Objective assessment no 2

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Accounting

Objective assessment no 2

by Ken Delaney-Moore, Sheffield Hallam University

This assessment covers the material of the following worksheets in the 'accounting principles' module:

If you are unsure about attempting the assessment, it may be advisable to have a look at the work-sheets first. When you are done, please fill-in the on-line evaluation form in order for us to monitor the quality of the materials we provide for you. Tell us what we're doing right and wrong. It takes very little time, and your opinions are valued - thank you. The assessment starts here. No-one except you will see your score; Biz/ed does not keep a record.

Note that in some of these questions there is only one correct answer, but for other questions there may be more than one answer. You will be told this information in advance, so read carefully:

For questions 1 to 10 there is only ONE correct answer. Each correct answer is worth two marks.

For questions 1 and 2 you need to refer to the following debtors' account:

K.Cobain

Date	Debits	£	Date	Credits	£
01.05.00	Sales	215	16.05.00	Cash	300
14.05.00	Sales	240	26.05.00	Returns in	50
30.05.00	Sales	180

Q3. Which of the following BEST describes a Trial Balance? (Select one answer) (a) It is a special type of account (b) It shows the double-entries made (c) It is a list of balances in the books (d) It shows the financial position of a business

Q5. Should the trial balance totals always agree? (Select one answer) (a) No. It is not a balance sheet, so the totals don't need to agree (b) Yes, except when the dual aspect concept doesn't apply (c) No. There are sometimes good reasons why they differ (d) Yes, as long as 'postings' are made.

For questions 6 to 10 refer to the account below, which appeared in the books of P.Prentiss;

Electricity

Date	Debits	£	Date	Credits	£
01.06.00	balance b/d	205
01.07.00	Bank	250
01.10.00	Bank	250
01.01.01	Bank	250	31.05.01	balance c/d	955
		955			955
31.05.01	balance b/d	955	31.05.01	To profit and loss	1018
31.05.01	balance c/d	63			____
		1018			1018
			01.06.01	balance b/d	63

Q7. At the beginning of the financial year 00-01, P Prentiss: (Select one answer) (a) Owes £205 to the Electricity supplier (b) Has received a refund of £205 from the electricity supplier (c) Has paid £205 in advance of his electricity bills (d) Has just paid a cheque for £205

The electricity account of P.Prentiss has been reproduced for your convenience:
Electricity

Date	Debits	£	Date	Credits	£
01.06.00	balance b/d	205
01.07.00	Bank	250
01.10.00	Bank	250
01.01.01	Bank	250	31.05.01	balance c/d	955
		955			955
31.05.01	balance b/d	955	31.05.01	To profit and loss	1018
31.05.01	balance c/d	63			____
		1018			1018
			01.06.01	balance b/d	63

Q10. Notice that Prentiss paid an amount DIFFERENT to that charged to the profit and loss account. This is because of WHICH concept? (Select one answer) (a) Realisation (b) Accruals (c) Cost (d) Money measurement

For the last five questions there may be more than one correct answer. Each question carries a total of four marks.

Q11. Accounts are balanced - off: (Select one or more answers) (a) At the end of the accounting period (b) Whenever the business requires them to be balanced-off (c) At the end of every month (d) When the balance exceeds a pre-determined amount

Q12. After drawing-up the profit and loss account for the year, a debit balance of £47 on a rent account would be included: (Select one or more answers) (a) In the balance sheet as a current asset (b) In the balance sheet as a current liability (c) As part of the expenses on this years profit and loss account (d) As part of the expenses on next years profit and loss account.

Q13. Which of the following accounts normally have a debit balance? (Select one or more answers) (a) Returns In (sales returns) (b) Returns Out (purchases returns) (c) Carriage In (d) Carriage Out

Q14. A clothes retailer buys twenty shirts at £15 each. She intends to sell them for £25 each. She receives an order for ten shirts from a bar owner wanting them for staff uniforms. Before she can make delivery the year - end falls and she decides on the following: - To include the order in the sales figure when calculating the profit. - To include the remaining stock in the balance sheet at a value of £25 each.Which of the following concepts have been breached? (Select one or more answers) (a) Consistency (b) Realisation (c) Money measurement (d) Cost

Q15. The Managing Director of a software company has decided NOT to include the cost of an advertising campaign (earlier in the year) in this years' profit and loss account because she feels that the shareholders need encouraging news on profitability. She argues that the benefits may be long-term, so why not put the cost in next years' accounts? Which concept(s) would be breached if she were allowed to go ahead with this? (Select one or more answers) (a) Prudence (b) Accruals (c) Going concern (d) Cost

Now please fill-in the on-line evaluation form in order for us to monitor the quality of the materials we provide for you. Tell us what we're doing right and wrong. It takes very little time, and your opinions are valued - thank you.

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