BS1071 Recap

To increase an asset account you

• Debit it

• Credit it

• I don't know

Assets = ?

• Liabilities

• Equity

• Equity - Liabilities

• Equity + Liabilities

• I don't know

To decrease a liability account you

• Debit it

• Credit it

• I don't know

Accumulated depreciation...

• appears in the income statement

• is added to asset cost

• is unaffected by the disposal of a depreciable asset

• totals all depreciation charged to date

• I don't know

To increase an equity account you

• Debit it

• Credit it

• I don't know

An organisation sells an asset for £40,000. The asset originally cost £120,000 and had a net book value of £50,000 at the time of disposal.

How would this be recorded in the financial records?

• DR bank £40,000, CR NCA cost £120,000, DR Acc Depn £70,000, CR Gain on sale £10,000

• DR bank £40,000, CR NCA cost £120,000, DR Acc Depn £70,000, DR loss on sale of asset £10,000

• CR bank £40,000, DR NCA cost £120,000, CR Acc Depn £50,000, CR Gain on sale £30,000

• I don't know

If an investor buys share capital for cash, how is this recorded?

• DR Equity, CR Cash

• DR Cash, CR Inventory

• DR Cash, CR Equity

• DR Share capital, CR Revenue

• I don't know

An organisation has a year end of 31 August 2022. On 1 August they paid £9,000 rent to their landlord for the period 1 August 2022 - 31 October 2022. The payment was recorded: DR Rent expense, CR bank.

Is any further entry required?

• Yes: DR Prepayments £6,000, CR Rent expense £6,000

• No

• Yes: DR Accruals £6,000, CR Rent expense £6,000

• I don't know

An organisation has an opening NBV of non-current assets at the beginning of the financial year of £428,000.

Additions of assets during the year were £37,000.

The closing NBV on non-current assets at the end of the financial year was £348,750.

How much was the depreciation charge during the year?

• £79,250

• £116,250

• £158,500

• £42,250

• I don't know

A sole trader's business had opening capital at the beginning of the financial year of £450,000 and closing capital at the end of the financial year of £525,000.

If they had made drawings of £45,000 during the year, and had not introduced any new capital, what was the profit of the business for the year?

• £75,000

• £165,000

• £30,000

• £120,000

• I don't know