Type of Production

CONSUMER GOODS
These are the tangible goods (that can be felt) which are sold to the general public. This include durable and non-durable goods. Durable goods such as machinery, garments and mobiles can last for a long time while non-durable goods such as edible things soon become damaged.
CAPITAL GOODS
They are physical products, manufactured specifically to be sold to other industries for the production of other goods and services like commercial vehicles.
SERVICES
They are non-tangible products for the public to satisfy their wants. They could be commercial or personal. Commercial services include banking, insurance, transportation which are done on a large scale. Personal services are one-to-one services such as hairdressing, teacher and lawyer.

MCQ of Accounting

1 What is the accounting equation for capital employed?

A current assets – current liabilities

B fixed assets + current assets – current liabilities

C fixed assets + current assets + current liabilities

D net assets – current liabilities

2 When preparing a sole trader’s annual accounts, no adjustments were made for closing amounts

prepaid. What is the effect of these omissions?
A net profit overstated | creditors understated

B net profit understated | creditors understated

C current assets overstated | owner’s capital overstated

D current assets understated | owner’s capital understated

3 Which item is revenue expenditure?

A cost of painting new office premises during construction

B cost of repairs to factory plant and machinery

C legal fees for the purchase of new factory premises

D wages of a company’s own workmen for building an office extension

4 In the cash book of a company the bank account showed a credit balance of $5000. There were

unpresented cheques amounting to $1500. The bank statement showed bank charges of $700 not

in the cash book. What is the balance on the bank statement?

A $3300 debit B $4200 debit C $4200 credit D $5800 credit

5 A business increases its provision for doubtful debts by $1600.

What will be the effect of this adjustment on the final accounts?
net profit | net debtors

A decrease by $1600 | decrease by $1600

B decrease by $1600 | increase by $1600

C increase by $1600 | decrease by $1600

D increase by $1600 | increase by $1600

6 What will always be classified in a Balance Sheet as a current liability?

A debentures

B preference shares

C prepaid expense

D proposed dividend

7 There is great uncertainty about the continuance of a business. This has caused the proprietor to

make a large reduction in the valuation of the year-end stock.

Which accounting concept does this illustrate?

A going concern

B matching

C materiality

D substance over form

8 The table shows information from the books of a business at 30 April 2002.
invoiced $

Credit sales invoiced during financial year 79 000

Goods sent to customers on 28 April 2002 and invoiced 4 May 2002 6 100

Goods sent to customers during April 2002 on sale or return basis 8 300

but not sold by 30 April 2002
What is the amount to be credited to the Trading Account as sales for the year ended 30 April

2002?

A $76 800 B $85 100 C $85 300 D $93 400

9 The balance on a Sales Ledger Control account is $40 000.

The following items are then discovered:
Total of sales day book understated 500

Discounts allowed not entered in Sales Ledger Control account 1 200

Bad debts written off not recorded in Sales Ledger Control account 400

Provision for bad debts 2 500
What is the total of the balances in the sales ledger?

A $37 900 B $38 600 C $38 900 D $41 100