Simple Double Entry and Asset and Liabilities

X owes Y $500 and pays this in cash.

How does this payment affect X’s current assets and current liabilities?

• current assets decrease

  current liabilities decrease

• current assets decrease

  current liabilities increase

• current assets increase

  current liabilities decrease

• current assets increase

  current liabilities increase

Which accounting concept states that every financial transaction of a business has two effects?

• business entity

• consistency

• duality

• matching

A business received cash from a debtor for goods sold on credit.

What entries record this transaction?

• debit Cash

  credit Trade Receivable

• debit Cash

  credit Sales

• debit Trade Receivable

  credit Cash

• debit Trade Receivable

  credit Sales

A business had the following assets and liabilities. (see picture)

Motor Vehicles $5,000, Inventory (unsold goods) $16,000, Trade Receivables $4,000, Bank $3,000, Trade Payables $11,000

The owner has now increased his capital in the business by $4500. What is the capital now?

• $21 500

• $28 000

• $32 500

• $43 500

The owner's capital is regarded as a liability of the business.

Which accounting principle is being applied?

• business entity

• consistency

• matching

• realisation

Money received from a customer must be recorded in the Trade Receivable’s account and the bank account.

What accounting principle is being applied?

• business entity

• duality

• matching

• money measurement

Which is an asset in a Balance Sheet/ Statement of Financial Position?

• a credit balance on a supplier's account

• a credit balance on the Bank account

• a debit balance on a customer's account

• a debit balance on the Drawings account

Which ledger account entries are made to record the purchase on credit of a motor vehicle (for use by the business)?

• debit trade payable

  credit motor vehicles

• debit motor vehicles

  credit cash

• debit motor vehicles

  credit trade payable

• debit motor vehicle expenses

  credit trade payables