Lockhat Incorporated - Trainee Employment Application

Monday Test score

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1. Which one of the following statements is INCORRECT?

a) Assets - Equity = Liabilitiesb) Liabilities + Assets = Equityc) Assets - Liabilities = Equityd) Liabilities + Equity = Assets

2. Which of the following is a current asset?

a) Machineryb) Buildingsc) Loan from Shareholderd) Cash Balance

3. Which of the following is a non-current liability?

a) Cash in bankb) Long-term borrowingsc) Current portion: long-term borrowingsd) Motor Vehicles

4. Which of the following is INCORRECT?

a) Assets R7 850, Liabilities R1 250, Equity R6 600b) Assets R8 200, Liabilities R2 800, Equity R5 400c) Assets R9 550, Liabilities R1 150, Equity R8 200d) Assets R6 540, Liabilities R1 120, Equity R5 420

5. Which of the following are CORRECT?

	Description	Account to be debited	Account to be credited
i	Purchased office furniture for cash	Office furniture	Cash
ii	A debtor, P Sangster, pays us by EFT	Bank	P Sangster
iii	Introduced capital by EFT	Capital	Bank
iv	Paid a creditor, B Lee, in cash	B Lee	Cash

Select from the following options:

a) i and iv onlyb) ii, iii and iv onlyc) i, ii and iv onlyd) i, ii and iii only

6. Which of the following are INCORRECT?

	Transaction	Account to be debited
i	Sold van for cash	Cash
ii	Returned some of office equipment to suppliers Ltd	Office equipment
iii	Repaid part of loan from C Charles by cheque	Loan from C Charles
iv	Bought machinery on credit from Betterways Ltd	Betterways Ltd

Select from the following options:

a) iii and iv onlyb) i and iii onlyc) ii and iii onlyd) ii and iv only

7. Of the following, which are correct?

Transaction	Account to be debited	Account to be credited
i) Goods sold on credit to R Williams	R Williams	Sales
ii) S Johnson returns goods to us	Returned inwards	S Johnson
iii) Goods bought for cash	Cash	Purchases
iv) We returned goods to A Henry	A Henry	Returns inwards

Select from the following options:

a) i and ii onlyb) iii and iv onlyc) ii and iv onlyd) i and iii only

8. Gross profit is:

a) Net profit less (-) expensesb) Sales less (-) purchases, add (+) opening stockc) Sales less (-) purchases, less (-) opening stock, add (+) closing stockd) Cost of goods sold add (+) opening stock

9. Net profit is calculated in the:

a) Profit and loss accountb) Trial balancec) Trading accountd) Balance sheet

10. Given the following figures:

Sales			8 200
Opening Stock			1 300
Closing Stock			900
Purchases			6 400

The cost of goods sold figure is:

a) R 6,200b) R 6,800c) R 7,000d) None of the above

11. The Philip Company received a bill for Rates. The bill is for R550 and is payable in 30 days. The accounting entry is:

	Debit	Credit
a	Accounts receivable	Service revenue
b	Accounts payable	Cash
c	Rates	Accounts payable
d	Rates	Cash

Select from the following options:

a)b)c)d)

12. The total of the "Discounts Allowed" column in the cash book is posted to:

a) The debit side of the Discounts allowed accountb) The debit side of the Discounts received accountc) The credit side of the Discounts received accountd) The credit side of the Discounts allowed account

13. Given the following information, calculate the amount of the cheque you would make out:

Purchase invoice:
- 5 items - R 80 each
- Trade discount - 25%
- Cash discount - 5% if paid within the credit period

Select one of the following options

a) R285b) R280c) R260d) none of the above

14. Depreciation is:

a) The part of the cost of the fixed Asset consumed during its period of use by the firmb) The salvage value of a fixed assetc) The amount spent to buy a fixed assetd) The amount of money spent in replacing assets

15. A firm bought a machine for R3,200. It is to be depreciated at a rate of 25% using the Reducing balance method. What would be the remaining book value after 2 years?

a) R1,800b) R2,400c) R1,600d) None of the above

16. A firm bought a machine for R 16 000. It is expected to be used for 5 years then sold for R 1 000. What is the annual amount of depreciation if the straight line method was used:

a) R3,200b) R3,100c) R3,000d) R3,750

17. Vat on supplier tax invoices are regarded as:

a) input Vatb) output vatc) a and bd) none of the above

18. Vat on turnover is regarded as:

a) input vatb) output vatc) a and bd) None of the above

19. The employer is liable for what percentage in respect of UIF?

a) 2%b) 1%c) 0%d) 14%

20. What is SARS main electronic medium of communication?

a) U- filingb) E- Filingc) ROEd) None of the above

21. What is the labour departments electronic medium of communication in respect of UIF?

a) U-filingb) E-filingc) ROEd) None of the above

22. CMU Corp, has R4 500 000 of accounts receivable and has found an average of 3 percent of its credit sales are uncollectible. Suppose CMU Corp. determines that a customer owing R10 000 will never pay. What would be the journal entry?

	Amount	Debit	Credit
a	300	Bad debts	Allowance for Bad debts
b	300	Allowance for Bad debts	Accounts Receivable
c	10 000	Bad debts	Allowance for Bad debts
d	10 000	Allowance for Bad debts	Accounts Receivable

Select from the following options:

a)b)c)d)

23. Brooks Co. declared and paid a cash dividend of R5,000. What would be the journal entry?

	Debit	Credit
a	Retained Earnings	Allowance for Bad debts
b	Retained Earnings	Accounts Receivable
c	Dividends payable Retained Earnings	Cash Dividends payable
d	Retained Earnings Dividends payable	Dividends payable Cash

Select from the following options:

a)b)c)d)

24. Given the following balance sheets of three firms, which appears to have greater financial leverage?


	Firm A	Firm B	Firm C
Debt	2	40	15
Equity	8	60	35
Total Assets	10	100	50

Select from the following options:

a) Firm Ab) Firm Bc) Firm Cd) All the same

25. On 01 December 2020, a company purchased supplies for R 1 300. On 31 December 2020, a physical inventory count showed that R 800 of supplies were on hand. The closing adjustment entry is:

	Amount	Debit	Credit
a	R 800	Purchases	Inventory
b	R 1 300	Purchases	Inventory
c	R 500	Purchases	Inventory
d	R 500	Inventory	Cash

Select from the following options:

a)b)c)d)

26. During the 2020 financial year, a company had Credit Sales of R50 000 and their average Trade Receivables balance was R5 000 at year end, what would their average collection period be?

a) 14 Daysb) 10 Daysc) 36,5 Daysd) 32 Days

27. If management were trying to hide profits to lower their tax expense, they would:

a) Under-state salesb) Over-state salesc) Under-state cost of salesd) Over-state depreciation (P/L)

28. Which VAT items are not deductible in terms of the VAT Act

a) A meal was paid for whilst staying away from home for business purposesb) Employee flew to Cape Town for a business meetingc) Purchased Coffee machine dispenser for employee cafeteriad) Insurance on motor vehicle (motor vehicle as defined)

29. In which instance should the Inventory Balance be remeasured:

a) When Fair Value exceeds Costb) When Fair Value is below Costc) When net realisable value exceeds Costd) When net realisable value is below Cost

30. Companies not disclosing the fact that bankruptcy is imminent would be violating which accounting principle

a) Solvency Testb) Profitability Conceptc) Business entity Conceptd) Going Concern Assumption

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