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University Of Phoenix
Cambridge International AS and A Level Accounting (9706)
UOPX -ACC 290 Multiple choice & answers with Explanation
May/ June Year 2010 (9706/12)

Questions
1
...
What is the effect of this
error on the accounts of the business?
Assets
Profit
A Overstated
Overstated
B Overstated
Understated
C Understated
Overstated
D Understated
Understated

Answers
Capital expenses are charged for long
term period and have no effect on
business revenue compared to revenue
expenses which are day to day
expenses that reduce business revenue
...

Answer: D

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2
...
It pays for materials invoiced
at $3000 less a trade discount of 20%
and a settlement discount of 5%
...
What is the bank balance after
these transactions?
A $2020 overdraft
B $6580 overdraft
C $7150 overdraft
D $7580 overdraft

Amount paid for the purchase of
Material after deducting trade
discount
Trade discount = $3000* 20%
= $600
Deducting the trade discount
3000 (-) 600 =2400
Settlement discount= $2400 * 5%
= $120
Deducting the settlement discount
= $2400(-) $120=$2280
Bank a/c
Dr
Cr
$
$
Customer 500
Open
4800
bank
balance
Closing
6580 Supplier 2280
bank
balance
7080
7080

Answer: B

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3
...

Identifying each item:
Discount allowed: it does not enter in
the purchases ledger as it is given to
customer to persuade those who owe
money to cover up within the given
timeframe provided by the
organization
...

Payments to suppliers are debited in
supplier account and are credited to
cashbook
...
It has nothing to do
with this question,
Purchases returns are debited in
supplier account and are credited to
return outwards one
...
The personal spending of the
owner of a business is not recognised
as a business expense
...
An owner's transaction
and his business transaction are
independent and distinct
...
It has nothing to do
with this question
...
It has nothing to do with
this question
...
It is not
related to this question
...
A business obtained a machine by
means of a hire purchase agreement
...
Which accounting principle is
involved?
A accruals
B materiality
C prudence
D substance over form

Accruals- It accounts for income and
expenditures which have been
collected or spent but whereby the
corresponding cash sums still have
not been received or paid out
...
It is not
concerned
...
It is not related to this
question
...
The table shows information from
the books of a business at 30 April
2010
...

So far it concerns, the good sent to
customer on sale or return basis, this
must not be considered as a sale until
the goods are sold by the salesperson
...
Which item will be entered in a
purchase ledger control account?
A discount allowed
B discount received
C prepaid rent
D returns inwards

Discount allowed enters in the sales
ledger control account
...

Return inwards- enters in the sales
ledger control account
...
(It is
debited in the purchases ledger
control account)
Answer: B

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8
...

When listing the individual suppliers’
accounts a credit balance had been
shown as a debit balance
...
The
effect would be doubled
D increase by twice the amount of
the credit balance
Answer: D
9 Which error will cause an entry in
the suspense account?
A a transposition error when
transferring a ledger account balance
to the trial balance
B an error of commission where the
wrong account is used for a
transaction but it is the correct type of
account
C an error of omission
D an error of principle

Option A is the only one that cause an
entry in the suspense accounts
Concern the six errors for example an
error of commission, an error of
omission, an error of principle, an
error of complete reversal, an error of
books of original entry, an error of
compensating do not affect the trial
balance
...


Answer: A

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