Deck 9: The General Ledger

Question 1

Which of the following statements is true?

A) To record an increase in any given asset account that account must be debited
B) To record a decrease in capital, the capital account must be credited
C) To record an increase in any given liability account that account must be debited
D) To record a decrease in any given liability account must be credited

Answer 1

To record an increase in any given asset account that account must be debited

Question 2

The trading and income statement:

A) Is only prepared once each year
B) Shows the entity's financial position at a point in time
C) Is not part of the double entry system?
D) Is part of the double entry system?

Answer 2

Is part of the double entry system?

Question 3

When a business pays its electricity bill by cheque the double entry is:

A) Debit: Heat and light account Credit: Bank account
B) Debit: Cash account Credit: Heat and light account
C) Debit: Heat and light account Credit: Cash account
D) Debit: Bank account Credit: Heat and light account

Answer 3

Debit: Heat and light account Credit: Bank account

Question 4

When a business purchases goods on credit the double entry is:

A) Debit: Purchases account Credit: Bank account
B) Debit: Purchases account Credit: Trade payables account
C) Debit: Trade payables account Credit: Purchases account
D) Debit: Purchases account Credit: Trade receivables account

Question 5

A debit balance on a ledger account indicates

A) An asset or an expense
B) A liability or an expense
C) An amount owing to the organisation
D) A liability or revenue

Question 6

When goods that were sold on credit are returned the double entry is:

A) Debit: Returns outward account Credit: Trade receivables account
B) Debit: Returns inward account Credit: Trade receivables account
C) Debit: Trade receivables account Credit: Sales return account
D) Debit: Sales returns account Credit: Returns inward account

Question 7

What transaction is represented by the entries? Debit: R. Ray
Credit: Bank

A) The purchase of goods from R. Ray by cheque
B) The sale of goods to R. Ray (they pay by cheque)
C) Receipt of a cheque from R. Ray
D) Payment by cheque to R. Ray

Question 8

What transaction is represented by the entries? Debit: Bank
Credit: Sales

A) The purchase of goods from R. Ray by cheque
B) The sale of goods to R. Ray (they pay by cheque)
C) Receipt of a cheque from R. Ray
D) Payment by cheque to R. Ray

Question 9

What transaction is represented by the entries? Debit: Bank
Credit: R. Ray

A) The purchase of goods from R. Ray by cheque
B) The sale of goods to R. Ray (they pay by cheque)
C) Receipt of a cheque from R. Ray
D) Payment by cheque to R. Ray

Question 10

What transaction is represented by the entry? Credit: Commission
Debit: T. McKee

A) The issue of an invoice for commission to T McKee
B) The payment of commission by the entity
C) The receipt of a bill for commission payable by the entity
D) The receipt of commission income by the business

Question 11

Which of the following are correct?

A) (1) and (4) only
B) (1) and (2) only
C) (2) and (3) only
D) (1) and (3) only

Question 12

Which of the following are incorrect?

A) (1) and (4) only
B) (1) and (2) only
C) (2) and (3) only
D) (1) and (3) only

Question 13

Which of the following are not entered in the statement of financial position?

A) Assets
B) Drawings
C) Capital introduced
D) Heat and light

Question 14

Which of the following correctly records the purchase of a lorry on credit from D. Watson?

A) Dr. Purchases account Cr. D. Watson account
B) Dr. D. Watson account Cr. Purchases
C) Dr. Motor vehicles account Cr. D. Watson account
D) Dr. D. Watson account Cr. Motor vehicles account

Question 15

Which of the following correctly records the sale of a lorry on credit to D. Watson (assume no profit
Or loss on the sale):

A) Dr. Motor vehicles account Cr. Bank account
B) Dr. Bank account Cr. Motor vehicles account
C) Dr. Motor vehicles account Cr. D. Watson account
D) Dr. D. Watson account Cr. Motor vehicles account

Question 16

Which of the following correctly records the sale of a lorry paid for by cheque by D. Watson (assume
No profit or loss on the sale and the entity's bank account is in overdraft):

A) Dr. Motor vehicles account Cr. Bank account
B) Dr. Bank account Cr. Motor vehicles account
C) Dr. Motor vehicles account Cr. D. Watson account
D) Dr. D. Watson account Cr. Motor vehicles account