Deck 9: Bookkeeping to Trial Balance

Question 1

Which of the following is an example of an accrual?

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

Answer 1

C

Question 2

A prepayment is considered to be:

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

Answer 2

A

Question 3

What would be the balance of the following account if balanced on 15th January?
Besame Ltd

A) £240 Credit
B) £240Debit
C) £390 Credit
D) £390 Debit

Answer 3

A

Question 4

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

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

Question 5

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

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 6

What would be the balance of the following account if balanced on 30th January?
Thunderstruck Ltd

A) £445 Credit
B) £445 Debit
C) £260 Credit
D) £260 Debit

Question 7

A creditor account of £10,500 represents:

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

Question 8

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

Question 9

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

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

Question 10

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

A) Trade payables
B) Trade receivables
C) Rent
D) Inventory

Question 11

In general,a sales account has a credit balance

Question 12

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

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 13

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

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

Question 14

In general,an asset account has a debit balance

Question 15

Which of the following statements is 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 16

The Accounting Equation regarding the Statement of Financial Position is:

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

Question 17

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?

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

Question 18

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

Question 19

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

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 20

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

Question 21

If a Trial Balance does not balance:

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

Question 22

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:

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 23

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:

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 24

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?

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.