BOOK-KEEPING FORM THREE TERMINAL EXAM

BOOK-KEEPING FORM THREE TERMINAL EXAM

INSTRUCTIONS:

Hello, Form Three Book-Keeping Stars!

This is your final exam, so let's show off all that you've learned! It's split into three sections: A, B, and C.

• Sections A and B are a MUST-DO: Answer ALL questions in these sections.
• Section C: Your Choice Time! Pick any TWO questions from this section to answer.
• Make it Easy to Read: Please write clearly and neatly. We want to be able to understand your awesome answers!
• Time's a-Ticking: You have 3 hours for this exam.

Best of luck – you're going to do great!

SECTION A: (20 Marks) - Show What You Know!

• Answer every question in this section.

1. Multiple Choice Questions (10 Marks)

   • For each question, choose the BEST answer from the options. Write down the letter (A, B, C, or D) of your choice.

   I. Let's say you're calculating depreciation. Which formula is the correct one for the straight-line method?

   A.  (Cost of an asset + Estimated residual value) / Useful life of an asset
   B.  (Cost of an asset - Estimated residual value) x Useful life of an asset
   C.  (Cost of an asset - Estimated residual value) / Useful life of an asset
   D.  (Cost of an asset + Estimated residual value) x Useful life of an asset
   

   II. What kind of account is Accrued Income?

   A.  A Current Liability (something the business owes)
   B.  A Current Asset (something the business owns)
   C.  An Expense (something the business spends money on)
   D.  Revenue (money the business earns)
   

   III. Which of these is something that a not-for-profit organization wouldn't record in its Receipts and Payments account (because it's not a cash transaction)?

   A.  Money from subscriptions
   B.  Money from donations
   C.  A Bank Overdraft (when the bank account goes below zero)
   D.  Money raised at a charity event
   

   IV. Why do businesses prepare a Statement of Affairs?

   A.  To figure out their profit or loss
   B.  To keep track of cash coming in and going out
   C.  To understand their financial situation when their records are incomplete
   D.  To record all receipts and payments
   

   V. What's one downside of using control accounts?

   A.  They make it faster to prepare financial statements.
   B.  They help find errors and fraud.
   C.  They require more paperwork.
   D.  They help check if the math in ledger accounts is correct.
   

   VI. What does "single entry system" mean in bookkeeping?

   A.  A system where each transaction is recorded with two entries.
   B.  A system that only records cash transactions.
   C.  A system that doesn't follow the double-entry system.
   D.  A system used by not-for-profit organizations.
   

   VII. What is prepaid revenue?

   A.  Revenue received in advance
   B.  Revenue received in cash
   C.  Revenue not yet received
   D.  Revenue received from credit sales
   

   VIII. Which of these is an example of capital expenditure?

   A.  Rent expense
   B.  Salaries
   C.  Buying a company car
   D.  Office supplies
   

   IX. What's the main reason for the matching concept in accounting?

   A.  To recognize revenue when cash comes in
   B.  To recognize expenses when cash goes out
   C.  To make sure earnings aren't misstated in a period
   D.  To make sure all transactions are in the cash book
   

   X. How do we treat recovered bad debts (when someone pays a debt we thought was uncollectible)?

   A.  As an expense
   B.  As a liability
   C.  As revenue
   D.  As an asset
   

2. Matching Challenge (10 Marks)

   • Match the items in List A with the correct descriptions in List B. Write the number and the corresponding letter (e.g., I. G).

   List A

   I. Accrued expense II. Depreciation III. Control account IV. Receipts and Payments Account V. Allowance for doubtful debts VI. Capital expenditure

   List B

   A. An account that summarizes transactions with customers or suppliers. B. Spending money on something that will benefit the business for more than one year. C. An account that tracks cash coming in and cash going out for a not-for-profit organization. D. Expenses that have been incurred but not yet paid. E. The way we spread the cost of an asset over its useful life. F. Revenue received before it's earned. G. An estimate of money owed to the business that might not be collected.

SECTION B: (42 Marks) - Time to Explain!

• Answer all questions in this section.

3. What's the difference between the accrual basis and the cash basis of accounting? (6 Marks)
4. Describe three different ways to calculate depreciation. (6 Marks)
5. What are the good things and the not-so-good things about using control accounts? (6 Marks)
6. Why might a business have incomplete records? (6 Marks)
7. What are the key characteristics of the single-entry system of bookkeeping? (6 Marks)
8. How are profit-making organizations different from not-for-profit organizations? (6 Marks)
9. How do we handle accrued expenses and prepaid expenses in accounting? (6 Marks)

SECTION C: (18 Marks) - Let's Dig Deeper!

• Answer any two questions from this section.

10. Why are adjustments important in accounting? Give five examples of common adjusting entries. (9 Marks)
11. Explain how to calculate profit or loss from incomplete records using the change in net worth method. (9 Marks)
12. What are the main parts of financial statements for not-for-profit organizations, and how are they different from those of profit-making organizations? (9 Marks)