Q: Given the following balances for Samuel and Sons at 31 December 2023: Capital at 1 Jan 2023 = R260,000; Drawings = R60,000; Closing Capital = R320,000. Calculate the profit for the year ended 31 December 2023.

$$\text{Profit} = \text{Closing Capital} - \text{Opening Capital} + \text{Drawings} = 320\ 000 - 260\ 000 + 60\ 000 = R120\ 000$$

Q: Fixtures and fittings were purchased for R8,000 on 31 December 2022 but not recorded as an asset. If depreciation is 10% per annum on cost, what is the depreciation expense for 2023?

$$\text{Depreciation} = 8\ 000 \times 10\% = R800$$

Question 1

Which of the following best describes the purpose of adjusting entries in the accounting cycle?

Accepted Answer

To ensure that income and expenses are recorded in the period in which they are earned or incurred, regardless of when cash is received or paid.

Question 2

A company failed to record accrued rent income of R5,000 at year-end. What is the effect on profit for the year if this adjustment is omitted?

Accepted Answer

Profit is understated by R5,000.

Question 3

Given the following balances for Samuel and Sons at 31 December 2023: Capital at 1 Jan 2023 = R260,000; Drawings = R60,000; Closing Capital = R320,000. Calculate the profit for the year ended 31 December 2023.

Accepted Answer

$$	ext{Profit} = 	ext{Closing Capital} - 	ext{Opening Capital} + 	ext{Drawings} = 320\ 000 - 260\ 000 + 60\ 000 = R120\ 000$$

Question 4

If a prepaid expense of R6,000 relating to 2023 was not adjusted at year-end, what is the effect on profit for 2023?

Accepted Answer

Profit is overstated by R6,000.

Question 5

Fixtures and fittings were purchased for R8,000 on 31 December 2022 but not recorded as an asset. If depreciation is 10% per annum on cost, what is the depreciation expense for 2023?

Accepted Answer

$$	ext{Depreciation} = 8\ 000 	imes 10\% = R800$$

Question 6

Which of the following errors would NOT cause the trial balance to be out of balance?

Accepted Answer

A transaction was recorded in the wrong account but on the correct side.

Question 7

A payment for a printer of R8,000 was incorrectly posted to repairs expense. What is the correcting journal entry?

Accepted Answer

Debit Fixtures and Fittings R8,000; Credit Repairs Expense R8,000

Question 8

If the rent expense was listed as a credit instead of a debit in the trial balance, what is the effect on the trial balance totals?

Accepted Answer

The credit total will be too high and the debit total too low by the amount of the rent expense.

Question 9

Which of the following is the correct sequence in the accounting recording process?

Accepted Answer

Source document → General journal → Posting to ledger → Trial balance

Question 10

A cash withdrawal of R2,000 by the owner was posted as a credit to cash at bank and as a credit to wages expense. What is the correcting journal entry?

Accepted Answer

Debit Drawings R2,000; Credit Wages Expense R2,000

Question 11

If accrued expenses payable of R20,000 for 2023 were not recorded, what is the effect on profit for 2023?

Accepted Answer

Profit is overstated by R20,000.

Question 12

Which of the following best describes a trial balance?

Accepted Answer

A list showing all general ledger account titles, codes, and balances at a specific date.

Question 13

If a debit of R600 to accounts receivable was not posted from the general journal, what is the correcting entry?

Accepted Answer

Debit Accounts Receivable R600; Credit Suspense Account R600

Question 14

A credit note for R100 received for an overcharge was posted as R1,000 to repairs expense. What is the correcting journal entry?

Accepted Answer

Credit Repairs Expense R900; Debit Suspense Account R900

Question 15

If the credit side of the cash at bank account was undercast by R2,000, what is the correcting entry?

Accepted Answer

Credit Cash at Bank R2,000; Debit Suspense Account R2,000

Question 16

Which of the following is NOT a purpose of the trial balance?

Accepted Answer

To calculate the profit or loss for the period.

Step-by-Step Guidance for Adjusting Entries and Trial Balance Corrections in Financial Accounting

Guida di studio - Domande di pratica

Study guide - Flashcard