Answers to 2021 GCE N(A) P1 Theory Questions Flashcards
State the meaning of the following value which an accountant must uphold:
Integrity
An accountant who upholds the value of integrity is someone who is straightforward and honest in all professional relationships.
State the meaning of the following value which an accountant must uphold:
Objectivity
An accountant who upholds the value of objectivity is someone who will not let bias, conflict of interest or the undue influence of others override his or her professional judgement.
State the purposes of a source document.
- To provide evidence (objectivity theory) to capture occurrence of a transaction.
- The source document contains and provides the details of a business transaction that are needed for recording.
State the type of transaction involved with the source document: receipt.
Cash purchase or cash sale
State the type of transaction involved with the source document:
Debit note
Corrects an undercharge, i.e. increases the amount owed by credit customers who were previously undercharged.
State the type of transaction involved with the source document:
Invoice
Informs credit customers of the amount owed after the business sold goods or provided services on credit.
State the type of transaction involved with the source document:
Credit note
Corrects an overcharge, i.e. reduces the amount owed by credit customers:
- who were previously overcharged; or
- after goods were returned.
State the type of transaction involved with the source document:
Payment voucher
- Processes payment to credit suppliers:
- must be approved by authorised personnel; and
- must be supported by original supplier’s invoice.
State the purposes of internal controls.
- safeguard assets of the business;
- ensure business transactions are recorded accurately;
- comply with laws and regulations.
Define a trade discount.
A trade discount is a reduction to the list / retail / catalogue price.
Note: List price refers to the original price of an item before any discounts.
State the double entry to record a cash discount in the books of:
the supplier
Dr Trade Payables
Cr Discount Received
State the double entry to record a cash discount in the books of:
Dr Discount Allowed
Cr Trade receivables
Calculation of cost of sales applies only to…
Trading Business
Calculation of profit for the year applies to:
Both trading business and service business.
“May have other income” applies to…
Both trading business and service business.
“Always holds inventory” applies only to…
trading business.
Journal entry for:
Owner introduced $20 000 personal savings into the business bank account.
Dr Cash at Bank
Cr Capital
Journal entry for:
Owner provided office equipment, $500, from her own home for business use.
Dr Office equipment
Cr Capital
Journal entry for: Owner took inventory with a cost of $20 for her own personal use.
Dr Drawings
Cr Inventory
Name the ledger account to which the sales revenue account is transferred when that account is closed at the end of the year.
Income Summary Account
