CAT multiple-choice questions

Take your pick

A selection of multiple-choice practice Questions are published below from CAT Scheme Papers 1 and 2. The answers are printed on page 66.

Paper 1, Recording financial transactions

Question 1
Hywel purchases goods on credit with a list price of $100. The supplier gives Hywel a trade discount of 15% and also offers a cash discount of 10% for payment within 30 days.

What is the amount that Hywel will debit to his purchases account?
A $115.00
B $85.00
C $76.50
D $75.00

Question 2
Which of the following best describes an invoice?
A A document produced by a purchaser detailing items purchased
B A document produced by a seller detailing items sold
C A document produced by a seller following the return of goods
D A document produced by a seller listing monthly transactions

Question 3
The following is a summary of the petty cash transactions for a week:

Petty cash is maintained using the imprest system.

What sum should be reclaimed by the cashier at the end of the week?
A $150
B $340
C $400
D $500

Question 4
Which of the following is a current liability?
A Closing inventory
B Opening inventory
C Petty cash
D Bank overdraft

Question 5
Which of the following errors will become apparent when drawing up a trial balance?
A A credit purchase was completely omitted from the accounting records
B A credit sale was recorded as a cash sale
C The payment of wages was debited to the rent account instead of the wages account
D A cash sale was recorded correctly in the sales account and credited in the bank account

Question 6
Carion sells the following goods for cash during January:

What are the correct entries in Carion's general ledger?
A Dr sales $1,799, Dr sales tax $268, Cr cash $2,067
B Dr cash $2,067, Cr sales $1,799, Cr sales tax $268
C Dr sales $1,531, Dr sales tax $268, Cr cash $1,799
D Dr cash $1,779, Cr sales $1,531, Cr sales tax $268

Question 7
Annabel's cash book shows her to be $2,030 overdrawn. A bank reconciliation, however, shows that a standing order payment for $365 had been entered in the cash book twice, and that a dishonoured customer's cheque for $275 had been debited in the cash book rather than credited.

What is Annabel's true overdraft position?
A $1,845
B $1,940
C $2,120
D $2,215

Question 8
An employee is paid $4.50 hourly, and works Monday to Friday inclusive for eight hours daily, Saturday four hours at
time-and-a-half, and Sunday five hours at double time.

What is the weekly gross pay of the employee?
A $220.50
B $229.50
C $243.00
D $252.00

Question 9
Iwan's payables ledger showed that $2,300 was owed to suppliers at the start of the week. During the week Iwan made purchases of $3,900 although he paid $900 of this in cash. He also paid suppliers $1,000 by cheque.

What is the closing balance on his payables ledger?
A $4,000
B $4,300
C $5,200
D $6,100

Question 10
What business transaction would result in the following double entry being posted?

A The purchases of goods for resale on credit
B The receipt of cash from a credit customer
C A cash sale
D The banking of petty cash

Question 11
Which of the following defines cost classification?
A The process of grouping costs according to their common characteristics
B The allotment of items of cost to cost centres
C The sum of all costs incurred
D The use by several companies of the same costing methods

Question 12
A sales representative earns a basic salary of $10,000 per annum, a guaranteed
end-of-year bonus of $5,000 and 5% commission on the value of sales.

What cost classification is appropriate for the sales representative's salary?
A Direct cost
B Product cost
C Semi-fixed cost
D Prime cost

Question 13
Which would be the most appropriate basis for re-apportioning the cost of a factory canteen to production departments?
A The number of direct operatives
B Floor space occupied by production departments
C Total employees in production departments
D Wages paid to direct operatives

Question 14
The occupancy rates for a hotel over a two-year period are shown below:

Which statement is correct?
A The occupancy rate for Year 1 is higher than Year 2 for quarters 3 and 4
B The occupancy rate for Year 2 is higher than Year 1 for quarters 1, 2 and 3
C The occupancy rate for Year 2 is higher than Year 1 for all four quarters
D The occupancy rate for Year 1 is higher than Year 2 for quarters 1, 2 and 3

Question 15
Western Limited makes four products, which are shown below:

There is only 200kg of Material X

Which product should Western make?
A Alpha
B Beta
C Delta
D Sigma

Question 16
Which of the following indicates the effect of an unfavourable variance?
A When a business has more profit as a result
B When a business has less profit as a result
C When a business has more sales as a result
D When a business has more stock as a result

Question 17
What is a computer's working memory known as?
A ROM (read-only memory)
B RAM (random access memory)
C CD-ROM (compact disc read-only memory)
D Virtual memory

Question 18
Why are PINs used?
A To restrict access by unauthorised personnel
B To increase the capacity of the computer
C To ensure employees perform their work correctly
D None of the above

Question 19
Which of the following factors is least important when planning a written report?
A Finding an ornate font for the title
B Following a logical structure
C Giving clear recommendations or options for action
D Giving references to previous reports on the same subject

Question 20
Pad Limited has the following results:

Sales $100,000
Cost of sales ($20,000)
Gross profit $80,000
Expenses ($30,000)
Net profit $50,000

What is the net profit margin (profit to sales ratio)?
A 50%
B 80%
C 62.5%
D 200%

Answers
Paper 1
Q1-B, Q2-B, Q3-B, Q4-D, Q5-D, Q6-D, Q7-D, Q8-D, Q9-B, Q10-C
Paper 2
Q11-A, Q12-C, Q13-C, Q14-B, Q15-A.
Q16-D, Q17-B, Q18-A, Q19-A, Q20-A