Accounting Basics

1. Book-keeping is___________

• collecting books in a library

• a statement of assets and liabilities

• recording business transactions

• recording the figures on a bank

  statement

The accounting cycle is____________

(i) the method of transport used for staff to come to work

(ii) the steps taken to produce a set of accounts

(iii) the period for which the business produces its

accounts

(iv) the organisation’s tax year

• (i) and (ii) only

• (iii) and (iv) only

• (ii) and (iii) only

• (i) and (iv) only

Which one of the following is NOT a source document?

• debit note

• journal

• invoice

• petty cash voucher

An invoice must include ___________

(i) the seller’s name and address

(ii) the seller’s date of birth

(iii) the purchaser’s telephone number

(iv) a description of the goods or services supplied

• (i) and (ii) only

• (ii) and (iv) only

• (i) and (iii) only

• (i) and (iv) only

The accounting equation may be expressed as ________

• Liabilities = Assets + Capital

• Capital = Assets + Liabilities

• Assets = Capital - Liabilities

• Liabilities = Assets - Capital

Which one of the following is NOT an asset?

• cash at bank

• government grants

• accounts receivable

• investment in other firms

Which one of the following is a liability?

• accounts payable

• interest from bank

• accounts receivable

• investment in other firms

Which one of the following is correct?

• capital is reduced by a loss

• profit does not affect capital

• a loan received will reduce capital

• if there is no profit there is no capital

Which of the following is INCORRECT?

• (i) and (ii) only

• (i) and (iv) only

• (ii) and (iii) only

• (ii) and (iv) only

Shane J. has the following information in his books.

Investments $20 000, Inventory $13 210, Accounts receivable $5 600, Bank $900, Accounts payable $4 200, Vehicles $13 000, Fixtures $17 500.

What is the value of current assets?

• $19 710

• $23 910

• $50 500

• $70 210