to liabilities and revenues. This is based on the fundamental accounting equation: Assets = Liabilities + Equity. When a business records a transaction, they must ensure that the equation stays in balance by using debits and credits correctly.

Question 3

At the beginning of the financial year,trade receivables are £4,560 and trade payables are £3,780.Cash received from receivables in the year are £38,240 and cash paid to payables are £18,040.Closing receivables are £2,268 and closing payables are £4,040.
What are the sales of the business in the year?
A) £40,508
B) £22,080
C) £35,948
D) £18,300

Accepted Answer

The sales for the year can be calculated using the formula:
Opening Receivables + Sales - Cash received = Closing Receivables
Therefore, Sales = Closing Receivables - Opening Receivables + Cash received
Sales = £2,268 - £4,560 + £38,240 = £35,948
Therefore, the correct choice is C.

Question 4

Debits are increases to assets and expenses

Accepted Answer

Debits represent increases to assets and expenses in accounting.

Question 5

Incomplete records can,with some additional information,be converted into an income statement and statement of financial position

Accepted Answer

With additional information such as bank statements, sales invoices, purchase receipts, and other documents, it is possible to reconstruct the missing data and create an accurate income statement and statement of financial position. However, it may not be possible to achieve complete accuracy without all of the original records.

Question 6

At the beginning of the financial year,trade receivables are £4,560 and trade payables are £3,780.Cash received from receivables in the year are £38,240 and cash paid to payables are £18,040.Closing receivables are £2,268 and closing payables are £4,040.
What are the purchases of the business in the year?
A) £40,508
B) £22,080
C) £35,948
D) £18,300

Accepted Answer

The answer of At the beginning of the financial year,trade...

Question 7

The assets and liabilities of Angus & Co.at 31st Dec were as follows:
$$\begin{array} { l c } 
\text { Inventory } & 110,950 \
\text { Trade receivables } & 12,600 \
\text { Trade payables } & 18,000 \
\text { Accruals } & 750 \
\text { Prepayments } & 850 \
\text { Bank balance } & £ 8,000
\end{array}$$
What is the capital at 31st December
A) £151,150
B) £151,250
C) £113,650
D) £113,450

Accepted Answer

To calculate the capital at 31st December, we need to find the net assets, which is the difference between total assets and total liabilities. Total assets = Inventory + Trade receivables + Prepayments + Bank balance = 110,950 + 12,600 + 850 + 8,000 = £132,400. Total liabilities = Trade payables + Accruals = 18,000 + 750 = £18,750. Net assets (Capital) = Total assets - Total liabilities = 132,400 - 18,750 = £113,650.

Question 8

Robert's bank statements show he had an opening bank balance of £13,000 and a closing bank balance of £16,000.Robert knows he paid £12,000 to suppliers and that he took drawings of £3,000.Calculate what Robert received from debtors.
A) £18,000
B) £8,000
C) £31,000
D) £13,000

Accepted Answer

Robert's net change in bank balance increased by £3,000 (£16,000 closing balance - £13,000 opening balance). To achieve this increase after paying £12,000 to suppliers and taking £3,000 in drawings, he must have received £18,000 from debtors.

Question 9

The opening capital of Overdrive Ltd at 1st January was £31,000.At 31st December the capital figure was £45,000.How much profit had been earned?
A) It is not possible to tell from the information provided
B) £14,000
C) (£14,000)
D) £45,000

Accepted Answer

The profit earned by Overdrive Ltd can be calculated as follows:
Profit = Final Capital - Initial Capital
Profit = £45,000 - £31,000
Profit = £14,000
Therefore, the correct answer is B) £14,000.

Question 10

At the beginning of the financial year,trade receivables are £6,000 and trade payables are £4,000.Cash received from receivables in the year are £40,000 and cash paid to payables are £20,000.Closing receivables are £3,000 and closing payables are £5,000.
What are the sales of the business in the year?
A) £43,000
B) £37,000
C) £25,000
D) £19,000

Accepted Answer

The answer of At the beginning of the financial year,trade...

Question 11

Bloom has sales of £12,000.The gross profit percentage is 25% of sales.If opening stock was £300 and closing stock £250,what were Bloom's purchases?
A) £3,000
B) £2,050
C) £4,050
D) £3,050

Accepted Answer

Gross profit is £3,000 (25% of £12,000 sales). Cost of goods sold is £9,000 (£12,000 - £3,000). Using the formula: Opening Stock + Purchases - Closing Stock = Cost of Goods Sold, we have £300 + Purchases - £250 = £9,000. Solving for Purchases gives £3,050.

Question 12

Not every debit has a credit

Accepted Answer

Every debit entry in an accounting system must have a corresponding credit entry for the transaction to be balanced. This is known as the double-entry accounting system. Therefore, every debit has a credit.

Question 13

At the end of the year,NewBiscuit company has inventory in hand at a selling price of £10,500.What was the cost of inventory assuming inventory is sold at a margin of 50%?
A) £5,250
B) £8,000
C) £3,000
D) £7,000

Accepted Answer

The cost of inventory is calculated by taking the selling price and dividing it by 1 plus the margin (in this case, 50% or 0.5). So, £10,500 / (1 + 0.5) = £7,000. However, the correct calculation to find the cost when given the selling price and margin percentage (50%) is to understand that the selling price represents 150% of the cost (100% cost + 50% margin). Therefore, the cost is £10,500 / 1.5 = £7,000, indicating a mistake in the initial explanation. The correct answer, based on the correct understanding of margin calculation, should be £7,000, not £5,250.

Question 14

The assets and liabilities of Bon & Co.at 31st Dec were as follows:
$$\begin{array} { l c } 
\text { Inventory } & 14,450 \
\text { Trade receivables } & 2,300 \
\text { Trade payables } & 3,000 \
\text { Accruals } & 200 \
\text { Prepayments } & 250 \
\text { Bank balance } & £ 1,250
\end{array}$$
What is the capital at 31st December?
A) £15,050
B) £18,250
C) £3,200
D) £14,450

Accepted Answer

Capital is calculated as Assets - Liabilities. Total assets are Inventory (£14,450) + Trade receivables (£2,300) + Prepayments (£250) + Bank balance (£1,250) = £18,250. Total liabilities are Trade payables (£3,000) + Accruals (£200) = £3,200. Therefore, Capital = £18,250 - £3,200 = £15,050.

Question 15

At the end of the year,Terraplane company has inventory in hand at a selling price of £20,600.What was the cost of inventory assuming inventory is marked up at 60%?
A) £12,875
B) £8,000
C) £8,240
D) £12,360

Accepted Answer

The cost of inventory can be calculated by dividing the selling price by 1 plus the markup percentage. £20,600 / 1.60 = £12,875.

Question 16

At the end of the year,NewBiscuit company has inventory in hand at a selling price of £10,500.What was the cost of inventory assuming inventory is marked up at 50%?
A) £5,250
B) £8,000
C) £3,000
D) £7,000

Accepted Answer

If the selling price of the inventory is £10,500 and it's marked up at 50%, then the cost of inventory would be 100% - 50% = 50% of the selling price.

Cost of inventory = 50% of £10,500 = £5,250

However, the inventory is already in hand and it's valued at the selling price of £10,500. This means that the inventory was sold at a markup of 100%, not 50%.

So, the original cost of the inventory would be half of the selling price, which is:

Original cost of inventory = £10,500 ÷ 2 = £5,250

Therefore, the correct answer is D) £7,000, which is not an option in the given choices.

Question 17

Tom's bank statements show he had an opening bank balance of £3,000 and a closing bank balance of £7,000.Tom knows he paid £5,000 to suppliers and that he took drawings of £1,200.Calculate what Tom received from debtors.
A) £13,200
B) £5,000
C) £9,800
D) £10,200

Accepted Answer

The answer of Tom's bank statements show he had an...

Question 18

Assets = Liabilities - Capital

Accepted Answer

This formula is incorrect. The correct formula is:
Assets = Liabilities + Capital

Question 19

It is essential that every business keeps a complete record of ALL transactions

Accepted Answer

The answer of It is essential that every business keeps...

Question 20

At the beginning of the financial year,trade receivables are £6,000 and trade payables are £4,000.Cash received from receivables in the year are £40,000 and cash paid to payables are £20,000.Closing receivables are £3,000 and closing payables are £5,000.
What are the purchases of the business in the year?
A) £43,000
B) £37,000
C) £25,000
D) £19,000

Accepted Answer

The answer of At the beginning of the financial year,trade...

Quiz 19: Incomplete Records

At the end of the year,Terraplane company has inventory in hand at a selling price of £20,600.What was the cost of inventory assuming inventory is sold at a margin of 60%?

Debits are increases to liabilities and revenues

Debits are increases to assets and expenses

Incomplete records can,with some additional information,be converted into an income statement and statement of financial position

Robert's bank statements show he had an opening bank balance of £13,000 and a closing bank balance of £16,000.Robert knows he paid £12,000 to suppliers and that he took drawings of £3,000.Calculate what Robert received from debtors.

The opening capital of Overdrive Ltd at 1st January was £31,000.At 31st December the capital figure was £45,000.How much profit had been earned?

Bloom has sales of £12,000.The gross profit percentage is 25% of sales.If opening stock was £300 and closing stock £250,what were Bloom's purchases?

Not every debit has a credit

At the end of the year,NewBiscuit company has inventory in hand at a selling price of £10,500.What was the cost of inventory assuming inventory is sold at a margin of 50%?

At the end of the year,Terraplane company has inventory in hand at a selling price of £20,600.What was the cost of inventory assuming inventory is marked up at 60%?

At the end of the year,NewBiscuit company has inventory in hand at a selling price of £10,500.What was the cost of inventory assuming inventory is marked up at 50%?

Tom's bank statements show he had an opening bank balance of £3,000 and a closing bank balance of £7,000.Tom knows he paid £5,000 to suppliers and that he took drawings of £1,200.Calculate what Tom received from debtors.

Assets = Liabilities - Capital

It is essential that every business keeps a complete record of ALL transactions