Deck 4: Double-Entry Bookkeeping 2: Books of Prime Entry, Accounting Systems, and the Statement of Cash Flows

Question 1

Andreas Limited has the following figures in the financial statements for the year ended 30 November 2021:
$$\begin{array} { | l | c | c | } \hline & \mathbf { 2 0 2 1 } & \mathbf { 2 0 2 0 } \\\hline & \mathbf { E } & \mathbf { E } \\\hline \text { Dperating profit } & \mathbf { 4 2 } , 000 & \mathbf { 3 5 } , 000 \\\hline \text { Depreciationcharged in year } & \mathbf { 2 8 , 0 0 0 } & \mathbf { 2 5 , 0 0 0 } \\\hline \text { Irvertaries } & \mathbf { 3 5 } , 000 & 40,000 \\\hline \text { Trade receivables } & \mathbf { 2 9 , 0 0 0 } & \mathbf { 3 2 , 0 0 0 } \\\hline \text { Trade payables } & \mathbf { 2 5 } , 000 & 19,000 \\\hline\end{array}$$ What is Andreas Limited's cash inflow from operating activities for the year ended 30 November 2021 using the indirect method?

A) £56,000
B) £66,000
C) £72,000
D) £84,000

Answer 1

£84,000

Question 2

Olly Limited undertook the following transactions during the year ended 30 November 2021:
?Issued 20,000 new shares at a price of £1.50 per share.
?Made £6,000 of repayments on the business loan.
?Received dividends of £1,000 from Molly Limited.
?Paid loan interest of £750.
?Paid dividends of £10,000.
?Received £500 bank interest.
?Paid overdraft interest of £125.
What is Olly Limited's net cash inflow from financing activities for the year ended 30 November 2021?

A) £3,125
B) £13,125
C) £13,625
D) £14,625

Answer 2

£13,125

Question 3

Collie Limited had the following cash inflows during the year ended 30 June 2021:
?Proceeds from the sale of investments of £200,000.
?Proceeds from the issue of shares of £250,000.
?Proceeds from the bond issue of £500,000.
?Proceeds from the sale of property, plant and equipment of £50,000.
What is Collie Limited's total cash inflow from financing activities for the year ended 30 June 2021?

A) £250,000
B) £450,000
C) £750,000
D) £1,000,000

Answer 3

£750,000

Question 4

The sales ledger records transactions with individual credit customers. Are the transactions listed below debits or credits in each individual customer's sales ledger account?
a. Cash refunds = Debit
b. Cash received = Credit
c. Irrecoverable debts = Credit
d. Sales invoices = Debit

Question 5

The purchase ledger records transactions with individual suppliers of goods and services. Are the transactions listed below debits or credits in each individual supplier's purchase ledger account?

A) Credit notes = Debit
B) Purchase invoices = Credit
C) Discounts received = Debit
D) Cash refunds = Credit

Question 6

CDC Limited buys goods from and sells goods to DAD Limited. CDC Limited owes DAD Limited £8,400, while DAD owes CDC Limited £12,600. The two companies agree to net off the amounts owed by each company to leave an amount owing by DAD Limited to CDC Limited of £4,200 (£12,600 - £8,400). What is the correct double entry in the books of CDC Limited to record this netting off of £8,400 between the two companies?

A) Debit sales £8,400, Credit purchases £8,400.
B) Debit trade receivables control account £8,400, Credit trade payables control account £8,400
C) Debit purchases £8,400, Credit sales £8,400
D) Debit trade payables control account £8,400, Credit trade receivables control account £8,400.

Question 7

When posting cash receipts in the cash book to the nominal ledger, the double entry increases the balance on the cash account and:
Please select all that apply.

A) Increases the balance on asset accounts
B) Increases the balance on income accounts
C) Increases the balance on capital accounts
D) Increases the balance on liability accounts

Question 8

Greg Limited sells a piece of property, plant and equipment. This non-current asset had originally cost £64,000. £42,000 accumulated depreciation had been charged on this asset by the date of disposal. The sale of this non-current asset generated a profit on disposal of £3,000. How much cash was received from the disposal of this piece of property plant and equipment?

A) £19,000
B) £22,000
C) £25,000
D) £39,000

Question 9

Anna Limited sells a piece of property, plant and equipment for £15,000. £22,500 accumulated depreciation had been charged on this asset by the date of disposal. The sale of this non-current asset resulted in a loss on disposal of £1,500. What was the original cost of the piece of property plant and equipment disposed of?

A) £24,000
B) £36,000
C) £37,500
D) £39,000

Question 10

Ola Limited sells a piece of property, plant and equipment for £21,000. The original cost of this asset was £102,000 and cash received from the sale was £21,000. The sale of this non-current asset generated a profit on disposal of £8,000. What was the accumulated depreciation that had been charged on this piece of property plant and equipment by the date of disposal?

A) £73,000
B) £89,000
C) £115,000
D) £131,000