PoA - Revision Final

Which of the following statements is incorrect?

• Assets - Capital = Liabilities
• Liabilities + Capital = Assets
• Liabilities + Assets = Capital
• Assets - Liabilities = Capital

Which of the following is not an asset?

• Buildings
• Cash balance
• Trade receivables
• Loan from K. Harris

Which of the following is a liability?

• Machinery
• Trade payables for goods
• Motor vehicles
• Cash at bank

Which of the following best describes the meaning of ‘Purchases’?

• Items bought
• Goods bought on time
• Goods bought for resale
• Goods paid for

Which of the following should not be called ‘Sales’?

• Office fixtures sold
• Goods sold on time
• Goods sold for cash
• Sale of item previously included in ‘Purchases’

Which of the following is correct?

• Profit does not alter capital
• Profit reduces capital
• Capital can only come from profit
• Profit increases capital

Which of the following best describes a trial balance?

• It shows the financial position of a business
• It shows the financial position of a businessIt is a special account
• It shows all the entries in the books
• It is a list of balances on the books

Is it true that the trial balance totals should agree?

• No, there are sometimes good reasons why they differ
• Yes, except where the trial balance is extracted at the year end
• Yes, always
• No, because it is not a balance sheet

Gross profit is

• Excess of sales over cost of goods sold
• Sales less purchases
• Cost of goods sold + opening inventory
• Net profit less expenses of the period

Net profit is calculated in th

• Trading account
• Profit and loss account
• Trial balance
• Balance sheet