FA1 MOCK EXAM CHAPTER 1 To 5

FA1 MOCK EXAM CHAPTER 1 to 5
Which of the following is an example of asset expenditure?

Paying for refurbishment as part of upgrading a building
Paying carriage outwards in respect of selling goods
Paying bonuses to production staff
Paying legal fees in order to recover customer debts

Christa pays her mortgage by instructing her bank to make monthly payments of a fixed
amount from her current account. When the mortgage rate changes she issues revised
instructions to the bank.
Which method of payment is Christa using?
Standing order
Payable order
Crossed cheque
Direct debit
A company has a credit facility with a local trade supplier. An invoice for purchases has
been credited to the payables control account and debited to the sales account.
Which of the following journal entries will correct the error?
Dr Sales account Cr Bank account
Dr Purchases account Cr Sales account
Dr Sales account Cr Payables control account
Dr Payables control account Cr Sales account

Louise introduces her car into her business.
Which parts of the business' accounting equation will change?
Liabilities and assets
Capital and profit
Capital and liabilities
Assets and capital

Freya started her business on 1 September. During September she made cash sales of
$6,400 and issued credit sales invoices for $10,200, of which $8,600 had been paid.
What would be the balance of the sales account in the general ledger at the end
of September?
$16,600
$8,000
$10,200
$6,400
Which journal entry correctly records the credit purchase of plant and
equipment?
Dr Plant and equipment Cr Cash
Dr Payables control account Cr Plant and equipment
Dr Cash Cr Plant and equipment
Dr Plant and equipment Cr Payables control account

Albert sold 15 units of inventory with a list price of $40 per unit to Michael. He gives
Michael a 10% trade discount and a 5% prompt payment discount if Michael pays within
30 days. Michael is not expected to take advantage of the prompt payment discount.
What will be the total of the invoice that Albert issues to Michael for this
transaction?
$540
$513
$600
$510
Which of the following are benefits of an effective document retention policy to a
small business?
(1 To ensure all documents are stored forever
)
(2 To meet legal and tax requirements of the business
)
(3 To mitigate risks arising from internal and external disputes of the business
)
(4 To increase operational efficiency and maintain control over costs
)
1 and 3 only
1, 2, 3 and 4
2, 3 and 4 only
1, 2 and 4 only
Which of the following statements are TRUE about a good coding system for
financial transactions?
(1 It enables a company to easily extract data for management analysis
)
(2 It provides a unique code for each item within the system
)
(3 It provides codes that are uniform in format
)
(4 It requires management authorisation before creation of new codes
)
1 and 2 only
1, 2, 3 and 4
3 and 4 only
2, 3 and 4 only
Narvinda buys goods from Jamal for $2,500 on 1 May. He returns half of the goods on
15 May.
Which of the following documents would be issued by Jamal for the return of the
goods?
Invoice
Credit note
Debit note
Remittance advice
If a cheque is marked 'Account Payee Only, Not Negotiable', what does this
mean?
The receiving bank can deposit the cheque in an account other than the payee
The paying bank can deposit the cheque in an account other than the payee
The cheque should be paid only into the account of the named payee
The cheque should be paid only into the account of the named drawer
What document is usually sent every month from the supplier to the customer,
listing all the transactions between them during that month?
Statement
Receipt
Credit note
Invoice
Walter sells goods to Ninevah with a list price (exclusive of sales tax) of $4,300, offering
a 4% trade discount. Sales tax is 17.5%.
What amount should be recorded for this transaction in the sales account (to the
nearest $)?
$4,850
$4,128
$5,053
$3,513
Which of the following statements regarding sales tax in the trial balance is
TRUE?
Output tax and input tax are credit balances
Output tax and input tax are debit balances
Output tax is a credit balance and input tax is a debit balance
Output tax is a debit balance and input tax is a credit balance

Which of the following should be classified as current liabilities?
(1 Trade receivables
)
(2 Sales tax payable
)
(3 Trade payables
)
(4 Drawings
)
2 and 4
2 and 3
1 and 2
3 and 4
Susan is a computer equipment dealer. She uses the following coding system for her
financial transactions.

1st number 2nd number
100 Purchases 300 Cash
200 Sales 400 Payables
500 Receivables

Danielle buys computer equipment worth $2,000 on credit from Susan.
Which of the following would be the code recorded on the invoice issued by
Susan?
200300
200500
100300
100400
Which of the following are books of prime entry?
(1 Sales day book
)
(2 Payables ledger
)
(3 Journal
)
(4 Cash book
)
1, 2 and 3
1, 2 and 4
1, 3 and 4
2, 3 and 4
Malindra sent a payment to Nicholas along with a document detailing the items and
invoices the payment related to.
What is this document known as?
Debit note
Credit note
Remittance advice
Delivery note

FA1 MOCK EXAM CHAPTER 1 To 5

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FA1 MOCK EXAM CHAPTER 1 to 5

Which of the following is an example of asset expenditure?

Paying carriage outwards in respect of selling goods

Paying bonuses to production staff

Paying legal fees in order to recover customer debts

Dr Purchases account Cr Sales account

Dr Sales account Cr Payables control account

Dr Payables control account Cr Sales account

Capital and profit

Capital and liabilities

Assets and capital

Dr Payables control account Cr Plant and equipment

Dr Cash Cr Plant and equipment

Dr Plant and equipment Cr Payables control account

Output tax and input tax are debit balances

Output tax is a credit balance and input tax is a debit balance

Output tax is a debit balance and input tax is a credit balance

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