4 Business Recovery Group

1. A trader had an opening capital of $3 900. If his drawings were $900 and his closing capital was $4 860, what was his net profit?

• $900

• $960

• $1,860

• $3,000

1. A company’s rent expense account had an opening debit balance of $2 000. During the year $6 000 was paid for rent. At the end of the year there was a closing debit balance of $1 500 in the account.

What was the rent expense recorded for the year?

• $9,500

• $7,500

• $6,500

• $6,000

Which of the following terms describes the exchange of goods and services?

• Trial Balance

• Balance Sheet

• Journal

• Transaction

Which of the following BEST describes the ‘double entry’ system of accounting?

• A ledger account must have two sides.

• An account must be written twice in the ledger.

• Each transaction must be written in two subsidiary books

• Each transaction must have a debit entry and a credit entry

Which of the following items are examples of current liabilities?

I. Mortgages

II. Accounts payable

III. Accrued wages

• II and III only

• I and III only

• I and II only

• I, II and III only

Which of the following is usually used to complete a general journal entry?

• Narration

• Description of assets

• Description of liabilities

• Name of book to which entry must be posted

The Cash Book is BEST used for recording

• Goods sold for cash

• Goods returned for cash

• Goods purchased for cash

• Cash receipts and cash payments

A businessman offers a discount for prompt payment for goods purchased. Under which column in his three-column cash book would this discount be entered?

• Bank

• Cash

• Discount Allowed

• Discount Received

Control accounts are kept in order to assist management in

• Locating errors

• Increasing profits

• Limiting drawings

• Limiting expenditure

The balance of an accounts payable accounts is entered in the Balance Sheet under the heading

• Capital

• Fixed assets

• Current assets

• Current Liabilities