FIA FA1 CLASS EXERCISE
EXAMPLES
1. Norah sells goods with a list price of $2,500 to Kondwani, offering a 5% trade discount. If
Kondwani pays within 14 days, Norah additionally offers a 6% cash discount. Sales tax is
20%.
a) The total of the invoice that Norah will issue to Kondwani assuming Kondwani
always pays within 14 days ……………………………………
b) The total of the invoice that Norah will issue to Kondwani assuming Kondwani does
not always pay within 14 days……………………………………
2. Theresa gives her customers individual trade discounts from the list price and a general 4%
cash discount for all invoices settled within seven (7) days of issue. A new customer
Mohammed negotiates a 10% trade discount. Mohammed’s transactions during October
are:
12 October
buys goods with a $2,000 list price
16 October
pays the amount due in full
How much does Mohammed pay Theresa on 16 October?
3. Audrey gives her customers individual trade discounts from the list price and a general 5%
cash discount for all invoices settled within seven days of issue. A new customer, Prisca
negotiates a 25% trade discount. Her transactions during June are:
12 June
buys goods with a $5,000 list price
15 June
Returns goods with a $1,000 list price as faulty
16 June
pays half of the net balance on his account
How much does Prisca owe Audrey at the end of June?
A. $1,425
B. $1,500
C. $2,000
D. $2,850
4.
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Charles buys goods on credit from Samir but finds that some of them are faulty. What
document would Charles return to Samir with the faulty goods?
A. Statement
B. Debit note
C. Credit note
D. Purchase invoice
5. What business document provides proof of payment for a business transaction?
A. Expense claim form
B. Invoice
C. Debit note
D. Receipt
6. What document is usually sent every month from the supplier to the customer, listing all the
transactions between them during that month?
A. Statement
B. Invoice
C. Receipt
D. Credit note
7. Which document is issued by seller to buyer when goods are sold on credit?
A. Goods received note
B. A debit note
C. A statement
D. An invoice
8. Which of the following are credit transactions?
1. Purchase of goods for $200 payable in cash in two weeks’time.
2. Writing a cheque for purchase of new computer.
3. Purchase of goods where payment is due in a week’s time.
4. Receipt of a cheque from a customer for goods purchased today.
A. 1 and 4
B. 2 and 4
C. 2 and 3
D. 1 and 3
9. Which document generated internally is used to keep track of all inventory items of an
organization to ensure they are available?
A. Expense claim form
B. Inventory list
C. Goods received note
D. Invoice
10. Which of the following documents is used by employees to claim back money from an
organization which they have spent from personal resources on business activities?
A. Credit note
B. Advice note
C. Expense claim form
D. Goods received note
11. When an organization’s stores department receives materials ordered from supplier, it
attempts to notify all other departments by raising and circulating a document called …
A. Advice note
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B. Goods received note
C. Expense claim form
D. Credit note
12. What is the description of an invoice that is sent from seller to buyer for which payment is
required upon delivery of goods to buyer?
A. Credit invoice
B. Copy invoice
C. Cash on delivery invoice
D. Receipt
13. The phrase ‘Éx-works’ on an invoice means ……….
A. Goods on board are damaged
B. Price quoted includes delivery cost
C. Price quoted excludes delivery cost
D. No damaged goods included
14. A document used by the seller to cancel all or part of the previously issued invoice is called ?
A. Debit note
B. Invoice reversal
C. Credit note
D. Delivery note
15. What document is used by a customer to formally request for a credit note from a supplier?
A. Statement
B. Debit note
C. Credit note
D. Expense claim
16. Lindiwe buys goods from Namatayi for $1,000. she returns half of the goods after two
weeks. What document will Lindiwe send to Namatayi with the goods?
A. COD invoice
B. Delivery note
C. Credit note
D. Debit note
17. Which of the following best describes cash discount?
A. A reduction in the invoiced amount of money demanded from the customer
B. An optional reduction in the amount of money payable by a customer
C. A reduction in the amount of money demanded from a customer as shown on the
supplier’s invoice because of the customer’s large reorder quantities
D. A reduction in the amount demanded from customer as shown on the invoice as certain
conditions have been fulfilled.
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18. Dennis buys goods worth $6,200 from Eugene. On $3,000 worth of the goods, he gets trade
discount of 15%, no trade discount is available on the rest. However, Dennis always makes
sure that he pays within 10 days in order to obtain Eugene’s settlement discount of 4%.
How much will Dennis pay?
A. $5,220
B. $5,270
C. $5,520
D. $5,622
19. Nosiku purchases goods with a list price of $1,800. The supplier offers a trade discount of
12% and a cash discount of 5% if payment is made within 30 days of the invoice date. How
much will Nosiku pay in total if she pays within 30 days?
A. $1,584
B. $1,504.8
C. $1,800
D. $1,640
20. Which of the following documents will the warehouse issue when deliveries are received?
A. A receipt
B. A goods received note
C. A remittance advise
D. A sales order
21. Which of the following correctly explains sales tax?
A. A tax on business profit
B. A tax levied on the sale of goods and services which is administered and collected by the
government
C. A tax on the sale of goods and services which is administered by the government
D. A tax on the sale of goods and services which all businesses must pay.
22. Mildred makes sales in the quarter of $50,226 including sales tax at 20%. His total purchases
net of sales tax are $23,980.
How much should he pay to the tax authorities?
A. $6,048.53
B. $5,249.20
C. $4,374.33
D. $3,575.00
23. You are informed that a sales tax registered business has total output tax of $850 and total
input tax of $700. How much will be payable to or receivable from the government by the
business?
A. $850 payable
B. $700 receivable
C. $150 receivable
D. $150 payable
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24. Ashraf makes sales in the quarter of $34,800 including sales tax at 20%. His total purchases
net of sales tax are $8,510.
How much sales tax should he pay to the government?
A. $5,800
B. $5,258
C. $4,098
D. $1,702
25. Which of the following best describes non active file?
A. A file that is never thrown away nor scrapped, but updated from time to time.
B. A file held for a short period and later thrown away when transaction records have been
processed.
C. A file that is frequently used because it is used in processing current transactions.
D. A file no longer used on day-to-day
26. Which of the following is not an appropriate way to deal with files an organization does not
require?
A. Throw away
B. Securely destroy
C. Microfilm or microfiche
D. Archive
27. Which of the following does not constitute a ‘principle’ in accordance with data protection
legislation?
A. Personal data shall be processed fairly and lawfully
B. Personal data shall be used for more purposes other than registered purposes.
C. Personal data shall be adequate, relevant and not excessive
D. Personal data shall not be kept longer than is necessary
28. What name is used to describe information about a living individual and not organization in
accordance with data protection legislation?
A. Data protection Act
B. Data controllers
C. Personal data
D. Data protection principle
29. The abbreviation FOB on an export invoice means?
A. Customer must pay shipping, insurance and freight cost up to their destination from
supplier’s place of business.
B. Supplier pays shipping, insurance and freight cost up to point of shipping
C. Price quoted does not include any shipping cost
D. No cost will be incurred by either party for shipping, insurance and freight.
30. Abdurrahman sold 12 boxes of ink cartridges with a list price of $80 per box to Mohammed.
He gives Mohammed a 12% trade discount and 5% settlement discount if Mohammed pays
within 30 days. Mohammed always pays within 30 days.
What will be the total of the invoice that Abdurrahman issues to Mohammed for this
transaction?
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31.
32.
33.
34.
35.
36.
37.
38.
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A. $960.00
B. $912.00
C. $844.80
D. $802.56
What is the primary function of a credit sales invoice which a customer has received from a
supplier?
A. It is a demand for immediate payment be the supplier
B. It is a record of goods purchased by a customer
C. It is a demand for payment within an agreed time from the supplier
D. It is a receipt for money paid
A sales tax registered business sells goods $1,200 plus $240 sales tax and purchases goods
costing $200 plus sales tax $40. Assuming these are the only transactions in the sales tax
period and that input tax is fully recoverable, how much sales tax is recoverable/payable
to/from the government?
A. Payable $200
B. Recoverable $200
C. Payable $240
D. Payable $280
What does E & O E on an invoice mean?
A. The supplier has paid shipping, insurance and freight cost
B. The supplier has not paid shipping, insurance and freight cost
C. The supplier can alter any incorrect information on an invoice
D. The supplier requires to be paid upon goods being delivered.
Which of the following transactions is likely to occur on a daily basis in a large business
organization?
A. Credit sales
B. Payroll
C. Purchase of equipment
D. Payment of suppliers
Which of the following comprises small cash transactions?
A. Payments to service providers
B. Petty cash
C. Purchases of inventory
D. Receipts from sales
What is the purpose of a credit note?
A. It acknowledges a purchase on credit
B. It is a reference from an agency detailing the creditworthiness of a new customer
C. It is issued when a deposit is paid on goods
D. It is issued to cancel all or part of a sales invoice.
Which of the following is not an internal document for purchases?
A. Supplier list
B. Delivery note
C. Goods received note
D. Purchase order
What is remittance advice for?
A. To indicate items now paid?
B. To identify goods received
C. To advise remittances received
D. For notification of goods dispatched
39. What is the purpose of a purchase invoice?
(i)
To claim back the sales tax
(ii)
To identify the goods bought
(iii)
To record how much is owed to the supplier
(iv)
To record how much is owed to from the customer
A. (i), (ii) and (iii) only
B. All
C. (ii) and (iii) only
D. (i) and (ii) only
40. In the purchasing procedure, which document will usually follow the goods received note?
A. Delivery note
B. Invoice
C. Statement
D. Advice note
41. Keith received a document from Cullen’s stationery supplies for eight reams of paper which
they supplied three days ago. How would Keith refer to this document?
A. It is a goods received note
B. It is a receipt
C. It is a purchase invoice
D. It is a credit note
42. Mohammed has received goods returned by his customers. What source document is he
going to use to enter these returns in an appropriate book of prime entry?
a. Invoice sent
b. Credit note received
c. Invoice received
d. Credit note sent.
43. Which of the following statements best explains output tax?
A. It is sales tax on purchases
B. It is sales tax on sales
C. It is a payment to the tax authorities
D. It is a refund from the tax authorities
44. A Trader Monica returned goods to her supplier to the value of $1,800 gross. VAT is
calculated at 20%. How much will Monica record as net purchases returns in an appropriate
account?
A. $1,100
B. $1,600
C. $1,500
D. $1,400
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45. Christian sells goods at a net price of $750 for cash. The rate of sales tax is 20%.
How much tax is receivable or payable on this transaction?
a) $150 receivable
b) $625 payable
c) $150 payable
d) $625 receivable
46. Kasonde, a VAT registered trader, purchases goods on credit with a list price of $1,500. The
supplier gives Kasonde a trade discount of 15% and also offers him a cash discount of 10%
for payment within 30 days. VAT is charged at a rate of 20%.
If Kasonde pays his supplier within 30 days, how much will he pay?
a. $1,504.5
b. $1,377.0
c. $1,147.5
d. $1,275.0
47. Which of the following best describes data subjects?
a. Organizations that control data kept about individuals
b. Organizations that collect and use data about individuals
c. Individuals for whom data is kept by organizations that collect and use personal data
d. Data protection legislators.
48. Which of the following are appropriate ways of dealing with sensitive or confidential
business documents that are no longer needed?
(1) Microfilm or microfiche for long term storage
(2) Archiving documents for storage
(3) Secure destruction
(4) Throwing away
a. (1) only
b. (1) and (2
c. (1), (2) and (3)
d. (1), (2), (3) and (4)
49. A Trader Osman returned goods to his supplier to the value of $600 gross. VAT is calculated
at 20%. How much will be a reversal for input tax?
A. $100
B. $600
C. $500
D. $400
50. Mabel buys a calculator costing $240, utensils costing $300 and blanket costing $220. These
are all gross figures, inclusive of sales tax at 17.5%.
How much sales tax in total has Mabel paid?
a) $760
b) $113.19
c) $133.00
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d) $210.25
51. Cynthia is a sales tax registered trader. On 1 October, she purchases carpets for her new
showroom at a list price of $4,000. She is given a trade discount of 20% and the sales tax
rate is 17.5%. What sum will Cynthia be invoiced, inclusive of sales tax ?
a)
b)
c)
d)
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$3,760
$3,200
$4,000
$4,800