11 Accounting Week 2

11 Accounting Week 1

Review​

By Catherine Ward

Multiple Select

Which of the following are assets? (You can select more than one answer)

• Land

• Service fees income

• Supplies (for a service business)

• Motor vehicle

Items of value owned or controlled by the business.​ They provide a future economic benefit to the business.

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​ASSETS

Multiple Select

Which of the following are assets? (You can select more than one answer)

• Cash at bank

• Inventories

• Money owed to the business

• Creditors

Liabilities are amounts owed by the business to external parties.

​ Liabilities

Multiple Select

Which of the following are liabilities? (You can select more than one answer)

• Interest expense

• Creditors

• Accounts payable

• Loan to J. James

Multiple Select

Which of the following are liabilities? (You can select more than one answer)

• Loan from bank

• Mortgage

• C. Chen (debtor)

• Bank overdraft

This is the difference between the assets and liabilities of a business, and equals the amount of the owner's interest or investment in the business. The accounting entity concept separates the owner from the business for accounting purposes.

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​Owner's equity

Multiple Select

Which of the following represent the accounting equation (you can select more than one answer)?

• A = OE - L

• OE = A - L

• A = L + OE

• L = A - OE

Multiple Choice

If M. Rode had the following assets and liabilities, what is the investment in the business?

Cash in hand $1000, Loan from bank $4000, Accounts payable $500, Accounts receivable $9500, Supplies $500, Furniture $3500

• $18,000

• $14,500

• $1,000

• $10,000

Multiple Choice

C. Black, a plumber, gives you the following list of items. Use the accounting equation to determine the total value of ASSETS.

Amount owing to Tim McLean $1000, Value of pipes held $8000, Loan from bank $1000, Amount owing by Charles Frey $1000, New equipment $3000, Vehicle $15000, C. Black's investment in the business (equity) $25000

• $27,000

• $28,000

• $26,000

• $19,000

Multiple Choice

Represent the following list of TOTAL assets and liabilities using the accounting equation.

Cash at bank $1000, Accounts receivable $500, Inventories $750, Equipment $3000, Accounts payable $250

• $4000 = $4750 - $750

• $5000 = $2250 + 2750

• $5000 = $5250 - $250

• $3500 = $4500 - $

Multiple Choice

The accounting equation only has meaning because of the accounting entity concept. This gives us the concept of owner's equity. Owner's equity exists because the owner is regarded as separate from the business. Given this, decide whether the following statement is TRUE or FALSE.

The business regards the owner as a special liability. (Refer page 32 if you need)

• True

• False

Multiple Choice

Read page 32, 'Detailed examination of the equation'. State whether the following could happen.

A < L + OE

• Yes

• No

Multiple Choice

Read page 32, 'Detailed examination of the equation'. State whether the following could happen.

A > L + OE

• Yes

• No