F4 POA Multiple Choice T1

To calculate profit, a sole trader prepares a/an

• income and expenditure account

• Income statement

• Statement of Financial Position

• Trial Balance

Which of the following is the most permanent asset?

• Bank

• Cash

• Inventory

• Accounts receivable

W. Smith transfers $200 cash from his business premises to the bank account. His total current assets figure

• is unchanged

• increases by $200

• decreases by $200

• increases by $400

Andre's bank account has a credit balance of $240. This means that he has

• $240 in the bank

• overdrawn her bank account by $240

• transferred $240 from bank to cash

• written cheques for $420

The double entry rules for recording assets are

• debit to increase; debit to decrease

• debit to increase; credit to decrease

• credit to increase; credit to decrease

• credit to increase; debit to decrease

The following double entry occured in the books of N. Bliss: debit Equipment; credit Lucky Ltd

Based on the above, what transaction has occured?

• N. Bliss paid Lucky Ltd for equipment

• Lucky Ltd paid N. Bliss for equipment

• N. Bliss purchased equipment on credit from Lucky Ltd

• Lucky Ltd purchased equipment on credit from N. Bliss

MDP Ltd receives a cheque for the rental of its premises. The double entry to record this transaction in MDP Ltd's books is

• debit rent expense; credit bank

• debit bank; credit rent revenue

• debit premises; credit rent revenue

• debit rent revenue; credit bank

External users of accounting information include

• banks and creditors

• banks and managers

• creditors and employees

• managers and employees

The effects of obtaining equipment using a loan are

• increased assets and reduced liabilities

• increased capital and increased assets

• reduced liabilities and reduced capital

• increased assets and increased liabilities

_______ principles is about moral principles and standards of behavior by which accounting professions must operate.