Accounting MCQ 1

Which group contains only liabilities?

• bank loan, trade payables, prepaid rent

• bank overdraft, trade payables, unpaid wages

• trade payables, cash at bank, unpaid rates

• trade payables, inventory, unpaid wages

What is the accounting equation?

• assets – liabilities = capital

• assets + liabilities = capital

• liabilities – assets = capital

• liabilities – capital = assets

Omar returned faulty goods to Yasmin, the supplier.

Which document did Omar send to Yasmin?

• credit note

• debit note

• Invoice

• statement of account

Jacob settled the account of Ahmed, a credit supplier. He made the following entries on the credit side of his cash book.

Which entries did Jacob make on the debit side of Ahmed’s account?

• Bank $195

• Bank $200

• Bank $195

  Discount Allowed $5

• Bank $195

  Discount Received $5

What may a credit balance on a ledger account represent?

• accrued income

• asset

• expense

• prepaid income

The following partly-completed account appeared in Edward’s sales ledger.

On 29 April, Ann paid $10 000 by cheque and was given a cash discount of $200.

Which statement is correct on 30 April?

• Ann owed Edward $10 800.

• Ann owed Edward $11 200

• Edward owed Ann $10 800.

• Edward owed Ann $11 200.

The totals of a trial balance did not agree. The total of the debit column was $13 400.

It was found that the purchases journal had been overcast by $195 and goods bought from supplier X for $85 had been incorrectly credited to Y.

What was the total of the credit column of the trial balance?

• $13 120

• $13 205

• $13 595

• $13 680

Leo is unable to pay the debt he owes to Sam.

Which entry did Sam make to write off this irrecoverable (bad) debt?

• Debit - Irrecoverable debts account

  Credit - income statement

• Debit - Irrecoverable debts account

  Credit - Leo Account

• Debit - Income statement

  Credit - Leo Account

• Debit - Leo Account

  Credit - Income statement

Rashid maintains a provision for doubtful debts of 5% of the trade receivables at the end of each year.

Trade receivables owed $40 000 on 31 March 2017.

Trade receivables owed $46 000 on 31 March 2018.

Which journal entry should Rashid make on 31 March 2018?

• Dr Income statement $300

  Cr Provision for doubtful debts $300

• Dr Income statement $2300

  Cr Provision for doubtful debts $2300

• Dr Provision for doubtful debts $300

  Cr Income statement $300

• Dr Provision for doubtful debts $2300

  Cr Income statement $2300

A trader prepares financial statements each year. What do these assist the trader to do?

• calculate the amount owing to creditors

• calculate the cash drawings

• check the bank statement balance

• make decisions about the future