What is the accounting equation?

• Assets - Liabilities = Capital

• Assets + Liabilities = Capital

• Assets - Liabilities - Capital

• Assets + Liabilities + Capital

A business makes a cash purchase for goods paying from the bank. What is the correct double entry for this transaction?

• DR Bank, CR Cash Purchases

• DR Cash Purchases, CR Bank

• DR Purchase Ledger Control, CR Bank

• DR Sales, CR Bank

What is the purpose of a business using a non-current asset register?

When purchasing a non-current asset, from the options below, select which items can usually be classified as capital expenditure costs

• Cost of the asset

• Installation and testing

• Repairs to premises

• Delivery cost of the non current asset

• Insurance for the new asset

Which of the following costs are normally classified as revenue expenditure?

• Purchase of a new vehicle

• Fuel for vehicles

• Building extension cost

• Yearly depreciation charge for an asset

• Redecoration of an office

In accounting, when we sell or part-exchange an asset, this is usually known as a?

Who is the appropriate person in a business to give permission for capital expenditure or a new business vehicle

• The driver of the vehicle

• The bank manager of the business

• The owner of the business

• The supervisor of the business

What type of financing method usually involves passing of the asset to the user at the end of the agreement?

• Hire purchase

• Finance lease

• Cash purchase

• Loan

A machine has been purchased for £10,000 plus VAT (the VAT was reclaimed). The machine is to be depreciated using the diminishing balance method at 20% per annum.

What will be the depreciation charge in year 2 of ownership?

• £1,600

• £2,000

• £1,920

• £2,400

A business purchased a van for £20,000 six years ago, and the accumulated depreciation for this van shows a balance of £12,000. It has recently sold the van for £10,000 and the gain on this vehicle was £2,000.

What double-entry transaction would remove the original cost of the van from the accounts?

• Dr Van at Cost £20,000, Cr Depreciation Charge £20,000

• Dr Accumulated Depreciation £20,000, Cr Van at Cost £20,000

• Dr Disposals £10,000, Cr Van at Cost £10,000

• Dr Disposals £20,000, Cr Van at Cost £20,000