Accounting Sample Exam
ACCT 1106
SAMPLE EXAMINATION
Section 1 – Technical Questions
Question 1 – Perpetual Journal Entries 20 marks
On October 1, Keiler Motorcycle Shop had an inventory of 20 dirt bikes at a cost of $1,150 each. During the month of October, the following transactions occurred.
Oct. 3 Purchased 10 bikes at a cost of $1,150 each from the Lyons Bike Company, terms n/30.
6 Sold 10 bikes for $1,500 each, terms n/30.
6 Freight of $250 on the October 6 sale was FOB shipping point.
7 Received credit from the Lyons Bike Company for the return of 2 defective bikes.
13 Issued a credit to a customer for the return of a bike. The bike was returned to inventory.
19 Purchased 8 bikes from Huffy Cycle Company at a cost of $1,125 each, terms 2/10, n/30.
20 Freight of $220 on the October 19 purchase was FOB shipping point.
29 Paid for the October 19 purchase.
Instructions
Using a perpetual inventory system, prepare the journal entries, in your exam booklet, to record the transactions.
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Question 2 Internal Controls 15 marks
The following internal control procedures are used by Brooks Company for cash receipts and disbursements.
1. Cashiers receive all over the counter receipts and place the cash into a single cash drawer.
2. When cash in the drawer exceeds $500, it is placed in an envelope marked “cash” and stored in a drawer in the supervisor’s office.
3. The company’s accountant makes daily bank deposits.
4. The clerk in the receiving department authorizes all payments for purchases.
5. Blank cheques are kept in the main office.
Instructions: For each of the above procedures, explain the weakness in internal control, identify the control policy or procedure violated and suggest a change in procedure that will result in better control. Complete your answer in the table provided below:
| | |Control
SAMPLE EXAMINATION
Section 1 – Technical Questions
Question 1 – Perpetual Journal Entries 20 marks
On October 1, Keiler Motorcycle Shop had an inventory of 20 dirt bikes at a cost of $1,150 each. During the month of October, the following transactions occurred.
Oct. 3 Purchased 10 bikes at a cost of $1,150 each from the Lyons Bike Company, terms n/30.
6 Sold 10 bikes for $1,500 each, terms n/30.
6 Freight of $250 on the October 6 sale was FOB shipping point.
7 Received credit from the Lyons Bike Company for the return of 2 defective bikes.
13 Issued a credit to a customer for the return of a bike. The bike was returned to inventory.
19 Purchased 8 bikes from Huffy Cycle Company at a cost of $1,125 each, terms 2/10, n/30.
20 Freight of $220 on the October 19 purchase was FOB shipping point.
29 Paid for the October 19 purchase.
Instructions
Using a perpetual inventory system, prepare the journal entries, in your exam booklet, to record the transactions.
[pic]
Question 2 Internal Controls 15 marks
The following internal control procedures are used by Brooks Company for cash receipts and disbursements.
1. Cashiers receive all over the counter receipts and place the cash into a single cash drawer.
2. When cash in the drawer exceeds $500, it is placed in an envelope marked “cash” and stored in a drawer in the supervisor’s office.
3. The company’s accountant makes daily bank deposits.
4. The clerk in the receiving department authorizes all payments for purchases.
5. Blank cheques are kept in the main office.
Instructions: For each of the above procedures, explain the weakness in internal control, identify the control policy or procedure violated and suggest a change in procedure that will result in better control. Complete your answer in the table provided below:
| | |Control