We have prepared a multiple-choice questions (MCQs) test of chapter business transactions for the students of accounting and finance to help them prepare for their exams and interviews. This MCQs test consists of 13 multiple choice questions with four options for each question. Students need to choose one correct answer to move to the next question.
If you are facing any difficulty to answer these MCQs, we highly recommend studying chapters business transactions and analysis of business transactions from our explanation section.
If you are ready to take this test, let’s start here:
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Business/Financial Transactions Multiple Choice Questions (MCQs) Test.
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Question 1 of 13
1. Question
A business paid out $12.450 in net wages to its employees. In respect of these wages, the following amounts were shown in the statement of financial position.
$ Pay payable 2,480 National Insurance payable -employees’ 1,350 -employers’ 1,500 No other deductions were made.
Employees’ gross wages, before deductions, were:
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12,450 + 2,480 + 1,350 = $16,280 -
Question 2 of 13
2. Question
Books of original entry in a double-entry system of accounting are used to list similar transactions with the totals being posted to the nominal ledger.
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Question 3 of 13
3. Question
Which of the following best explains the imprest system of petty cash?
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The exact amount of petty cash expenditure is reimbursed at intervals to maintain a fixed float.
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Question 4 of 13
4. Question
Which of the following is a book of original entry?
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A, C and D are all ledgers to which transactions are posted from the books of original entry. The journal (B) is the book of original entry that is used for unusual transactions and to correct errors and omissions.
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Question 5 of 13
5. Question
The following data has been extracted from the payroll records of Kleen Ltd. for the month of February 20×1.
$ Pay 17,000 Employers’ NIC 7,500 Employees’ NIC 6,000 Cash paid to employees 50,000 The wage expense for the month is:
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50,000 + 17,000 + 7,500 + 6,000 = $80,000
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Question 6 of 13
6. Question
When a purchase invoice is received from a supplier which two of the following documents would the invoice be checked to?
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Purchase order and goods received note.
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Question 7 of 13
7. Question
G purchases goods on credit from H for $1,000. $100 of these goods are defective and G returns them to H. What document would H issue to G in respect of the returned goods?
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A credit note is issued by a supplier when a customer returns goods to them (C). Invoices (A) are issued when goods are originally sold, on the basis of the delivery note (D) which shows what exactly has been sold. A remittance advice (B) is sent in by the customer to the supplier with payment.
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Question 8 of 13
8. Question
In which book of original entry would discounts allowed be recorded?
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Discounts allowed, like discount received, are recorded in the cash book as the book of original entry.
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Question 9 of 13
9. Question
In which book of original entry is VAT on credit sales recorded?
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VAT on credit sales is recorded in the sales day book (A). VAT on cash sales and on credit purchases would be recorded in the cash book (C) and purchases day book respectively.
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Question 10 of 13
10. Question
In which book of original entry is VAT on purchases from non-credit suppliers recorded?
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When purchases are made from a supplier with which the business does not have an account, they must be paid for in cash – so the book of original entry is the cash book.
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Question 11 of 13
11. Question
The petty cash float in the business has an imprest amount of $200. At the end of March vouchers in the petty cash box totalled $136 and the amount of cash remaining in the box was $54.
Which if the following explains the difference?
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There is $10 or a petty cash voucher for $10 missing from the petty cash box.
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Question 12 of 13
12. Question
A business has the following payroll costs for a month:
$ Gross pay 38,600 Income tax 5,400 Employee’s national insurance 3,100 Employer’s national insurance 3,500 What is the wages cost to the business for the month?
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38,600 + 3,500 = $42,100
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Question 13 of 13
13. Question
Which TWO of the following are source documents that are recorded in an entity’s books of original entry?
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The invoice to a customer will be recorded in the sales day book while the cheque to a supplier will be recorded in the cash book. The purchase order and goods received note act as supporting documentation when an invoice arrives from a supplier, but are not themselves recorded in the books of original entry. Similarly, the delivery note acts as supporting documentation when preparing an invoice to a customer, but is not separately recorded.