Principles of Accounts Revision Game #2

Which of the following best describes “Accounting”?

• Assuming accountability for all aspects of the firm’s management.

• Co-ordinating and interpreting financial data for use in management decision-making

• Keeping an accurate account of the firm’s business dealings with debtors and creditors

• Keeping accounts up-dated to ensure the firm makes maximum profits

Which of the following statements describe the purpose of accounting?

I. Keeping proper records of business transactions

II. Keeping proper control of the finances of the business

III. Assisting management in making decisions

IV. Using the accounting transactions to make proper decisions

• I and II only

• II and IV only

• I. II and III only

• I, III and IV only

Which of the following are functions of the bookkeeper?

I. Analyzing

II. Interpreting

III. Posting

IV. Recording

• II and III only

• III and IV only

• I, II and III only

• I, II and IV only

Which of the following expresses the balance sheet equation?

• Liabilities = Assets – Capital

• Liabilities = Assets + Capital

• Assets = Liabilities – Capital

• Capital = Assets + Liabilities

The principle of double entry book-keeping states that:

• Every debit entry has a corresponding debit entry

• Every debit entry has a corresponding credit entry

• Every credit entry has a corresponding credit entry

• Every debit entry has a corresponding creditor entry

The accounting cycle entails the following procedures: Which of the following is the correct sequence in which the procedures should be followed.

I. Posting to the ledger

II. Making adjusting and closing entries

III. Journalizing

IV. Preparation of final account

V. Extracting a trial balance

• III, I, II, V, IV

• III, I, V, II, IV

• I, III, V, II, IV

• III, I, V, IV, II

Another name for the owner’s equity or net worth of a business is the:

• Income

• Assets

• Capital

• Liabilities

If assets amount to $5 950, Creditors $900 and bank overdraft $800, then capital is:

• $6 050

• $5 850

• $7 650

• $4 250

A firm’s balance sheet shows the following figures; use these to answer the next two questions

Fixed Assets $6 000

Current Assets $4 000

Creditors $4 500

Debtors $2 000

Bank overdraft $800

Owner’s equity is equal to:

• $6 700

• $8 300

• $17 300

• $11 500

A firm’s balance sheet shows the following figures

Fixed Assets $6 000

Current Assets $4 000

Creditors $4 500

Debtors $2 000

Bank overdraft $800

If the proprietor introduced $800 more cash into the firm, the effect of this transaction would be to:

• increase cash; increase bank

• increase cash; increase capital

• increase cash; decrease bank

• increase capital; decrease cash