Deck 4: Double-Entry Bookkeeping 1: Debits, Credits,t Accounts, the Trial Balance and the Financial Statements

Question 1

The credit side of the T account records:

A) Increases in assets and expenses.
B) Increases in income, liabilities and capital.
C) Decreases in income and expenses.
D) Decreases in assets, liabilities and capital.

Answer 1

B

Question 2

The debit side of the T account records:

A) Increases in assets and expenses.
B) Increases in income, liabilities and capital.
C) Decreases in income and expenses.
D) Decreases in assets, liabilities and capital.

Answer 2

A

Question 3

A credit entry to a debit account will:

A) Increase the debit balance on that account IE increase an asset or expense.
B) Reduce the debit balance on that account IE reduce the asset or expense.
C) Increase the credit balance on that account IE increase the liability, equity or income.
D) Reduce the credit balance on that account IE reduce the liability,equity or income.

Answer 3

B

Question 4

A debit entry to a debit account will::

A) Decrease the credit balance on that account IE decrease the liability, capital or income.
B) Increase the credit balance on that account IE increase the liability, capital or income.
C) Decrease the debit balance on that account IE decrease the asset or expense.
D) Increase the debit balance on that account IE increase the asset or expense.

Question 5

A debit entry to a credit account will::

A) Increase the debit balance on that account IE increase the asset or expense.
B) Decrease the debit balance on that account IE decrease the asset or expense.
C) Decrease the credit balance on that account IE decrease the liability, capital or income.
D) Increase the credit balance on that account IE increase the liability, capital or income.

Question 6

A credit entry to a credit account will:

A) Decrease the credit balance on that account IE decrease the liability, capital or income.
B) Increase the credit balance on that account IE increase the liability or income.
C) Decrease the debit balance on that account IE decrease the asset or expense.
D) Increase the debit balance on that account IE increase the asset or expense.

Question 7

Making a debit entry to a T account will:
Please select all that apply.

A) Increase an asset balance.
B) Decrease a liability balance.
C) Decrease an income balance.
D) Increase a capital balance.

Question 8

Making a credit entry to a T account will:
Please select all that apply.

A) Increase an expense balance.
B) Increase a liability balance.
C) Increase an asset balance.
D) Increase an income balance.

Question 9

Making a debit entry to a T account will:
Please select all that apply.

A) Decrease a capital balance.
B) Decrease a liability balance.
C) Increase an expense balance.
D) Increase an income balance.

Question 10

Making a credit entry to a T account will:
Please select all that apply.

A) Decrease an asset balance.
B) Decrease an income balance.
C) Decrease a capital balance.
D) Increase a liability balance.

Question 11

Margot Limited makes cash sales in September of £10,500. Which one of the following is the correct double entry to record these sales in Margot Limited's books of account?

A) Debit trade receivables £10,500, Credit sales £10,500
B) Debit cash £10,500, Credit trade payables £10,500
C) Debit cash £10,500, Credit trade receivables £10,500
D) Debit cash £10,500, Credit sales £10,500

Question 12

Charles Limited runs a retail furniture operation. Charles Limited receives a delivery of tables and chairs with a cost of £22,000 from a supplier. Charles Limited will pay for these goods in 30 days' time. Which one of the following is the correct double entry to record this transaction in Charles Limited's books of account?

A) Debit trade payables £22,000, Credit purchases £22,000
B) Debit purchases £22,000, Credit cash £22,000
C) Debit purchases £22,000, Credit trade payables £22,000
D) Debit trade payables £22,000, Credit cash £22,000

Question 13

Tibbles Limited receives cash from a credit customer of £30,000. Which one of the following is the correct double entry to record this cash receipt in Tibbles Limited's books of account?

A) Debit trade receivables £30,000, Credit sales £30,000
B) Debit cash £30,000, Credit trade payables £30,000
C) Debit cash £30,000, Credit trade receivables £30,000
D) Debit cash £30,000, Credit sales £30,000

Question 14

Hedge Limited receives notice from its customer Privet Limited that it is in administration and has no cash with which to pay what it owes to its suppliers. Privet Limited owes Hedge Limited £8,000. Which one of the following is the correct double entry to record this event in Hedge Limited's books of account?

A) Debit sales £8,000, Credit trade receivables £8,000
B) Debit trade receivables £8,000, Credit irrecoverable debts £8,000
C) Debit sales £8,000, Credit irrecoverable debts £8,000
D) Debit irrecoverable debts £8,000, Credit trade receivables £8,000

Question 15

Maria receives notice from her customer Joseph that he has no cash with which to pay what he owes to his suppliers. Joseph owes Maria £500. Which one of the following is the correct double entry to record this event in Maria's books of account?

A) Debit cash £500, Credit irrecoverable debts £500
B) Debit sales £500, Credit cash £500
C) Debit irrecoverable debts £500, Credit trade receivables £500
D) Debit sales £500, Credit trade receivables £500

Question 16

Debit irrecoverable debts, Credit trade receivables is the double entry required to record an irrecoverable debt.

Question 17

Puffins Limited takes out a bank loan for £200,000. The bank loan is paid into Puffins' bank account and is due for repayment in three years' time. Which one of the following is the correct double entry to record this transaction in Puffin Limited's books of account?

A) Debit bank account £200,000, Credit bank loan £200,000
B) Debit bank account £200,000, Credit sales £200,000
C) Debit bank loan £200,000, Credit bank account £200,000
D) Debit sales £200,000, Credit bank account £200,000

Question 18

Barolo Limited receives a statement from the bank showing bank charges of £257. This amount has been deducted from the cash in the company's bank account. Which one of the following is the correct double entry to record this event in Barolo Limited's books of account?

A) Debit bank account £257, Credit trade payables £257
B) Debit bank charges £257, Credit bank account £257
C) Debit bank account £257, Credit bank charges £257
D) Debit trade payables £257, Credit bank account £257

Question 19

Frascati Limited buys a new van with which to make deliveries in its distribution business. The cost of the van is £20,000 and the purchase of the van is made on credit with its supplier. Frascati Limited will pay for the new van 30 days after taking delivery of the vehicle. Which one of the following is the correct double entry to record this transaction in Frascati Limited's books of account?

A) Debit motor expenses £20,000, Credit bank account £20,000
B) Debit motor expenses £20,000, Credit trade payables £20,000
C) Debit motor vehicles £20,000, Credit bank account £20,000
D) Debit motor vehicles £20,000, Credit trade payables £20,000

Question 20

Which one of the following is the correct double entry to record expenses paid in cash in an entity's books of account?

A) Debit expenses, Credit cash
B) Debit expenses, Credit trade payables
C) Debit trade payables, Credit cash
D) Debit cash, Credit trade payables

Question 21

Chianti Limited sells new plant and equipment that it has produced to a customer for £250,000. The customer has agreed to pay the £250,000 due in 60 days' time. Which one of the following is the correct double entry to record this transaction in Chianti Limited's books of account?

A) Debit trade receivables £250,000, Credit property, plant and equipment £250,000
B) Debit trade receivables £250,000, Credit sales £250,000
C) Debit cash £250,000, Credit sales £250,000
D) Debit cash £250,000, Credit property, plant and equipment £250,000

Question 22

Panos invested £10,000 into a small retail business which he runs on his own. His profits each year are added to the balance on his capital account and he draws out money for his own personal living expenses as and when he needs to. Panos has set up a direct debit from his business bank account to pay his personal smart phone bill each month. In September, the smart phone company charged Panos' business bank account £25 for his personal smart phone usage in August. Which one of the following is the correct double entry to record this transaction in Panos books of account?

A) Debit telephone expenses £25, Credit bank account £25
B) Debit telephone expenses £25, Credit trade payables £25
C) Debit capital account £25, Credit bank account £25
D) Debit bank account £25, Credit capital account £25

Question 23

Cheapo Supermarkets makes a payment of £9,570 from its bank account to pay what it owes to its supplier of breakfast cereals. Which one of the following is the correct double entry to record this transaction in Cheapo Supermarkets' books of account?

A) Debit bank £9,570, Credit trade receivables £9,570
B) Debit sales £9,570, Credit bank £9,570
C) Debit purchases £9,570, Credit bank £9,570
D) Debit trade payables £9,570, Credit bank £9,570

Question 24

Arvind is setting up his own business. He opens a business bank account and pays in £25,000 of his own money with which to finance the early months of trading. Which one of the following is the correct double entry to record this transaction in Arvind's books of account?

A) Debit bank £25,000, Credit income £25,000
B) Debit bank £25,000, Credit capital £25,000
C) Debit bank £25,000, Credit liabilities £25,000
D) Debit capital £25,000, Credit bank £25,000

Question 25

Debit purchases, Credit trade payables is the correct double entry to record goods purchased on credit for resale in a retail business.

Question 26

Which one of the following is the correct double entry to record a payment of loan interest from the bank account in an entity's books of account?

A) Debit loan interest, Credit bank
B) Debit loan interest, Credit loan interest accrual
C) Debit loan, Credit cash
D) Debit bank, Credit loan interest

Question 27

Shazia runs a grocery retail business. She trades on credit with her suppliers. At the end of her financial year, her main supplier of goods awards Shazia a £1,000 discount on her purchases of goods during the year. Her main supplier asks her to claim this discount by deducting £1,000 from her next payment for goods supplied on credit. Which one of the following is the correct double entry to record this £1,000 discount in Shazia's books of account?

A) Debit purchases £1,000, Credit trade payables £1,000
B) Debit bank account £1,000, Credit purchases £1,000
C) Debit trade payables £1,000, Credit purchases £1,000
D) Debit trade payables £1,000, Credit sales £1,000

Question 28

AC makes a sale on credit to DC. The total value of the sale is £10,000. Some of the £10,000 of goods delivered are damaged in transit. DC returns these damaged goods and asks for a credit to its account of £3,000. Which one of the following is the correct double entry to record the £3,000 reduction in sales in AC's books of account?

A) Debit sales £3,000, Credit bank £3,000
B) Debit sales £3,000, Credit trade receivables £3,000
C) Debit trade receivables £3,000, Credit sales £3,000
D) Debit sales £7,000, Credit trade receivables £7,000

Question 29

Debit allowance for receivables expense, credit trade receivables is the correct double entry required to record an increase in the allowance for receivables.

Question 30

Debit bank, Credit trade payables is the correct double entry to record cash paid to trade payables.

Question 31

Dr depreciation expense, Credit non-current assets is the correct double entry to record the annual depreciation charge on non-current assets.

Question 32

JC awards discounts to customers for bulk orders of goods purchased during the financial year. The total discounts allowed for the financial year to 31 December total up to £9,650. Which one of the following is the correct double entry to record these discounts allowed in JC's books of account?

A) Debit sales £9,650, Credit trade receivables £9,650
B) Debit trade payables £9,650, Credit purchases £9,650
C) Debit trade payables £9,650, Credit discounts allowed £9,650
D) Debit discounts allowed £9,650, Credit trade receivables £9,650

Question 33

ZJ purchases raw materials on credit from BD for £5,000. However, when they arrive, half the raw materials turn out to be unsuitable so ZJ returns these goods to BD. Which one of the following is the correct double entry to record the £2,500 goods returned in ZJ's books of account?

A) Debit purchases £2,500, Credit trade payables £2,500
B) Debit purchases £2,500, Credit cash £2,500
C) Debit trade payables £2,500, Credit purchases £2,500
D) Debit cash £2,500, Credit purchases £2,500

Question 34

Which of the following double entries will result in decreases in expense accounts?
Please select all that apply.

A) Debit trade payables, Credit purchases (double entry to record purchase returns made to suppliers).
B) Debit prepayments, Credit rent expense (double entry to record rent paid in advance).
C) Debit cash, Credit irrecoverable debts (double entry to record cash recovered from an insolvent debtor that was previously charged as an expense).
D) Debit allowance for receivables expense account, Credit allowance for receivables (double entry to record an increase in the allowance for receivables).

Question 35

Luis Limited makes a loan repayment of £50,000 from the company's bank account. What is correct double entry to record this transaction?

A) Debit trade payables £50,000, Credit loan £50,000
B) Debit loan £50,000, Credit trade payables £50,000
C) Debit bank £50,000, Credit loan £50,000
D) Debit loan £50,000, Credit bank £50,000

Question 36

Felicia Limited takes out a £500,000 bank loan on 1 January 2019. On 31 December 2019, the company makes the first repayment of £50,000 together with a payment of interest of £25,000. The repayment and the payment of interest are made from the company's bank account. What is the correct double entry to record this transaction?

A) Debit loan £75,000, Credit bank £75,000
B) Debit loan £50,000, Debit interest payable £25,000, Credit bank £75,000
C) Debit bank £75,000, Credit loan £50,000, Credit interest receivable £25,000
D) Debit loan £50,000, Credit bank £50,000

Question 37

Which of the following double entries will result in decreases in assets?
Please select all that apply.

A) Debit sales, Credit trade receivables (double entry to record sales returns made by customers).
B) Debit allowance for receivables, credit allowance for receivables expense (double entry to record a reduction in the allowance for receivables).
C) Debit annual depreciation charge, credit accumulated depreciation (double entry to record the annual charge for depreciation on non-current assets).
D) Debit irrecoverable debts, credit trade receivables (double entry to record trade receivables that cannot or will not pay what is owed).

Question 38

Which of the following double entries will result in increases in income?
Please select all that apply.

A) Debit trade receivables, credit sales (double entry to record sales made on credit to customers).
B) Debit bank account, credit interest receivable (double entry to record a receipt of bank interest).
C) Debit bank account, credit capital account (double entry to record the receipt of cash from the owner of a business).
D) Debit bank account, credit bank loan (double entry to record the receipt of a loan from the bank).

Question 39

Which of the following double entries will result in decreases in liabilities?
Please select all that apply.

A) Debit loan, credit bank (double entry to record the repayment of a loan from the bank).
B) Debit sales, credit cash (double entry to record a refund of cash to a customer for a cancelled sale).
C) Debit trade payables, credit bank (double entry to record cash paid to suppliers of goods and services made on credit).
D) Debit capital account, credit bank (double entry to record the payment of cash to the owner of a business).

Question 40

Jacob's rent account shows a prepayment at 1 January 2019 of £750. During the year to 31 December 2019, Jacob paid rent of £11,000 from his bank account. At 31 December 2019 Jacob has a rent prepayment of £875. What is the figure that will appear in Jacob's trial balance for rent expense at 31 December 2019?

A) £10,875
B) £11,125
C) £11,750
D) £12,625

Question 41

Jemima made credit sales of £243,250 in the financial year to 31 October 2019. Her sales returns for the year totalled up to £3,750 and she also allowed customers discounts of £1,000. What is the figure that will appear in Jemima's trial balance for sales at 31 October 2019?

A) £238,500
B) £239,500
C) £240,500
D) £243,250

Question 42

Fadia set up her retail business on 1 October 2018. She trades with her suppliers on credit. During her first financial year ended 30 September 2019, Fadia's suppliers delivered goods with a total value of £78,950. By 30 September 2019, Fadia had returned goods with a value of £2,750, had received discounts from her suppliers totalling up to £895 and had made total payments to her suppliers of £72,308. What is the figure that will appear in Fadia's trial balance for trade payables at 30 September 2019?

A) £2,997
B) £3,892
C) £5,747
D) £6,642

Question 43

Ebrahim has been trading for many years. At 31 May 2018, his trade receivables account had a balance of £48,221. During the financial year to 31 May 2019, Ebrahim made credit sales of £385,669. He received cash from his customers of £378,570. On 28 May 2019 a customer went into liquidation owing £4,410: the customer has insufficient assets with which to pay any of this debt. What is the debit figure that will appear in Ebrahim's trial balance for trade receivables at 31 May 2019?

A) £36,712
B) £41,122
C) £50,910
D) £55,320

Question 44

Linda starts her accountancy practice on 1 May 2018. She opens a business bank account and pays in £50,000 of her own money to provide the practice with cash with which to start operating. Her fees to clients in her first year total up to £100,000 (there are no outstanding fees due for payment at 30 April 2019 and all fees received have been paid into her business bank account). Her office expenses are £40,000 (all of these have been paid by the end of the financial year from her business bank account and there are no outstanding expenses at 30 April 2019) and she withdraws £2,000 each month to cover her own personal living expenses. What is the figure that will appear in Linda's trial balance for her bank account at 30 April 2019?

A) £26,000 credit
B) £64,000 credit
C) £86,000 debit
D) £150,000 debit

Question 45

The balance on the accumulated depreciation account represents an expense and is therefore posted to the debit side of the trial balance.

Question 46

At 1 June 2018, Madhavi's telephone expense account showed a prepayment of £250. During the financial year ended 31 May 2019, Madhavi paid £3,400 for all her telephone calls and line rental. At 31 May 2019, Madhavi had an accrual for telephone expenses of £400. What is the figure that will appear in Madhavi's trial balance for her telephone expense at 31 May 2019?

A) £3,250
B) £3,550
C) £3,650
D) £4,050

Question 47

In the trial balance for the financial year ended 31 July 2018, Vanita's capital account showed a balance of £43,400. Vanita's loss for the year ended 31 July 2018 amounted to £10,350. During the financial year to 31 July 2019, Vanita made drawings from her capital account of £12,000. Her final accounts for the year ended 31 July 2019 show that she made a profit for the year of £20,450. What is the figure that will appear in Vanita's trial balance for her capital account at 31 July 2019?

A) £21,050
B) £31,400
C) £41,500
D) £41,750

Question 48

At 31 October 2018 Famske Limited had an accrual for electricity costs of £675. During the financial year to 31 October 2019, Famske Limited made an £800 payment each month for electricity. At 31 October 2019, Famske's electricity supplier wrote to confirm that the company had overpaid for electricity for the 12 months to 31 October 2019, the overpayment at that date amounting to £425. What is the figure that will appear in Famske Limited's trial balance for electricity expense at 31 October 2019?

A) £8,500
B) £9,350
C) £9,850
D) £10,700

Question 49

The balance on the allowance for receivables account represents an expense and is therefore posted to the debit side of the trial balance.