Practice Questions • 20 Questions
State the difference between mark-up and gross profit margin. (2 marks)
Explain what is meant by "incomplete records" in accounting. (2 marks)
A business uses mark-up to calculate the expected value of closing inventory in order to identify whether any inventory has been stolen. Explain ONE limitation of using mark-up for this purpose. (3 marks)
State FOUR benefits of introducing a double-entry bookkeeping system for a sole trader who currently uses incomplete records. (4 marks)
Suki Rawlings does not keep full accounting records. The following information is available at 31 March 2023: Calculate the opening capital of Suki Rawlings at 31 March 2023. Show your working. (4 marks)
The following information is available for Nathan Wells for the year ended 31 December 2023: During the year Nathan withdrew £7 400 for private use. Calculate the profit or loss for the year ended 31 December 2023. Show all workings. (4 marks)
Explain TWO reasons why a sole trader might choose not to keep full double-entry accounting records. (4 marks)
A business has credit sales but does not keep full accounting records. Explain how a trade receivables account can be used to find total credit sales for the year. (4 marks)
Kelly Okonkwo runs a clothing retailer. She does not keep full accounting records. The following information is available for the year ended 31 July 2023: - Revenue: £156 000 - Mark-up: 30% on cost - Opening inventory: £14 500 - Purchases: £121 200 (a) Calculate the cost of sales for the year. (2 marks) (b) Calculate the gross profit for the year. (1 mark) (c) Calculate the closing inventory at 31 July 2023. (2 marks)
Diana Fenwick runs a hair salon. During the year ended 31 May 2023 she suspected that cash had been stolen by a member of staff. The following information is available: (a) Prepare a cash account and calculate the amount of cash stolen during the year. (4 marks) (b) State how stolen cash is treated in the income statement. (1 mark)
Marco Andelli does not keep full accounting records for his business for the year ended 30 September 2023. He has provided the following information: (a) Prepare a trade receivables account to calculate credit sales for the year. (4 marks) (b) Calculate total revenue for the year ended 30 September 2023. (2 marks)
Continuing with Marco Andelli's records (year ended 30 September 2023): Bank payments to trade payables during the year were £47 600 (as shown in the bank account above). Marco also paid £2 400 cash directly for purchases. (a) Prepare a trade payables account to calculate total credit purchases for the year. (4 marks) (b) Calculate total purchases for the year ended 30 September 2023. (2 marks)
The following information relates to Brendan Halloran's business for the year ended 28 February 2023: - Revenue: £240 000 - Gross profit margin: 25% - Opening inventory: £22 000 - Rate of inventory turnover: 6 times per annum (a) Calculate the cost of sales and gross profit. (2 marks) (b) Calculate the closing inventory at 28 February 2023 using the inventory turnover figure. (2 marks) (c) Calculate purchases for the year. (2 marks)
A business owner discovers that £3 200 in cash has been stolen. The business's insurance company has agreed to pay compensation of £2 000, although this had not been received at the year end. Analyse the impact of the stolen cash on the income statement and statement of financial position of the business. (6 marks)
Suki Rawlings (from Q4) continued trading in the year ended 31 March 2024. The following information is available: During the year Suki withdrew £11 800 for private use. Prepare a statement of financial position extract (capital section only) for Suki Rawlings at 31 March 2024, showing the profit or loss for the year. Show all workings. (8 marks)
Maria Santos runs a gift shop. She does not keep full accounting records. All sales and purchases are for cash. All takings are paid directly into her bank account. She has provided the following information for the year ended 28 February 2023: **Additional information:** Prepare an income statement for Maria Santos for the year ended 28 February 2023. (10 marks)
Thomas Darvell does not keep full accounting records. He has provided the following information for the year ended 31 December 2023: **Additional information:** Prepare: (a) An income statement for the year ended 31 December 2023. (14 marks) (b) A statement of financial position at 31 December 2023. (6 marks)
Yusuf Okafor does not keep full accounting records. He has provided the following information for the year ended 30 June 2023: Yusuf believes that a dishonest employee has stolen some cash. His insurance company has agreed to pay compensation of £1 800, although this had not been received by 30 June 2023. **Additional information:** Prepare: (a) An income statement for the year ended 30 June 2023. (14 marks) (b) A statement of financial position at 30 June 2023. (6 marks)