Lecture 3 Sept 2023 Set A

Sydney & Associates had the following assets and liabilities. Total equity is _:

                                       $

Cash in hand                            4 000

Bank overdraft                         11 000

Sundry creditors                      3 000

Inventory                                2 700

Sundry debtors                         8 100

Office furniture                       4 500

Loan from Perth Ltd                12 000

Motor vehicles                         12 000

• $8300

• $27300

• $5300

• $13300

The assets of Frank’s business increased by $40 000 and the liabilities increased by $10 000 during the current year. If the profit for this period was $25 000, what additional contribution or withdrawal was made by the owner? (Assume only a withdrawal or a contribution was made.)

• Drawings $10 000

• Contribution $10 000

• Contribution $5000

• Drawings $5000

Julio’s opening capital at 1 July 2011 was $50 000, his profit for the year was
$18 000 and his drawings were $15 000.  What is the final balance of his capital at the end of the year?

• $68000

• $50000

• $51000

• $53000

Liz, after qualifying at university and having several years’ experience decides to set up her own dental practice. On 1 March she deposits $25 000 into a bank account she has opened for the practice. Which of the following represents the effect of this transaction on the accounting equation?

• Increase in assets of $25 000; increase in equity of $25 000.

• Increase in assets of $25 000; decrease in equity of $25 000.

• Increase in assets of $25 000; increase in liabilities of $25 000.

• Decrease in assets of $25 000; increase in equity of $25 000.

A party who has provided goods or services to the entity to whom the entity owes money is called a:

• payables

• debtor

• creditor

• receivables

A firm repays $4000 of an existing bank loan. The transaction is recorded as which of the following entries?

• DR Bank loan $4000; CR Owner’s capital $4000

• DR Cash at bank $4000; CR Accounts receivable $4000

• DR Cash at bank $4000; CR Bank loan $4000

• DR Bank loan $4000; CR Cash at bank $4000

J. Wood performed carpentry services for $7500. He received cash of $5000 with the balance to be received within 28 days. The transaction is recorded as _.

• DR Cash $5000; DR Accounts receivable $2500; CR Income earned $7500

• DR Income earned $7500; CR Cash $5000; CR Accounts payable $2500

• DR Cash $7500; CR Equity $7500

• DR Cash $5000; DR Equity $2500; CR Income earned $7500

Which of these errors would be detected by a trial balance?

• A cash sale was recorded in the sales account as $237 instead of $273 but was correctly recorded in the bank account.

• Office salaries were recorded as office expenses.

• The sales assistant pocketed the cash from a cash sale and did not ring it up on the register.

• Purchase of inventory on credit was recorded as a debit to the plant and equipment account and a credit to creditors.

The office supplies inventory account of Tan Traders shows a balance of $1600 on 31 December 2014. Office supplies of $550 were issued to staff in the 12 months up to 31 December 2014. After adjustment on 31 December 2014, the close of the annual accounting period:

• office supplies expense in the income statement is $1600 and office supplies inventory in the balance sheet is $0.

• office supplies expense in the income statement is $0 and office supplies inventory in the balance sheet is $1600.

• office supplies expense in the income statement is $1050 and office supplies inventory in the balance sheet is $550.

• office supplies expense in the income statement is $550 and office supplies inventory in the balance sheet is $1050.

The prepaid insurance account of Tan Traders shows a balance of $600, representing a payment on 1 July 2014 of a two-year insurance premium. After adjustment at 31 December 2014, the close of the annual accounting period:

• insurance expense in the income statement is $600 and prepaid insurance in the balance sheet is $0.

• insurance expense in the income statement is $150 and prepaid insurance in the balance sheet is $450.

• insurance expense in the income statement is $0 and prepaid insurance in the balance sheet is $600.

• insurance expense in the income statement is $300 and prepaid insurance in the balance sheet is $300.