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Cameroon GCE O-Level Accounting study materials
Cameroon GCE O-Level Accounting study resources

Cameroon GCE O-Level Accounting practice questions

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Question 1Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

A trader records a delivery van bought for business use as a personal asset and keeps it out of the business books. Which accounting concept is being applied?

  1. Business entity concept Correct answer.
  2. Accrual concept
  3. Prudence concept
  4. Going concern concept

Explanation

The business entity concept treats the business as separate from its owner, so owner's private items and business items are recorded separately. Keeping the van out of the books because it is seen as personal reflects that separation. Going concern, accrual and prudence deal with continuity, timing of income and caution, not with separating owner and business.

Question 2Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

Which group of users is most interested in the financial statements of a company to decide whether to lend money and whether interest will be paid on time?

  1. Employees
  2. Lenders such as banks Correct answer.
  3. Government tax authorities
  4. Customers

Explanation

Lenders assess profitability, cash flow and existing debts before granting credit and while monitoring repayment. Employees focus on job security and wages, tax authorities on tax liability, and customers on continuity of supply. The need to judge repayment capacity points specifically to lenders.

Question 3Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

A business has assets of 4,500,000 FCFA and liabilities of 1,800,000 FCFA. What is the owner's capital?

  1. 2,700,000 FCFA Correct answer.
  2. 1,800,000 FCFA
  3. 4,500,000 FCFA
  4. 6,300,000 FCFA

Explanation

The accounting equation states that assets equal capital plus liabilities, so capital equals assets minus liabilities. Subtracting 1,800,000 from 4,500,000 gives 2,700,000 FCFA. Adding the two figures or quoting one of them alone does not satisfy the equation.

Question 4Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

Which statement best describes the main purpose of financial accounting?

  1. To calculate the selling price of each product for the sales manager
  2. To record, classify and summarise transactions and report results to interested parties Correct answer.
  3. To keep a daily list of customers' telephone numbers
  4. To design advertisements for the business

Explanation

Financial accounting records transactions, classifies and summarises them, and communicates the results through statements for owners, lenders, tax authorities and others. Pricing, contact lists and advertising are managerial or administrative tasks outside its purpose. The reporting function is what distinguishes accounting from mere record keeping.

Question 5Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

A trader pays 250,000 FCFA cash for a second-hand delivery motorcycle for business use. What is the effect on the accounting equation?

  1. Assets decrease and liabilities increase by 250,000 FCFA
  2. One asset increases and another asset decreases, so total assets are unchanged Correct answer.
  3. Assets increase and capital increases by 250,000 FCFA
  4. Capital decreases and liabilities decrease by 250,000 FCFA

Explanation

Cash is an asset and the motorcycle is also an asset, so the transaction merely changes the form in which assets are held. Total assets, total liabilities and capital all remain the same. Only a transaction involving the owner or a third party changes capital or liabilities.

Question 6Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

Which pair of accounts is increased by a credit entry?

  1. Assets and drawings
  2. Liabilities and capital Correct answer.
  3. Expenses and drawings
  4. Assets and expenses

Explanation

Under double entry, liabilities, capital and income are credited when they increase, while assets and expenses are debited when they increase. Drawings reduce capital and are therefore debited. Only the pairing of liabilities with capital fits the credit rule.

Question 7Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

A business receives a 600,000 FCFA bank loan. Which entry correctly records the transaction?

  1. Debit bank account, credit capital account
  2. Debit bank account, credit loan account Correct answer.
  3. Debit capital account, credit bank account
  4. Debit loan account, credit bank account

Explanation

The bank balance, an asset, increases and is therefore debited; the loan, a liability, increases and is therefore credited. Capital is not affected because the owner has introduced nothing. Reversing the entries would show a fall in the bank and a reduction of the liability.

Question 8Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

A firm pays 90,000 FCFA in December for electricity used in November. Under the accrual concept, in which period should the expense be recognised?

  1. Split equally between November and December
  2. December, the period in which the cash was paid
  3. January, the period following payment
  4. November, the period in which the electricity was consumed Correct answer.

Explanation

The accrual concept matches expenses with the period that benefited from them, not the period of payment. The electricity was consumed in November, so it belongs to November and is an accrued expense at the end of that month. The December payment simply settles the liability.

Question 9Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

A trader's assets total 3,200,000 FCFA and capital is 1,950,000 FCFA. What are the liabilities?

  1. 1,250,000 FCFA Correct answer.
  2. 5,150,000 FCFA
  3. 1,950,000 FCFA
  4. 3,200,000 FCFA

Explanation

Rearranging the accounting equation gives liabilities equal to assets minus capital. Subtracting 1,950,000 from 3,200,000 gives 1,250,000 FCFA. Adding the two figures would overstate liabilities and confuse the equation.

Question 10Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

Which item would a bank most likely examine first when assessing whether a small business can repay a short-term loan?

  1. The statement of cash flows and current assets compared with current liabilities Correct answer.
  2. The list of the business's suppliers' telephone numbers
  3. The number of years the business has advertised
  4. The owner's personal household budget

Explanation

Repayment capacity depends on available cash and on short-term assets relative to short-term obligations. The statement of cash flows and the relationship between current assets and current liabilities directly address this. Personal budgets, advertising history and contact lists do not measure the business's ability to meet its debts.

Question 11Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

A trader includes the private electricity bill of the owner's home in the business expense account. Which concept has been violated?

  1. Dual aspect concept
  2. Consistency concept
  3. Realisation concept
  4. Business entity concept Correct answer.

Explanation

The business entity concept requires that only transactions of the business be recorded in its books. The owner's household bill is a private matter and should be treated as drawings. Consistency concerns applying the same methods over time, realisation concerns when revenue is recognised, and dual aspect concerns the two-sided effect of each transaction.

Question 12Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

Why is the going concern assumption important when preparing financial statements?

  1. It justifies carrying assets at cost rather than at forced-sale values Correct answer.
  2. It requires all assets to be valued at their current market price
  3. It means the business never needs to prepare a statement of financial position
  4. It allows the owner's private debts to be included in the business books

Explanation

If a business is expected to continue operating, assets are shown at cost less depreciation rather than at the low values they would fetch on a forced sale. Market revaluation is not required by the assumption, private debts remain outside the entity, and statements are still prepared. The assumption therefore supports normal cost-based valuation.

Question 13Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

A business buys office equipment for 800,000 FCFA on credit from a supplier. What is the immediate effect on the accounting equation?

  1. Assets increase by 800,000 FCFA and liabilities increase by 800,000 FCFA Correct answer.
  2. Assets decrease by 800,000 FCFA and liabilities decrease by 800,000 FCFA
  3. Capital decreases by 800,000 FCFA and liabilities increase by 800,000 FCFA
  4. Assets increase by 800,000 FCFA and capital increases by 800,000 FCFA

Explanation

Office equipment is an asset that rises by 800,000 FCFA, while the amount owed to the supplier is a liability that rises by the same amount. Capital is untouched because the owner has contributed nothing and no profit has arisen. The equation stays balanced because both sides grow equally.

Question 14Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

Which of the following best explains why the same accounting information may be presented differently to two different user groups?

  1. Only owners are legally entitled to any accounting information
  2. Accounting rules require every user to receive identical reports
  3. Financial statements are prepared solely to calculate tax
  4. Different users need different levels of detail and focus for their decisions Correct answer.

Explanation

Users have different decisions to make: managers need detailed internal reports, lenders need cash flow and gearing data, and tax authorities need profit figures. Accounting information is therefore summarised and presented to suit the purpose. Identical reports for all users and an owner-only rule do not reflect this.

Question 15Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

A business reports a profit of 750,000 FCFA for the year, but the owner withdrew 200,000 FCFA in cash during the year. Opening capital was 1,400,000 FCFA. What is the closing capital?

  1. 1,950,000 FCFA Correct answer.
  2. 1,600,000 FCFA
  3. 1,150,000 FCFA
  4. 2,350,000 FCFA

Explanation

Closing capital equals opening capital plus profit less drawings. Adding 750,000 to 1,400,000 and then deducting 200,000 gives 1,950,000 FCFA. Adding drawings instead of deducting them, or ignoring profit, produces the other figures.

Question 16Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

A firm records its stock at the lower of cost and net realisable value. Which accounting convention does this illustrate?

  1. Business entity
  2. Consistency
  3. Prudence Correct answer.
  4. Materiality

Explanation

Prudence requires that losses be anticipated but gains not be recognised until realised, which is why stock is reduced when its realisable value falls below cost. Materiality concerns the significance of amounts, consistency concerns uniform methods, and business entity concerns separation from the owner. The lower-of-cost rule is a direct application of prudence.

Question 17Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

A trader uses the straight-line method of depreciation for one year and then switches to the reducing-balance method without explanation. Which accounting concept is most directly breached?

  1. Going concern
  2. Prudence
  3. Realisation
  4. Consistency Correct answer.

Explanation

The consistency concept requires that the same accounting methods be applied from one period to the next so that results remain comparable. An unexplained change in depreciation method breaks that comparability. Prudence, going concern and realisation do not require a stable choice of depreciation method.

Question 18Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

A business has capital of 2,000,000 FCFA and liabilities of 500,000 FCFA. It then earns revenue of 900,000 FCFA in cash and incurs expenses of 400,000 FCFA paid in cash. What are total assets after these transactions?

  1. 2,900,000 FCFA
  2. 2,100,000 FCFA
  3. 3,000,000 FCFA Correct answer.
  4. 2,500,000 FCFA

Explanation

Profit of 500,000 FCFA increases capital to 2,500,000 FCFA, and liabilities remain 500,000 FCFA, so assets equal 3,000,000 FCFA. Checking directly: assets began at 2,500,000 FCFA, cash rose by 900,000 and fell by 400,000, giving 3,000,000 FCFA. Both routes confirm the same total.

Question 19Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

A sale is made on credit in March, but the customer pays in May. Under the realisation concept, in which period is the revenue recognised?

  1. When the customer places the next order
  2. Split between March and May
  3. March, when the sale was made and the customer became liable Correct answer.
  4. May, when the cash was actually received

Explanation

Realisation recognises revenue when the sale is completed and a legal claim arises, not when cash is collected. The March sale therefore belongs to March, with the unpaid amount shown as a receivable. Recording it in May would be the cash basis and would misstate both periods.

Question 20Introduction to Accounting: nature, purpose, users of accounting information, accounting concepts and conventions, the accounting equation

A trader keeps no records of a small stapler bought for 1,500 FCFA, although it will last several years. Which convention best justifies this treatment?

  1. Dual aspect
  2. Prudence
  3. Consistency
  4. Materiality Correct answer.

Explanation

Materiality allows items of insignificant value to be treated as expenses rather than capitalised, because recording them would not affect users' decisions. The stapler is too small in value to warrant depreciation over its life. Prudence, consistency and dual aspect do not provide this value-based justification.

Question 21Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

A business receives a credit note from a supplier for goods returned. In which book of original entry is this transaction first recorded?

  1. Sales returns day book
  2. General journal
  3. Purchases day book
  4. Purchases returns day book Correct answer.

Explanation

A credit note received from a supplier records goods the business is returning to that supplier, so it is entered in the purchases returns day book (returns outwards book). The sales returns day book is used only for credit notes the business itself issues to its own customers.

Question 22Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

Which source document supports an entry in the sales day book?

  1. A supplier's invoice received for goods bought on credit
  2. A petty cash voucher signed by the cashier
  3. A copy of a sales invoice issued to a credit customer Correct answer.
  4. A bank paying-in slip counterfoil

Explanation

The sales day book lists credit sales, and each credit sale is evidenced by a copy of the invoice sent to the customer. Supplier invoices belong to the purchases day book, while petty cash vouchers and paying-in slips relate to cash movements.

Question 23Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

A petty cash imprest of 50,000 FCFA is established. Vouchers for 32,000 FCFA are paid during the month. How much is reimbursed to restore the imprest?

  1. 32,000 FCFA Correct answer.
  2. 18,000 FCFA
  3. 82,000 FCFA
  4. 50,000 FCFA

Explanation

Under the imprest system the cash on hand plus the vouchers paid must always equal the float, so the reimbursement equals the total of the vouchers. Here the vouchers total 32,000 FCFA, which is the amount needed to bring the float back to 50,000 FCFA.

Question 24Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

Cash sales of goods are recorded in which book of original entry?

  1. The sales day book
  2. The sales returns day book
  3. The cash book Correct answer.
  4. The general journal

Explanation

The sales day book is used only for credit sales, because cash sales are already captured as a receipt in the cash book. The cash book therefore serves as the book of original entry for cash sales as well as for other cash receipts and payments.

Question 25Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

Which of the following is entered on the debit side of the cash book?

  1. Purchase of stationery for cash
  2. Payment of rent by cheque
  3. Payment of wages in cash
  4. Cash received from a debtor Correct answer.

Explanation

The cash book is a book of original entry that also acts as a ledger account for cash and bank, so receipts are debits and payments are credits. Money received from a debtor is a receipt and is therefore entered on the debit side.

Question 26Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

A cheque received from a customer is later dishonoured by the bank. What entry is made in the cash book?

  1. A debit entry, because the customer now owes the money again
  2. A credit entry, reversing the earlier receipt Correct answer.
  3. A debit in the petty cash book only
  4. No entry, because the original receipt remains valid

Explanation

When a cheque is dishonoured the earlier receipt must be cancelled, so the cash book is credited to reduce the bank balance. The customer's account in the sales ledger is then debited to restore the debt.

Question 27Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

A trader keeps a three-column cash book. Which column records discounts received from suppliers?

  1. The cash column on the debit side
  2. The bank column on the credit side
  3. The discount received column on the credit side Correct answer.
  4. The discount allowed column on the debit side

Explanation

Discount received arises when a supplier allows a reduction for prompt payment, so it is a gain and is entered in the discount received column on the credit side of the three-column cash book. Discount allowed to customers appears on the debit side instead.

Question 28Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

Which item would be recorded in the general journal rather than in a day book?

  1. Cash paid for transport of goods
  2. Correction of an error where a purchase was entered twice Correct answer.
  3. Goods sold on credit to a customer
  4. Goods bought on credit from a supplier

Explanation

The general journal is used for transactions that do not pass through the specialised day books, such as corrections of errors, opening entries and adjustments. Routine credit sales and purchases go to the sales and purchases day books, and cash payments go to the cash book.

Question 29Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

The petty cashier starts the month with an imprest of 40,000 FCFA. During the month 27,500 FCFA is spent and 12,500 FCFA remains in the box. What is the amount of the reimbursement?

  1. 40,000 FCFA
  2. 12,500 FCFA
  3. 27,500 FCFA Correct answer.
  4. 52,500 FCFA

Explanation

The imprest is restored by reimbursing exactly the amount spent, which is the total of the paid vouchers. Spending of 27,500 FCFA leaves 12,500 FCFA in the box, and adding 27,500 FCFA returns the float to 40,000 FCFA.

Question 30Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

Which statement best describes the dual role of the cash book?

  1. It is a memorandum book that is not part of the double-entry system
  2. It is a subsidiary book used only for credit transactions
  3. It replaces the trial balance at the end of the period
  4. It is a book of original entry and also a ledger account for cash and bank Correct answer.

Explanation

The cash book is unique because it serves both as a book of original entry, capturing cash and bank transactions first, and as the ledger account for cash and bank. Its balance is therefore carried directly into the trial balance.

Question 31Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

Goods bought on credit from a supplier are recorded in the purchases day book. Which ledger accounts are then debited and credited?

  1. Debit purchases account, credit sales account
  2. Debit purchases account, credit supplier's account Correct answer.
  3. Debit cash account, credit purchases account
  4. Debit supplier's account, credit purchases account

Explanation

A credit purchase increases the expense of purchases, so the purchases account is debited, and it increases the amount owed to the supplier, so the supplier's personal account is credited. The purchases day book is simply the book of first entry from which these postings are made.

Question 32Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

A credit note issued to a customer for 15,000 FCFA is recorded in the sales returns day book. What is the correct double entry?

  1. Debit customer's account, credit sales returns account
  2. Debit customer's account, credit cash account
  3. Debit sales returns account, credit customer's account Correct answer.
  4. Debit sales account, credit customer's account

Explanation

Goods returned by a customer reduce the income from sales, so the sales returns account is debited, and they also reduce what the customer owes, so the customer's account is credited. The sales returns day book supplies the totals for these postings.

Question 33Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

Which of the following would be recorded in the petty cash book rather than the main cash book?

  1. Sale of a delivery van on credit
  2. Purchase of postage stamps for 1,500 FCFA Correct answer.
  3. Payment of a supplier's invoice by cheque for 250,000 FCFA
  4. Receipt of a loan from the bank

Explanation

The petty cash book is used for small, routine payments where a full cheque or main cash book entry would be impractical, such as postage stamps. Large payments, bank transactions and credit sales of assets are handled elsewhere.

Question 34Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

The petty cash book is analysed into expenditure columns such as postage, travelling and stationery. What is the main purpose of this analysis?

  1. To replace the need for petty cash vouchers
  2. To determine the amount of discount received
  3. To calculate the profit of the business for the period
  4. To provide totals for posting to the relevant expense accounts Correct answer.

Explanation

Analysing petty cash payments by type of expense allows the column totals to be posted periodically to the appropriate expense accounts in the nominal ledger. This saves many small individual postings and gives a useful summary of small expenses.

Question 35Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

A business uses an imprest of 30,000 FCFA. At the end of the week the cashier has vouchers totalling 24,600 FCFA and cash of 5,400 FCFA. What does this show?

  1. The vouchers exceed the imprest by 24,600 FCFA
  2. The imprest should be reduced to 5,400 FCFA
  3. There is a cash shortage of 5,400 FCFA
  4. The imprest is correctly maintained and reimbursement should be 24,600 FCFA Correct answer.

Explanation

Vouchers of 24,600 FCFA plus cash of 5,400 FCFA equal exactly 30,000 FCFA, so the float is intact. Under the imprest system the reimbursement equals the vouchers, which is 24,600 FCFA.

Question 36Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

Which of the following transactions is entered in the general journal?

  1. The owner bringing a motor vehicle into the business as capital Correct answer.
  2. A credit sale of goods to a customer
  3. Cash received from a debtor
  4. A credit purchase of goods from a supplier

Explanation

The general journal records transactions that are not routine credit sales, credit purchases or cash movements, such as capital introduced in kind. Bringing a vehicle into the business requires a journal entry debiting the motor vehicle account and crediting the capital account.

Question 37Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

A sales day book shows total credit sales of 480,000 FCFA for the month. How is this total posted to the ledger?

  1. Debit debtors control account, credit sales account Correct answer.
  2. Debit sales account, credit sales day book total
  3. Debit cash account, credit sales account
  4. Debit sales account, credit debtors control account

Explanation

The total of the sales day book is posted periodically by debiting the debtors control account, representing the increase in amounts owed by customers, and crediting the sales account. Individual customer accounts are also updated from the day book entries.

Question 38Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

Which of the following is a source document for a payment made from petty cash?

  1. A sales invoice issued to a customer
  2. A bank statement from the business's bank
  3. A petty cash voucher signed by the recipient Correct answer.
  4. A credit note received from a supplier

Explanation

Every petty cash payment must be supported by a petty cash voucher showing the amount, purpose, date and signature of the recipient. This voucher is the source document from which the petty cash book entry is made.

Question 39Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

A business operates an imprest of 25,000 FCFA. During the month the petty cashier spends 9,000 FCFA on postage, 7,500 FCFA on travelling and 3,000 FCFA on cleaning. The imprest is then restored. What is the balance of cash in hand immediately after restoration?

  1. 5,500 FCFA
  2. 25,000 FCFA Correct answer.
  3. 19,500 FCFA
  4. 44,500 FCFA

Explanation

Restoring the imprest means reimbursing the total spent, which is 9,000 + 7,500 + 3,000 = 19,500 FCFA. Adding this to the 5,500 FCFA remaining brings the cash in hand back to the full float of 25,000 FCFA.

Question 40Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

A cheque for 60,000 FCFA received from a debtor was entered in the cash book but was not credited by the bank before the statement date. How does this item appear in a bank reconciliation statement starting from the cash book balance?

  1. It is ignored, since it already appears in the cash book
  2. As an addition, because it is an unpresented cheque
  3. As a deduction, because it is a deposit not yet credited Correct answer.
  4. As an addition, because it is a bank error

Explanation

A deposit not yet credited by the bank means the bank balance is lower than the cash book balance, so it is deducted when starting from the cash book balance. It is not an error, merely a timing difference that will clear when the bank processes the cheque.

Question 41Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

A purchase of goods on credit from A. Ngu was correctly entered in the purchases day book but posted to the account of B. Ngu. Which book of original entry is used to correct this error?

  1. The petty cash book
  2. The general journal Correct answer.
  3. The purchases day book
  4. The cash book

Explanation

A posting error between two personal accounts does not affect the totals of the day books, so it cannot be corrected there. The correction requires a journal entry debiting B. Ngu and crediting A. Ngu, recorded in the general journal.

Question 42Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

A petty cash book has an imprest of 20,000 FCFA. The cashier reports vouchers of 16,800 FCFA and cash in hand of 2,700 FCFA. What is the most likely explanation?

  1. The imprest has been increased to 19,500 FCFA
  2. A reimbursement of 16,800 FCFA has already been made
  3. The vouchers have been overstated by 2,700 FCFA
  4. There is a cash shortage of 500 FCFA Correct answer.

Explanation

Vouchers plus cash should equal the imprest of 20,000 FCFA, but 16,800 + 2,700 = 19,500 FCFA, leaving a shortfall of 500 FCFA. This indicates that cash has been lost or an unrecorded payment made, and the shortage must be investigated.

Question 43Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

Which pair of day books is used by a business that both buys and sells goods on credit?

  1. Cash book and petty cash book
  2. Purchases day book and sales day book Correct answer.
  3. Sales returns day book and cash book
  4. General journal and purchases returns day book

Explanation

A trading business records credit purchases in the purchases day book and credit sales in the sales day book. The other books handle cash movements, returns and non-routine adjustments.

Question 44Books of Original Entry and Source Documents: journals, day books, cash book, petty cash book, imprest system

A business pays a supplier 90,000 FCFA by cheque and receives a discount of 10,000 FCFA on a debt of 100,000 FCFA. How is this recorded in a three-column cash book?

  1. Debit bank 90,000 FCFA and debit discount received 10,000 FCFA
  2. Debit discount allowed 10,000 FCFA and credit bank 90,000 FCFA
  3. Credit bank 100,000 FCFA only
  4. Credit bank 90,000 FCFA and credit discount received 10,000 FCFA Correct answer.

Explanation

The payment reduces the bank balance, so the bank column is credited with 90,000 FCFA, and the discount gained from the supplier is credited in the discount received column with 10,000 FCFA. Together they clear the 100,000 FCFA owed to the supplier.

Question 45Double-Entry Bookkeeping and Ledger Accounts: posting, balancing, trial balance

A business buys office stationery on credit from Etablissements Nkeng. Which entry correctly records this transaction in the buyer's books?

  1. Debit Purchases account, credit Cash account
  2. Debit Etablissements Nkeng account, credit Stationery account
  3. Debit Stationery account, credit Cash account
  4. Debit Stationery account, credit Etablissements Nkeng account Correct answer.

Explanation

An expense increases with a debit, so the Stationery account is debited. Because payment is deferred, the supplier becomes a creditor, and a liability increases with a credit. The Cash account is untouched since no money has yet been paid.

Question 46Double-Entry Bookkeeping and Ledger Accounts: posting, balancing, trial balance

Which of the following is the correct double entry when a debtor pays the business by cheque?

  1. Debit Cash account, credit Bank account
  2. Debit Bank account, credit Sales account
  3. Debit Bank account, credit Debtor account Correct answer.
  4. Debit Debtor account, credit Bank account

Explanation

Receiving a cheque increases the bank asset, so Bank is debited. The debtor's debt is settled, so the debtor's personal account is credited to reduce the amount owing. No sale is recorded because the revenue was recognised when the goods were sold.

Question 47Double-Entry Bookkeeping and Ledger Accounts: posting, balancing, trial balance

In the ledger, the Trial Balance column totals fail to agree by an amount exactly divisible by 9. Which error is most likely indicated?

  1. An entry posted to the correct side of the wrong account
  2. A transposition of digits when posting an amount Correct answer.
  3. A compensating error of equal amount on both sides
  4. A transaction completely omitted from the books

Explanation

A transposition error, such as recording 540 as 450, produces a difference that is a multiple of 9. Errors of complete omission, wrong account posting and compensating errors do not disturb the agreement of the trial balance at all, so they cannot explain a difference.

Question 48Double-Entry Bookkeeping and Ledger Accounts: posting, balancing, trial balance

A ledger account shows a debit balance of 4,500 CFA francs on 1 March. During March, credits of 9,200 CFA francs and debits of 6,100 CFA francs are posted. What is the balance carried down on 31 March?

  1. 7,600 CFA francs debit
  2. 1,400 CFA francs debit Correct answer.
  3. 1,400 CFA francs credit
  4. 3,100 CFA francs debit

Explanation

The account is totalled as debits of 4,500 + 6,100 = 10,600 and credits of 9,200. The debit side exceeds the credit side by 1,400, so the balance is 1,400 CFA francs debit, which is carried down as a debit balance.

Question 49Double-Entry Bookkeeping and Ledger Accounts: posting, balancing, trial balance

Which of the following accounts normally carries a credit balance in the ledger of a trading business?

  1. Discount allowed
  2. Sales returns
  3. Carriage outwards
  4. Loan from bank Correct answer.

Explanation

A loan received is a liability of the business, and liabilities increase on the credit side, so the Loan account normally shows a credit balance. The other three items are expenses or deductions from revenue, and they normally carry debit balances.

Question 50Double-Entry Bookkeeping and Ledger Accounts: posting, balancing, trial balance

The purchases ledger control account is used mainly to:

  1. record cash sales made to customers during the period
  2. calculate the gross profit earned on credit sales
  3. record all credit purchases and payments to suppliers in total Correct answer.
  4. replace the individual creditors' accounts in the ledger

Explanation

The control account summarises total credit purchases, returns outwards, payments and discounts received, and its balance should equal the total of individual creditors' balances. The personal accounts of each supplier are still maintained separately as a check on the control figure.