Section a multiple choice questions (60 marks=20*3 marks)

Total assets 750,000
Current liabilities 120,000
Non-current liabilities 230,000
Total liabilities 350,000
Share capital—preference 100,000
Ordinary shareholders’ equity 280,000
Retained earnings 20,000
Total capital 400,000
A1:2
B 2,14:1
C 2:1
D 1:2.14
Answer: C
Current Ratio= 240,000/120,000=2:1
17. (Bank reconciliation) The company’s cash book shows a balance of $ 25,100.
Bank statement contains $500 of service charge of operating the account. Bank statement contains interest income of $2500.A note receivable of $ 8,300 was collected by the bank
Compute the adjusted cash book balance.

A$35,400
B$30,400

C$36,400
D$18,800
Answer: A
25,100-500+2,500+8,300=$35,400
18. Use the following information for the year ended 31 December 2022 to compute the sales revenue for 2022:
$
Beginning inventory 23,000
Purchases 300,000
Ending inventory 15,000
The gross profit as a percentage of sales is 20%

A $422,500

B $308,000
C $246,400
D $385,000
Answer: D
COGS=23,000+300,000-15,000=$308,000; Sales revenue=308,000*100/80=$385,000

19. The company's ending inventory was understated by $10,000. What will be the effect of this error?

A The current year's assets will be overstated
B The current year's cost of goods sold will be understated and net income will be overstated
C The current year's cost of goods sold will be overstated and net income will be understated
D The current year's cost of goods sold will be understated, the equity will be overstated
Answer: C

20. The following transactions relate to Data Logic Co electricity expense ledger account for the year ended 31 December 2022:

$
Prepayment brought forward at 1 January 2022 3,200
Cash paid 8,400
Prepayment carried forward at 31 December 2022 3,700

What amount should be charged to the statement of profit or loss in the year ended 31 December 2022 for electricity?

A $11,600

B $8,900
C $15,300
D $7,900
Answer: D

Balance b/f 3,200

Expense incurred (cash) 8,400
Prepaiment c/f 3,700