accounting june 2002
section one (compulsory) answer all six questions in this section. each question carries 10 marks.
question 1 (total: 10 marks) read and state whether the following statement are ture (t) or false (f). for false statements you are required to corrected statements. write all answers on the answer sheets.
1.1 a “carriage outwards” account normally has a debit balance.
1.2 “long term investment” is an item of shareholders’ fund.
1.3 “cash basis accounting” means that accounts only record items which have realizable values in cash.
1.4 a “purchases” account records only items which were bought for resale.
1.5 “share premium” is a capital profit. 1.6 a “quick ratio” tests the liquidity of a business.
1.7 a variable cost is a cost which changes according to market conditions.
question 2 (total: 10 marks) read the following statements and choose the correct answers by writing the alphabetical letter on the answer sheets.
2.1 a “relevant cost” is
(a) a cost which has been paid
(b) a future cost which is associated with the decision at hand.
(c) a future cost which must be incurred if a firm is to continue in business.
(d) a fixed cost in a project
2.2 provision for doubtful debts is
(a) an account recording all debts which are doubtful in collection.
(b) a current liability.
(c) a current asset.
(d) a reduction in the value of an asset.
2.3 a cash flow statement
(a) shows the amounts of money in cash, or near cash form, received and paid out by a firm from trading during a period.
(b) shows the amounts of money in cash, or near cash form, received and paid out by a firm from all activities during a period.
(c) shows the change in financial positions of a firm during a period.
(d) shows a firm’s cash transactions during a period.