Extension - double entry (start of year)

After the preparation of the Profit and Loss Account, the following balances were included in the books of the business.

equipment 17 600

Trade Payables 3 200

Trade Receivables 5 900

bank overdraft 800

Loan 600

Inventory 4 100

motor vehicles 2 500

What is the total of the assets?

• $27 400

• $30 100

• $30 700

• $30 900

Smith sold goods on credit to Green.

What entries will Green make to record this?

• account debited purchases

  account credited Smith

• account debited Smith

  account credited purchases

• account debited sales

  account credited Smith

• account debited Smith

  account credited sales

Which entries are made in X’s ledger to record the payment by a customer of money owing to X?

• account to be debited cash

  account to be credited Trade Payable

• account to be debited cash

  account to be credited Trade Receivable

• account to be debited Trade Payable

  account to be credited Cash

• account to be debited Trade Receivable

  account to be credited Cash

Which is an asset?

• a credit balance on a supplier’s account

• a credit balance on the bank account

• a debit balance on a customer’s account

• a debit balance on the drawings account

Money received from a customer is recorded in the debtor’s account and in the bank account.

Which accounting principle is being applied?

• business entity

• duality

• matching

• money measurement

A business purchases a motor vehicle on credit.

What is the effect of this?

• It increases non-current assets.

• It increases owner’s capital.

• It reduces net profit.

• It reduces the bank balance.

Sarah sublets part of her premises to Ruth.

A cheque for rent has been received from Ruth.

How will Sarah record this in her ledger?

• account to be debited bank

  account to be credited rent receivable

• account to be debited rent receivable

  account to be credited bank

• account to be debited rent receivable

  account to be credited Ruth

• account to be debited Ruth

  account to be credited bank

The skill and knowledge of the workforce is not shown as an asset in the Statement of Financial Position (balance sheet) of a business.

Which accounting principle is being applied?

• business entity

• consistency

• money measurement

• prudence