Question 1

Ronald Scott starts his own business and opens a business account with £40,000.Using double entry bookkeeping,how would this transaction be recorded?

Accepted Answer

A)  Debit cash account and credit retained earnings account 
B)  Debit capital account and credit cash account 
C)  Debit retained earnings account and credit cash account 
D)  Debit cash account and credit capital account 
A)  Debit cash account and credit retained earnings account 
B)  Debit capital account and credit cash account 
C)  Debit retained earnings account and credit cash account 
D)  Debit cash account and credit capital account D

Question 2

If a Trial Balance does not balance:

Accepted Answer

A)  The difference between them is: debit - credit = profit. (If credit is greater, there is a loss) 
B)  The difference between them is: credit - debit = profit. (If debit is greater, there is a loss) 
C)  There must be an error somewhere. 
D)  The difference between them is the increase in assets or liabilities to the business 
A)  The difference between them is: debit - credit = profit. (If credit is greater, there is a loss) 
B)  The difference between them is: credit - debit = profit. (If debit is greater, there is a loss) 
C)  There must be an error somewhere. 
D)  The difference between them is the increase in assets or liabilities to the business C

Question 3

Which of the following is expected to have a debit balance?

Accepted Answer

A)  Trade payables 
B)  Trade receivables 
C)  Sales 
D)  All of the above 
A)  Trade payables 
B)  Trade receivables 
C)  Sales 
D)  All of the above B

Question 4

A prepayment is considered to be:

Accepted Answer

A)  An asset which will be consumed in a future period 
B)  An expense in the current year 
C)  A future liability 
D)  An expense incurred in one year but paid for in the following 
A)  An asset which will be consumed in a future period 
B)  An expense in the current year 
C)  A future liability 
D)  An expense incurred in one year but paid for in the following

Question 5

Thunderstruck plc purchased £2,000 of inventory,paying £800 cash.How would you record this transaction using double entry bookkeeping?

Accepted Answer

A)  Debit cash £800, debit accounts payables £1,200 and credit inventory £2,000 
B)  Credit cash £1,200, credit accounts payables £800 and debit inventory £2,000 
C)  Credit cash £800, credit accounts payables £1,200 and debit inventory £2,000 
D)  Credit cash £800, debit inventory £800 
A)  Debit cash £800, debit accounts payables £1,200 and credit inventory £2,000 
B)  Credit cash £1,200, credit accounts payables £800 and debit inventory £2,000 
C)  Credit cash £800, credit accounts payables £1,200 and debit inventory £2,000 
D)  Credit cash £800, debit inventory £800

Question 6

A cash account shows all receipts of cash on the right hand side and all payments of cash on the left hand side

Accepted Answer

A) True 
 B)False

Question 7

In a trial balance,if the totals of all the debts equals the totals of all the credits,you can be certain that no errors have been made

Accepted Answer

A) True 
 B)False

Question 8

Which of the following accounts would be increased with a debit?

Accepted Answer

A)  Inventory 
B)  Capital 
C)  Sales 
D)  Accounts payable 
A)  Inventory 
B)  Capital 
C)  Sales 
D)  Accounts payable

Question 9

P.Rudd company received and paid an electricity bill for £300.How would this transaction be recorded?

Accepted Answer

A)  Debit cash and credit retained earnings 
B)  Debit electricity and credit retained earnings 
C)  Debit electricity and credit cash 
D)  Debit cash and credit electricity 
A)  Debit cash and credit retained earnings 
B)  Debit electricity and credit retained earnings 
C)  Debit electricity and credit cash 
D)  Debit cash and credit electricity

Question 10

Which of the following is an example of an accrual?

Accepted Answer

A)  Purchase of inventory 
B)  Payment for rent in advance 
C)  Wages incurred but not yet paid 
D)  All of the above 
A)  Purchase of inventory 
B)  Payment for rent in advance 
C)  Wages incurred but not yet paid 
D)  All of the above

Question 11

Sales made on credit are shown on the left-hand side of the sales account and on the right hand side of the trade receivables account

Accepted Answer

A) True 
 B)False

Question 12

A business begins with £5,000 capital which is paid into the bank.
£1,000 is then spent on goods for resale,paying by cheque.
Half of these are then sold for £2,000 cash.
£3,000 is spent on a van,paying by cheque.
The double entry transaction for the sale of the goods is:

Accepted Answer

A)  Debit CASH £2,000. Credit GOODS £500 
B)  Debit CASH £2,000. Credit GOODS £2,000 
C)  Debit CASH £2,000. Credit SALES £2,000 
D)  Debit SALES £2,000. Credit CASH £2,000 
A)  Debit CASH £2,000. Credit GOODS £500 
B)  Debit CASH £2,000. Credit GOODS £2,000 
C)  Debit CASH £2,000. Credit SALES £2,000 
D)  Debit SALES £2,000. Credit CASH £2,000

Question 13

In general,a sales account has a credit balance

Accepted Answer

A) True 
 B)False

Question 14

At the end of a financial year,businesses often have "prepayments" which are amounts paid in advance,and "Accruals" which are amounts owing.For example,the business may have prepaid a month's rent.It may also have used some utilities that it has not yet paid for.The accounting treatment is as follows:

Accepted Answer

A)  Adjust the relevant accounts in the Income Statement. Prepayment is a current asset. An Accrual is a current liability, both of which are shown on the Statement of Financial Position. 
B)  Do nothing. The money will eventually catch up with the accrued transactions, and the prepaid items will be used in the next financial year. 
C)  Adjust only the accrued amounts - show the additional utilities on the Income Statement and show an Accrual as a current liability on the Statement of Financial Position. Prepayments should be ignored 
D)  Adjust only the prepaid amounts - reduce the rent on the income statement and show the prepayment as a current asset on the Statement of Financial Position. Accruals should be ignored 
A)  Adjust the relevant accounts in the Income Statement. Prepayment is a current asset. An Accrual is a current liability, both of which are shown on the Statement of Financial Position. 
B)  Do nothing. The money will eventually catch up with the accrued transactions, and the prepaid items will be used in the next financial year. 
C)  Adjust only the accrued amounts - show the additional utilities on the Income Statement and show an Accrual as a current liability on the Statement of Financial Position. Prepayments should be ignored 
D)  Adjust only the prepaid amounts - reduce the rent on the income statement and show the prepayment as a current asset on the Statement of Financial Position. Accruals should be ignored

Question 15

For a small company,making a small number of sales,all the transactions are recorded in one main ledger.However,as a business grows,it may introduce a "subsidiary ledger" known as the Sales Ledger.Within the Sales Ledger,the individual sales transactions are recorded in personal accounts.The totals are recorded in a "Sales ledger Control" account.
Suppose a company with a subsidiary ledger makes the following sales:
$$\begin{array} { l l } 
\text { B. Bug } & £ 100 \
\text { M. Moth } & £ 250 \
\text { Worm Ltd } & £ 150
\end{array}$$
Which of the following is the correct treatment?

Accepted Answer

A)  Debit Sales with the individual amounts. Credit Sales ledger Control with the total amounts. Also Debit the individual customer accounts in the Sales ledger itself. 
B)  Credit Sales with the individual amounts. Credit Sales ledger Control with the individual amounts. Also Debit the individual customer accounts in the Sales ledger itself. 
C)  Credit Sales with the total amount, £500. Credit Sales ledger Control with the individual amounts. Also Debit the individual customer accounts in the Sales ledger itself. 
D)  Credit Sales with the total amount, £500. Debit Sales Ledger Control with the total amount, £500. Also make debit entries of the individual amounts in the personal accounts in the Sales Ledger. 
A)  Debit Sales with the individual amounts. Credit Sales ledger Control with the total amounts. Also Debit the individual customer accounts in the Sales ledger itself. 
B)  Credit Sales with the individual amounts. Credit Sales ledger Control with the individual amounts. Also Debit the individual customer accounts in the Sales ledger itself. 
C)  Credit Sales with the total amount, £500. Credit Sales ledger Control with the individual amounts. Also Debit the individual customer accounts in the Sales ledger itself. 
D)  Credit Sales with the total amount, £500. Debit Sales Ledger Control with the total amount, £500. Also make debit entries of the individual amounts in the personal accounts in the Sales Ledger.

Question 16

A creditor account of £10,500 represents:

Accepted Answer

A)  An expense 
B)  An asset 
C)  A liability 
D)  A sale 
A)  An expense 
B)  An asset 
C)  A liability 
D)  A sale

Question 17

Which of the following statements about double-entry bookkeeping is correct?

Accepted Answer

A)  Recording a transaction on the left hand side of an account is called debiting it 
B)  Recording a transaction on the right hand side is debiting it 
C)  If an account has more debited to it than credited to it, it is said to have a credit balance 
D)  If an account has more credited to it than debited to it, it is said to have a debit balance 
A)  Recording a transaction on the left hand side of an account is called debiting it 
B)  Recording a transaction on the right hand side is debiting it 
C)  If an account has more debited to it than credited to it, it is said to have a credit balance 
D)  If an account has more credited to it than debited to it, it is said to have a debit balance

Question 18

Which of the following statements is correct?

Accepted Answer

A)  A purchases accounts only records purchases that have been made on a credit basis 
B)  A purchases account only records purchases that have been made on a cash basis 
C)  A sales account only records sales that have been made on a cash basis 
D)  None of the above statements are correct 
A)  A purchases accounts only records purchases that have been made on a credit basis 
B)  A purchases account only records purchases that have been made on a cash basis 
C)  A sales account only records sales that have been made on a cash basis 
D)  None of the above statements are correct

Question 19

The Accounting Equation regarding the Statement of Financial Position is:

Accepted Answer

A)  Capital + Assets = Liabilities 
B)  Assets - Liabilities = Capital 
C)  Capital = Assets + Liabilities 
D)  Income - Expenses = Profit 
A)  Capital + Assets = Liabilities 
B)  Assets - Liabilities = Capital 
C)  Capital = Assets + Liabilities 
D)  Income - Expenses = Profit

Question 20

Powerage Ltd.purchased goods for £1,700 from RiffRaff plc.Having noticed that the goods were faulty,they were returned to the supplier.How would the return of the goods be recorded?

Accepted Answer

A)  Debit payables (RiffRaff's personal account), credit purchases 
B)  Credit payables (RiffRaff's personal account), debit purchases 
C)  Credit sales, debit payables (RiffRaff's personal account) 
D)  Debit sales, credit returns 
A)  Debit payables (RiffRaff's personal account), credit purchases 
B)  Credit payables (RiffRaff's personal account), debit purchases 
C)  Credit sales, debit payables (RiffRaff's personal account) 
D)  Debit sales, credit returns

Ronald Scott starts his own business and opens a business account with £40,000.Using double entry bookkeeping,how would this transaction be recorded?

If a Trial Balance does not balance:

Which of the following is expected to have a debit balance?

A prepayment is considered to be:

Thunderstruck plc purchased £2,000 of inventory,paying £800 cash.How would you record this transaction using double entry bookkeeping?

A cash account shows all receipts of cash on the right hand side and all payments of cash on the left hand side

In a trial balance,if the totals of all the debts equals the totals of all the credits,you can be certain that no errors have been made

Which of the following accounts would be increased with a debit?

P.Rudd company received and paid an electricity bill for £300.How would this transaction be recorded?

Which of the following is an example of an accrual?

Sales made on credit are shown on the left-hand side of the sales account and on the right hand side of the trade receivables account

A business begins with £5,000 capital which is paid into the bank. £1,000 is then spent on goods for resale,paying by cheque. Half of these are then sold for £2,000 cash. £3,000 is spent on a van,paying by cheque. The double entry transaction for the sale of the goods is:

In general,a sales account has a credit balance

A creditor account of £10,500 represents:

Which of the following statements about double-entry bookkeeping is correct?

Which of the following statements is correct?

The Accounting Equation regarding the Statement of Financial Position is:

Powerage Ltd.purchased goods for £1,700 from RiffRaff plc.Having noticed that the goods were faulty,they were returned to the supplier.How would the return of the goods be recorded?

The Statement of Financial Position Balance Sheetand What It Tells Us

The Income Statement Profit and Loss Account

The Development of Financial Reporting

Ratios and Interpretation: a Straightforward Introduction

How the Stock Market Assesses Company Performance

Cash Flow Statements: Understanding and Preparation

Advanced Interpretation of Company and Group Accounts

Current Issues in Financial Reporting

Trial Balance to Final Accounts

Financing a Business

Management of Working Capital

Introduction to Management Accounting

Investment Appraisal

Budgetary Planning and Control

Absorption Costing

Marginal Costing and Decision-Making

Standard Costing and Variance Analysis

Incomplete Records

Filters

Exam 9: Bookkeeping to Trial Balance

Ronald Scott starts his own business and opens a business account with £40,000.Using double entry bookkeeping,how would this transaction be recorded?

If a Trial Balance does not balance:

Which of the following is expected to have a debit balance?

A prepayment is considered to be:

Thunderstruck plc purchased £2,000 of inventory,paying £800 cash.How would you record this transaction using double entry bookkeeping?

A cash account shows all receipts of cash on the right hand side and all payments of cash on the left hand side

In a trial balance,if the totals of all the debts equals the totals of all the credits,you can be certain that no errors have been made

Which of the following accounts would be increased with a debit?

P.Rudd company received and paid an electricity bill for £300.How would this transaction be recorded?

Which of the following is an example of an accrual?

Sales made on credit are shown on the left-hand side of the sales account and on the right hand side of the trade receivables account

A business begins with £5,000 capital which is paid into the bank. £1,000 is then spent on goods for resale,paying by cheque. Half of these are then sold for £2,000 cash. £3,000 is spent on a van,paying by cheque. The double entry transaction for the sale of the goods is:

In general,a sales account has a credit balance

A creditor account of £10,500 represents:

Which of the following statements about double-entry bookkeeping is correct?

Which of the following statements is correct?

The Accounting Equation regarding the Statement of Financial Position is:

Powerage Ltd.purchased goods for £1,700 from RiffRaff plc.Having noticed that the goods were faulty,they were returned to the supplier.How would the return of the goods be recorded?

The Statement of Financial Position Balance Sheetand What It Tells Us

The Income Statement Profit and Loss Account

The Development of Financial Reporting

Ratios and Interpretation: a Straightforward Introduction

How the Stock Market Assesses Company Performance

Cash Flow Statements: Understanding and Preparation

Advanced Interpretation of Company and Group Accounts

Current Issues in Financial Reporting

Trial Balance to Final Accounts

Financing a Business

Management of Working Capital

Introduction to Management Accounting

Investment Appraisal

Budgetary Planning and Control

Absorption Costing

Marginal Costing and Decision-Making

Standard Costing and Variance Analysis

Incomplete Records

Filters