F4 Accounting ch2 supp ex

Identify the account which differs from the others in nature.

• Bank loans

• Machinery

• Motor vehicles

• Premises

Which of the following are incorrect?

(i)Bank loans are classified as liabilities.

(ii)Liabilities are resources owned by a firm.

(iii)Creditors are persons or entities that owe money to a firm.

(iv)Creditors are the suppliers to whom a firm owes money and debtors are the customers who owe money to a firm.

• (i) and (iv)

• (ii) and (iii)

• (ii), (iii) and (iv)

• All of the above

What is the purpose of the double-entry bookkeeping system?

• To ensure that capital is always equal to liabilities plus assets

• To record both aspects of every transaction, once on the debit side of an account and once on the credit side of another account

• To ensure no transaction is omitted from the books

• To record the owner’s capital

• (i) and (iii)

• (i) and (iv)

• (ii) and (iii)

• (ii) and (iv)

Which of the following statements are correct about the accounting equation?

(i) Capital is the total amount of resources supplied to a business by its owner(s).

(ii) Liabilities are the resources supplied to a business by people other than its owner(s).

(iii) Assets are the resources owned by a business.

(iv) Assets are the resources supplied to a business by its suppliers.

• (i) and (ii)

• (iii) and (iv)

• (i), (ii) and (iii)

• All of the above

Which of the following is an asset of a firm?

• Office equipment owned by the firm

• Money owned by the firm to a supplier for goods purchased on credit

• An overdrawn balance in the firm’s bank account

• The amount paid by the owner to settle a debt of the firm

Which of the following is a liability of a firm?

• A building owned by the firm

• Cash kept in the firm’s safe

• Amount owed to the firm by a debtor

• A loan taken out by the firm from a financial institution

• (i) and (ii)

• (iii) and (iv)

• (i), (ii) and (iii)

• All of the above

• $184,000

• $185,000

• $192,000

• $193,000

A supplier’s account in the customer’s books shows a credit balance of $18,000. What does this mean?

• The customer owes the supplier $18,000.

• The customer has paid the supplier $18,000.

• The supplier has paid the customer $18,000.

• The supplier owes the customer $18,000.