FORM ONE BOOK KEEPING TERMINAL EXAMINATION

 

FORM ONE BOOK KEEPING TERMINAL EXAMINATION

Time: 2 Hours

Instructions:

• Answer all questions in Sections A and B

• Choose one question from Section C

• Write your answers clearly in the spaces provided

• Show all your workings where calculations are required

• Neat presentation will be rewarded

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SECTION A (15 MARKS)

Multiple Choice Questions (10 Marks)

Choose the best answer for each question and write its letter in the space provided.

1. What do we call the systematic recording of business financial transactions?
   A. Auditing
   B. Bookkeeping
   C. Management
   D. Marketing

2. Which of these would be classified as a business asset?
   A. Salaries paid to employees
   B. Monthly rent payment
   C. Money in the company bank account
   D. Amounts owed to suppliers

3. The fundamental accounting equation states that:
   A. What the business owns equals what it owes plus the owner's claim
   B. Assets are equal to liabilities minus owner's equity
   C. Owner's equity is assets minus liabilities
   D. Liabilities are the total of assets and owner's equity

4. When we need proof of a business transaction, we refer to a:
   A. Book where all accounts are kept
   B. Daily record of transactions
   C. Document providing transaction details
   D. Statement showing financial position

5. Which document would a business use when billing customers for goods sold?
   A. Utility bill received
   B. Cooking instructions
   C. Itemized sales document
   D. Fictional story book

6. In accounting terms, the left side of any account is known as the:
   A. Side where we record decreases
   B. Side where we record increases
   C. Difference between totals
   D. Initial transaction record

7. Money that the business owes to others would be classified as:
   A. Property owned by the business
   B. Outstanding payments to creditors
   C. Office equipment
   D. Products held for sale

8. When the owner contributes personal funds to the business, we record this as:
   A. An operating cost
   B. Income earned
   C. Owner's investment
   D. Personal withdrawals

9. Using business money or goods for the owner's personal needs is called:
   A. Income from sales
   B. Buying inventory
   C. Owner's drawings
   D. Business profit

10. The book where we first record all daily transactions is called the:
    A. Collection of all accounts
    B. Chronological transaction record
    C. Financial position statement
    D. Profit and loss report

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Matching Items (5 Marks)

Match each accounting term with its correct definition by writing the letter in the space provided.

Term	Definition
1. Asset	B. Resources owned by the business
2. Liability	A. Money owed to others
3. Capital	D. Owner's investment
4. Expense	E. Costs incurred in running the business
5. Revenue	C. Income earned from sales

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SECTION B (70 MARKS)

Answer all questions in this section.

1. Importance of Bookkeeping (10 marks)

Explain five key reasons why maintaining proper financial records is essential for any business.

2. Users of Accounting Information (10 marks)

Identify and describe five different groups of people who rely on a business's financial information.

3. Types of Business Transactions (10 marks)

Discuss five different kinds of financial activities that would be recorded in a business's books.

4. Source Documents in Accounting (10 marks)

Describe five different types of original records that provide evidence for accounting entries.

5. Rules of Debit and Credit (10 marks)

Explain the fundamental principles governing increases and decreases in different types of accounts.

6. Types of Accounts (10 marks)

Outline and describe five main categories of accounts used in the accounting system.

7. Advantages of Using a Journal (10 marks)

Discuss five benefits of recording transactions in a journal before posting to ledger accounts.

8. Examples of Assets and Liabilities (10 marks)

Provide five examples each of what a business might classify as assets and as liabilities.

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SECTION C (15 MARKS)

Answer one question from this section.

9. Importance of Double-Entry System (15 marks)

Explain why the double-entry bookkeeping method is crucial for maintaining accurate financial records, discussing how it helps prevent errors and provides complete financial information.

OR

10. Role of Bookkeeping in Business Success (15 marks)

Discuss how proper bookkeeping practices contribute to effective business management and decision making, providing real-world examples where possible.