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Accounts Assignment II Semester

Multiple Choice Questions (11 to 14)

Question 11

On 1 June 2010 Dan Traders, invested R100 000 at the O K Bank at an interest rate of 13% per annum. No interim interest payments were made by the O K Bank regarding this investment up to 31 December 2010, the end of Dan Trader’s financial year.

Which one of the following journal entries correctly reflects the adjustment that must be made at 31 December 2010 in the books of Dan Traders in respect of the above?

Sno R R
1.



2.


3.




4.



Accrued income Interest received
Narration

Interest received
Accrued income
Narration

Interest received
Accrued income
Narration

Accrued income
Interest received Narration

7 583



7 583


5 417



5 417





7 583



7 583




5 417


5 417




Question 12

Happy Limited took out three insurance policies during 2010, namely one each on 1 April, 1 July and 31 December. The annual premiums (payable in advance) were R2 000, R3 000 and R1 000 respectively.

Which one of the following alternatives will appear on the income statement of the company in respect of “insurance” for the year ended 31 December 2010?

  1. Insurance – R3 000
  2. Prepaid expenses (insurance) – R3 000
  3. Insurance – R6 000
  4. Insurance – R5 000.
  5. None of the above

Question 13

On 1 December 2010 ABC Limited received an amount of R2 400 representing a fee re- ceived for services to be rendered on a monthly basis during the six months 1 January 2011 to 30 June 2011.

On 1 January 2011 ABC Ltd had to make an advance payment of R600 in respect of rent for the period 1 January 2011 to 31 March 2011. The latter payment was necessary to en- able ABC Limited to render the above-mentioned services.

Which one of the following amounts represents the net profit/loss of ABC Limited, resulting from the above, for the period ended 28 February 2011, the end of their financial year? (The matching as well as the accrual principles are to form the basis for your calculations.)

  1. R 400 profit
  2. R 800 profit
  3. R1 800 profit
  4. R 600 loss
  5. None of the above

Question 14

During 2009 White Dairy sold milk coupons to the value of R150 000 to clients. During 2009, however, only R135 000 worth of coupons were exchanged for milk. During 2010 coupons to the value of R140 000 were sold whilst coupons worth R143 000 were exchanged for milk.

According to the accrual principle, which one of the following answers represents the income for 2010?

  1. R135 000
  2. R143 000
  3. R147 000
  4. R140 000
  5. None of the above

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