Q: Given the following information from a partnership: Capital balances are K36,000 for Kaleji and K24,000 for Nsama. Interest on capital is 5% per annum. What is the total interest on capital to be charged for the year?

$$K36,000 \times 0.05 + K24,000 \times 0.05 = K1,800 + K1,200 = K3,000$$

Q: Which of the following is the correct formula to calculate Gross Profit?

$$\text{Gross Profit} = \text{Turnover} - \text{Cost of Sales}$$

Q: If motor vehicles are to be depreciated at 20% per annum on a reducing balance basis, what is the depreciation expense for a motor vehicle with a cost of K20,000 for the year?

$$K20,000 \times 0.20 = K4,000$$

Q: If the net profit is K1,000,000, cost of sales is K540,000, expenses are K1,500,000, and turnover is K5,500,000, what is the gross profit?

$$\text{Gross Profit} = \text{Turnover} - \text{Cost of Sales} = K5,500,000 - K540,000 = K4,960,000$$

Question 1

Which of the following is NOT a primary purpose of preparing final accounts in financial accounting?

Accepted Answer

To calculate the market value of the business's shares

Question 2

A business withdrew K1,250 cash from the bank for official use. How should this transaction be recorded in the cash book?

Accepted Answer

Debit Bank column, Credit Cash column

Question 3

Which accounting concept ensures that expenses and revenues are recorded in the period they occur, not when cash is received or paid?

Accepted Answer

Accruals concept

Question 4

Given the following information from a partnership: Capital balances are K36,000 for Kaleji and K24,000 for Nsama. Interest on capital is 5% per annum. What is the total interest on capital to be charged for the year?

Accepted Answer

$$K36,000 	imes 0.05 + K24,000 	imes 0.05 = K1,800 + K1,200 = K3,000$$

Question 5

A business purchased goods worth K2,500 on credit from Tembo Ltd. How should this transaction be recorded in the Purchases Day Book?

Accepted Answer

Record K2,500 under Purchases column and Tembo Ltd under Supplier column

Question 6

If the provision for bad debts at the beginning of the year is K780 and needs to be adjusted to K500 at year-end, what is the effect on the profit and loss account?

Accepted Answer

Increase profit by K280

Question 7

Which of the following is the correct formula to calculate Gross Profit?

Accepted Answer

$$	ext{Gross Profit} = 	ext{Turnover} - 	ext{Cost of Sales}$$

Question 8

On 5/09/20, Kabubi's account shows a credit note (No. 03) for K5,000. What does this transaction represent?

Accepted Answer

Goods returned by Kabubi to Chibomba Ltd

Question 9

If motor vehicles are to be depreciated at 20% per annum on a reducing balance basis, what is the depreciation expense for a motor vehicle with a cost of K20,000 for the year?

Accepted Answer

$$K20,000 	imes 0.20 = K4,000$$

Question 10

Which of the following is NOT an element of the Balance Sheet?

Accepted Answer

Expenses

Question 11

A business paid rent by cheque amounting to K1,000. How should this transaction be recorded in the cash book?

Accepted Answer

Credit Bank column, Debit Rent expense column

Question 12

Which accounting principle requires that financial statements be prepared under the assumption that the business will continue to operate in the foreseeable future?

Accepted Answer

Going concern concept

Question 13

Kabubi's account shows a transaction on 22/09/20 labeled 'RD – Cheque 001233' for K5,250. What does 'RD' stand for and what does it mean?

Accepted Answer

'RD' stands for 'Returned/Dishonored', meaning the cheque was not honored by the bank

Question 14

If the net profit is K1,000,000, cost of sales is K540,000, expenses are K1,500,000, and turnover is K5,500,000, what is the gross profit?

Accepted Answer

$$	ext{Gross Profit} = 	ext{Turnover} - 	ext{Cost of Sales} = K5,500,000 - K540,000 = K4,960,000$$

Question 15

Which of the following is the other name for a copy invoice?

Accepted Answer

Duplicate invoice

Question 16

A partnership agreement states that partners are entitled to a salary of K36,000 for Kaleji and K24,000 for Nsama per annum. If the profit before salaries is K120,000, what is the profit available for sharing after salaries are paid?

Accepted Answer

$$K120,000 - (K36,000 + K24,000) = K120,000 - K60,000 = K60,000$$

Question 17

Which of the following is NOT a user of accounting information?

Accepted Answer

Competitors

Question 18

If office equipment is to be depreciated at 10% per annum on a straight-line basis and its cost is K18,000, what is the annual depreciation expense?

Accepted Answer

$$K18,000 	imes 0.10 = K1,800$$

Question 19

Which of the following is NOT a recognized international accounting standard-setting body?

Accepted Answer

SEC

Financial Accounting: Core Concepts, Ledger Preparation, and Partnership Accounts

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