Double entries-recording-inventories-sales

In double-entry bookkeeping, which of the following statements is true?

• Credit entries decrease expenses and increase assets
• Debit entries decrease expenses and increase assets
• Credit entries decrease liabilities and increase income
• Debit entries decrease income and increase assets

Answer explanation

Debit entries decrease income and increase assets.

Reece has opening trade receivables of £42,100 and closing trade receivables of £38,600. Sales for the period totalled £186,190 (£13,400 of which were cash sales). What is the total of receipts recorded in trade receivables for the period?

• £169,290
• £176,290
• £182,690
• £189,690

Answer explanation

Note that receipts from cash sales are not entered in trade receivables, which is for credit sales only.

During the year, Jiva made the following accounting entries to account for the depreciation charge relating to motor vehicles: Debit Accumulated depreciation – motor vehicles $5,000 Credit Depreciation expense – motor vehicles $5,000 What journal entry is required to account correctly for the depreciation charge for motor vehicles for the year?

• Debit Motor vehicles $5,000, and Credit Accumulated depreciation $5,000
• Debit Depreciation Expense $10,000, and Credit Accumulated depreciation $10,000
• Debit Depreciation expense $5,000, and Credit Accumulated depreciation $5,000
• Debit Accumulated depreciation $10,000, and Credit Depreciation expense $10,000

Parul is unsure of the accounting entries required to account for a contra between the receivables’ and payables’ general ledger accounts for $1,250. What journal entry is required to account correctly for a contra between the receivables’ and payables’ general ledger accounts?

• Debit Payables $1,250, and Credit Receivables $1,250
• Debit Trade payables’ ledger $1,250, and Credit Trade receivables’ ledger $1,250
• Debit Receivables $1,250, and Credit Payables $1,250
• Debit Trade receivables’ ledger $1,250, and Credit Trade payables’ ledger $1,250

Roshan made the following accounting entries to account for an increase in the allowance for receivables: Debit Receivables $4,300 Credit Allowance for receivables $4,300 What journal entry required to correct the above accounting entries to increase the allowance for receivables for the year?

• Debit Receivables, and Credit Irrecoverable debts expense
• Debit Allowance for receivables, and Credit Irrecoverable debts expense
• Debit Irrecoverable debts expense, and Credit Receivables
• Debit Irrecoverable debts expense, and Credit Allowance for receivables

Andi started a taxi business by transferring a personally-owned car, at a value of $5,000, into the business. What accounting entries are required to record this transaction?

• Dr Capital $5,000, Cr Car $5,000
• Dr Car $5,000, Cr Drawings $5,000
• Dr Car $5,000, Cr Capital $5,000
• Dr Drawing $5,000 Cr Car $5,000

Which of the following pairs of items would appear on the same side of the trial balance?

• Drawings and accruals
• Carriage outwards and prepayments
• Carriage inwards and rental income
• Opening inventory and purchase returns

Answer explanation

Drawings, carriage inwards (an expense), prepayments, carriage outwards (expense) and opening inventory are all debit balances. Accruals, rental income and purchase returns are all credit balances.

During the year, Ali made the following accounting entries to account for the cash proceeds received upon disposal of an item of machinery: Debit Bank $2,500 Credit Sales revenue $2,500 What journal entry is required to account correctly for the disposal proceeds received upon disposal of the item of machinery?

• Debit Accumulated depreciation $2,500, and Credit Disposal of machinery $2,500
• Debit Sales revenue $2,500, and Credit Bank $2,500
• Debit Disposal of machinery $2,500, and Credit Machinery asset $2,500
• Debit Sales revenue $2,500, and Credit Disposal of machinery $2,500

What are the accounting entries required to account for settlement discount received of $250 from a credit supplier?

• Debit Discount received $250, and Credit Payables $250
• Debit Payables $250, and Credit Discount received $250
• Debit Discount received $250, and Credit Payables $250
• Debit Payables $250, and Credit Revenue $250

Identify whether the following statements are true or false. Statement (1): A credit balance of £100 brought down on George's receivables ledger in Lei's accounting records means that George owes money to Lei. Statement (2): A debit balance of £500 on Lei's drawings account means Lei has withdrawn £500 in the period.

• Statement (1) is true and Statement (2) is false
• Statement (1) is false and Statement (2) is true
• Both statements are true
• Both statements are false

Answer explanation

Lei owes money to George, so Statement 1 is false. Lei has drawings of £500, so Statement 2 is true.