Multiple choice

1 What is the purpose of book-keeping?

• to interpret the double entry records

•  to prepare financial statements at regular intervals

• to record all the financial transactions of the business

• to summarise the financial position of the business

1 A trader prepares financial statements each year. What do these assist the trader to do?

• calculate the amount owing to credit suppliers

• calculate the cash drawings

• check the bank statement balance

• make decisions about the future

A business employs a book-keeper and an accountant. Which task would the accountant perform?

• extracting balances from the ledger accounts to produce a trial balance

• making entries in the general journal to adjust a provision for doubtful debts

• preparing a monthly report that analyses the profitability of the company

• recording sales and purchase invoices in the books of prime entry

Which statements about book-keeping and accounting are correct?

1 Accounting is performed periodically rather than daily.

2 Accounting relies on having accurate book-keeping records.

3 Book-keeping includes the preparation of financial statements.

4 Book-keeping involves the recording of financial transactions.

• 1, 2 and 4                         

• 1 and 3                       

• 2, 3 and 4                       

• 2 and 4 only

Which statement is correct?

• The accountant prepares the trial balance and the book-keeper prepares the financial

  statements.

• The accountant writes up the journals and the book-keeper writes up the ledger accounts.

• The book-keeper writes up the journals and the accountant prepares the trial balance.

• The book-keeper writes up the ledger accounts and the accountant prepares the financial

  statements.

What is prepared by a book-keeper?

• appropriation account

• cash book

• income statement

• statement of financial position

   

Which task would be carried out by a book-keeper?

• comparison of financial statements between years

• preparation of financial statements

• provision of information for decision-making

• recording financial transactions

Which transaction will increase both assets and capital by the same amount?

• A credit customer settled his account after deducting a cash discount.

• Goods were sold for cash at a price higher than their cost price.

• Rent received included an amount prepaid for the next accounting period.

• The owner repaid a business loan from his personal bank account.

What are assets?

• items that are bought for long-term use by a business

• items that are expected to be turned into cash in the near future

• items that are owned by or owed by a business

• items that are owned by or owed to a business

What is not an example of a book-keeping entry?

• an entry made in the bank column of the cash book for a cheque received

• cost of goods purchased on credit entered in the supplier’s account

• expenses paid during the year entered in the income statement

• goods returned by a customer entered in the sales returns journal