Which statements about book-keeping and accounting are correct?

1. 1 - Accounting is performed periodically rather than daily.
2. 2 - Accounting relies on having accurate book-keeping records.
3. 3 - Book-keeping includes the preparation of financial statements.
4. 4 - Book-keeping involves the recording of financial transactions.

• 1, 2 and 4

• 1 and 3

• 2, 3 and 4

• 2 and 4

A trader invested $4000 into the business. $2000 was used to pay a credit supplier. The rest of the money was paid into the business bank account.

What changes would take place within the accounting equation?

• A –$2000, OE –$4000, L +$2000

• A +$2000, OE +$2000, L no effect

• A +$2000, OE +$4000, L –$2000

• A +$4000, OE +$4000, L no effect

Wilma bought 55 items from Margot at a list price of $40 each, subject to a 15% trade discount.

Wilma later returned 25 items as they were faulty.

Which document did Margot issue to Wilma for the returned items?

• credit note for $850

• credit note for $1000

• debit note for $850

• debit note for $1000

The bank agreed to allow Dan an overdraft with a limit of $500.

What did this mean?

• A sum of $500 would be transferred into Dan’s account by the bank.

• All cheques issued by Dan would be paid by the bank.

• Cheques issued by Dan would be paid by the bank provided the account was not overdrawn by more than $500.

• Only cheques issued by Dan for less than $500 would be paid by the bank if there was not enough money in the account.

On 30 September 2018, Ahmed’s bank statement showed a credit balance of $2500. Ahmed found that a cheque issued for $90 and a deposit of $500 had not been included on the bank statement.

What was the balance at bank shown in Ahmed’s cash book on 30 September 2018?

• $1910

• $2090

• $2910

• $3090

On 1 September 2018 Chan owed Tan $570. During September 2018 the following transactions took place.

1. Tan sold goods, $380, on credit to Chan
2. Chan returned goods, $150, to Tan
3. Chan paid Tan $500 by cheque

What was the balance brought down on Chan’s account in Tan’s ledger on 1 October 2018?

• $300 credit

• $300 debit

• $840 credit

• $840 debit

Ava had $4000 in the bank. She paid a supplier $575 by cheque in full settlement of $600 owing.

Which changes would take place within the accounting equation?

• A–$600, OE –$25, L –$625

• A–$600, OE +$25, L –$625

• A–$575, OE +$25, L –$600

• A+$575, OE –$25, L +$600

What increases owner’s capital?

• bank loan extended from five to ten years

• purchase of inventory on credit

• purchase of machinery by cheque

• transfer of vehicle to business from private use

Which account always has a credit balance?

• capital account

• cash account

• drawings account

• premises account

Kamal purchases and sells goods on credit. Where does he maintain the accounts of his credit suppliers?

• purchases journal

• purchases ledger

• sales journal

• sales ledger