Zambia School Certificate / GCE — Principles of Accounts (7110)

What is the main purpose of Principles of Accounts for a Lusaka sole trader?

• ATo provide financial information that users can use to make decisions
• BTo advertise goods to customers
• CTo set the selling price of every item in the shop
• DTo replace the need for source documents

Which group is an external user of a Kitwe retailer's accounting information?

• AThe owner when reviewing weekly cash takings
• BThe shop supervisor preparing a staff rota
• CA commercial bank deciding whether to grant an overdraft
• DThe book-keeper posting the cash book

The business entity concept requires that a Ndola grocer:

• ATreats the business as separate from the owner and records only business transactions in…
• BRecords the owner's private school fees as a business expense
• CValues inventory at selling price so the owner can see wealth
• DIgnores amounts the owner withdraws for personal use

The going concern concept assumes that a Chipata hardware shop will:

• AContinue operating for the foreseeable future, so assets are not valued on a break-up bas…
• BBe sold next month and should therefore value all assets at forced-sale prices
• CAlways make a profit
• DNever buy non-current assets on credit

Applying the prudence concept, a Livingstone outfitter should:

• AAnticipate a possible future profit on unsold dresses and include it in this year's profit
• BIgnore a known bad debt until cash is received from another customer
• CNot overstate assets or profit, and recognise known losses such as irrecoverable debts
• DRecord inventory at selling price because that figure is larger than cost

The duality concept is the reason every transaction:

• AHas both a debit entry and a credit entry of equal amount
• BIs recorded in the cash book only
• CMust be paid in cash on the same day
• DIncreases capital and increases profit

Which statement of the accounting equation is correct?

• AAssets = Capital − Liabilities
• BAssets + Capital = Liabilities
• CAssets = Capital + Liabilities
• DCapital = Assets + Liabilities

Mulenga Hardware has assets of ZMW 85,000 and liabilities of ZMW 32,000. What is the owner's capital?

• AZMW 117,000
• BZMW 85,000
• CZMW 32,000
• DZMW 53,000

A cashier at a Mongu store records a lower cash sale so that the difference can be taken personally. Which ethical principle is mainly breached?

• AIntegrity
• BGoing concern
• CMateriality
• DConsistency

In the Zambian Principles of Accounts syllabus, ZICA is the body that:

• ARegulates the accountancy profession in Zambia
• BSets the School Certificate examination papers for subject 7110
• CCollects pay-as-you-earn tax from every sole trader
• DIssues trading licences to market stallholders

An increase in a non-current asset such as a delivery van is recorded as a:

• ADebit in the van account
• BCredit in the van account
• CDebit in the capital account
• DCredit in the purchases account

Rent paid in cash by Banda Stores is entered as:

• ADebit Rent, credit Cash
• BDebit Cash, credit Rent
• CDebit Capital, credit Rent
• DDebit Rent, credit Sales

Phiri Traders buys goods on credit from a Ndola wholesaler. The double entry is:

• ADebit Payables, credit Purchases
• BDebit Purchases, credit Bank
• CDebit Purchases, credit Payables
• DDebit Inventory, credit Sales

The owner of Tembo Enterprises withdraws ZMW 2,500 cash for personal use. The entry is:

• ADebit Drawings, credit Cash
• BDebit Cash, credit Drawings
• CDebit Wages, credit Cash
• DDebit Capital, credit Sales

In the three-fold classification of ledger accounts, a trade receivable account is a:

• ANominal account
• BReal account
• CPersonal account
• DSuspense account

Credit sales to customers are posted from the sales day book to the:

• ASales (receivables) ledger, with the total credited to Sales in the general ledger
• BPurchases ledger only
• CPetty cash book
• DPrivate ledger only, with no general-ledger entry

Zulu Outfitters sells goods for ZMW 1,800 cash. The double entry is:

• ADebit Cash, credit Sales
• BDebit Sales, credit Cash
• CDebit Payables, credit Sales
• DDebit Cash, credit Purchases

Chanda Motors pays a supplier ZMW 6,400 by cheque. The entry is:

• ADebit Bank, credit Payables
• BDebit Purchases, credit Bank
• CDebit Payables, credit Bank
• DDebit Bank, credit Purchases

Mwale Farm Supplies buys a used pickup for ZMW 45,000, paying ZMW 15,000 by cheque and leaving the balance on credit. What is the immediate effect on the accounting equation?

• AAssets +ZMW 30,000; liabilities +ZMW 30,000
• BAssets +ZMW 45,000; liabilities unchanged
• CAssets +ZMW 15,000; capital +ZMW 15,000
• DAssets −ZMW 15,000; liabilities +ZMW 45,000

A customer's account has debit entries of ZMW 8,400 and credit entries of ZMW 6,100 before balancing. Which balance carried down (c/d) entry makes the two sides equal?

• AZMW 2,300 on the credit side
• BZMW 14,500 on the debit side
• CZMW 2,300 on the debit side
• DZMW 8,400 on the credit side

The source document for an entry in the sales day book is usually the:

• ADuplicate (copy) of the sales invoice issued to the customer
• BOriginal purchase invoice received from a supplier
• CCheque stub for a payment to a supplier
• DPetty cash voucher for tea and sugar

Goods bought on credit are first recorded in the:

• APurchases day book
• BSales day book
• CSales returns day book
• DPetty cash book

A supplier issues a credit note to Sakala Stationery for damaged goods returned. The note is entered in the:

• APurchases returns (returns outwards) day book
• BSales day book
• CSales returns day book
• DCash book as a contra

A three-column cash book has columns for:

• ACash, bank and discount
• BDate, folio and narrative only
• CSales, purchases and returns
• DAssets, liabilities and capital

Ngoma Grocers banks ZMW 3,200 of shop cash. In the cash book this is a contra entered as:

• ADebit Bank ZMW 3,200, credit Cash ZMW 3,200
• BDebit Cash ZMW 3,200, credit Bank ZMW 3,200
• CDebit Sales ZMW 3,200, credit Bank ZMW 3,200
• DDebit Bank ZMW 3,200, credit Sales ZMW 3,200

Under the imprest system the petty cashier is reimbursed with:

• AExactly the amount spent since the last reimbursement, restoring the float to the imprest
• BThe original imprest plus this period's spending
• CA round sum chosen by the cashier each Friday
• DThe balance left in the tin, which is then treated as drawings

A petty cash imprest is ZMW 500. Vouchers for the month total ZMW 365. The reimbursement cheque should be:

• AZMW 500
• BZMW 865
• CZMW 135
• DZMW 365

Which transaction is recorded in the general journal rather than a day book or the cash book?

• ACredit sale of goods to a regular customer
• BCash purchase of goods for resale
• CCorrection of an error and the opening entry for capital introduced as a mix of assets
• DPayment of wages by cheque

The main purpose of a trial balance is to:

• ACalculate the year's net profit
• BReplace the need for a statement of financial position
• CShow how much cash will be received next month
• DList ledger balances and check that total debits equal total credits

A trial balance totals are debit ZMW 124,600 and credit ZMW 118,900. The difference to be investigated is:

• AZMW 243,500
• BZMW 118,900
• CZMW 2,850
• DZMW 5,700

A trial balance that agrees still may not be free of error because:

• AEvery error affects the debit and credit totals unequally
• BThe cash book is never included
• CCredit balances are omitted by design
• DErrors of omission, commission, principle, original entry, complete reversal and compensa…

Which list contains only balances that normally appear on the debit side of a trial balance?

• ASales, capital, payables
• BLoan from bank, sales, discount received
• CCapital, purchases returns, revenues
• DPurchases, rent, drawings, equipment

The following balances are extracted from Musonda Electrics: Capital ZMW 40,000; Sales ZMW 36,000; Payables ZMW 8,000; Purchases ZMW 22,000; Bank ZMW 12,500; Rent ZMW 5,500; Inventory ZMW 8,000; Drawings ZMW 4,000; Equipment ZMW 32,000. The trial-balance total (each side) is:

• AZMW 84,000
• BZMW 76,000
• CZMW 68,000
• DZMW 92,000

Which item is capital expenditure for a Choma bakery?

• AFlour used in this week's bread
• BWages of the baker for July
• CPurchase of a new oven
• DElectricity for the shop lights

Repairing a delivery van's puncture is treated as:

• ACapital expenditure, added to the van account
• BA capital receipt
• CRevenue expenditure, charged as an expense
• DDrawings

Which of the following is a capital receipt?

• AWeekly shop takings
• BRent received from a spare storeroom
• CProceeds from selling an old delivery motorcycle
• DDiscount received from a supplier

Opening inventory ZMW 12,000, purchases ZMW 48,000, closing inventory ZMW 15,000. Cost of goods sold is:

• AZMW 45,000
• BZMW 51,000
• CZMW 75,000
• DZMW 21,000

Using cost of goods sold of ZMW 45,000 and sales of ZMW 80,000, gross profit is:

• AZMW 125,000
• BZMW 45,000
• CZMW 35,000
• DZMW 80,000

Purchases ZMW 50,000, purchases returns ZMW 3,000, carriage inwards ZMW 2,000. Net purchases for the trading account are:

• AZMW 50,000
• BZMW 45,000
• CZMW 55,000
• DZMW 49,000

Banda Stores: Sales ZMW 96,000; sales returns ZMW 4,000; opening inventory ZMW 18,000; purchases ZMW 62,000; purchases returns ZMW 2,000; carriage inwards ZMW 1,500; closing inventory ZMW 21,000. Gross profit is:

• AZMW 33,500
• BZMW 37,500
• CZMW 29,500
• DZMW 41,500

Gross profit is ZMW 28,000 and expenses are ZMW 11,400. Net profit is:

• AZMW 39,400
• BZMW 11,400
• CZMW 28,000
• DZMW 16,600

A trial-balance rent expense is ZMW 18,000. Rent accrued at the year end is ZMW 2,400. Depreciation for the year is ZMW 5,000. Gross profit is ZMW 41,000 and other expenses (already correct) are ZMW 12,600. Net profit is:

• AZMW 28,400
• BZMW 20,000
• CZMW 23,000
• DZMW 3,000

Current assets are ZMW 45,000 and current liabilities are ZMW 18,000. Working capital is:

• AZMW 63,000
• BZMW 45,000
• CZMW 27,000
• DZMW 18,000

Non-current assets ZMW 80,000, working capital ZMW 27,000, and a long-term loan ZMW 20,000. Capital employed is:

• AZMW 80,000
• BZMW 27,000
• CZMW 47,000
• DZMW 107,000

Closing inventory of a sole trader appears in:

• AThe trading account only
• BThe statement of financial position only
• CBoth the trading account (cost of sales) and the statement of financial position (current…
• DThe cash book only

Carriage inwards is shown in the trading account while carriage outwards is shown:

• AAlso in the trading account as a deduction from sales
• BAs a non-current asset
• CAs a deduction from capital
• DAs an expense in the profit-or-loss section

Equipment cost ZMW 50,000, accumulated depreciation ZMW 12,000, inventory ZMW 14,000, trade receivables ZMW 9,000, bank ZMW 6,000, trade payables ZMW 8,500, long-term loan ZMW 15,000. Capital is:

• AZMW 67,000
• BZMW 58,500
• CZMW 35,500
• DZMW 43,500