Accounting Quiz I

Which of the following statements is incorrect? (A) Assets + Capital = Liabilities (B) Capital = Assets – Liabilities (C) Liabilities + Capital = Assets (D) Liabilities = Assets – Capital

• Assets + Capital = Liabilities

• Capital = Assets – Liabilities

• Liabilities + Capital = Assets

• Liabilities = Assets – Capital

Which of the following is not an asset? (A) Cash at the bank (B) Premises (C) Inventory (D) Accounts payable

• Cash at the bank

• Premises

• Inventory

• Accounts payable

Which of the following is a liability? (A) Buildings (B) Accounts receivable (C) Loan from J. Henry (D) Equipment

• Buildings

• Accounts receivable

• Loan from J. Henry

• Equipment

Which of the following best describes the meaning of ‘Sales’? (A) Items sold for cash or on credit (B) Assets sold on credit (C) The sale of items bought previously (D) Sale of items previously included in ‘Purchases’

• Items sold for cash or on credit

• Assets sold on credit

• The sale of items bought previously

• Sale of items previously included in ‘Purchases’

When should the trial balance totals differ? (A) Only when it is drawn up by the accountant (B) When drawn up before the profit and loss account (income statement) is prepared (C) If drawn up halfway through the financial year (D) Never

• Only when it is drawn up by the accountant

• When drawn up before the profit and loss account (income statement) is prepared

• If drawn up halfway through the financial year

• Never

What was the balance on the account of P Norman in MC 17 on 23 June 2018? (A) A credit balance of $96 (B) A debit balance of $96 (C) A credit balance of $528 (D) A debit balance of $528

• A credit balance of $96

• A debit balance of $96

• A credit balance of $528

• A debit balance of $528

Which of the following best describes a trial balance? (A) Is the final account in the books (B) Shows all the asset balances (C) Is a list of balances on the books (D) Discloses the financial position of a business

• Is the final account in the books

• Shows all the asset balances

• Is a list of balances on the books

• Discloses the financial position of a business

From the following information you are to ascertain the amount of capital. Premises, $55,000, motor vehicles, $17,800, inventory, $6,450, accounts receivable, $3,720, bank, $1,110, accounts payable, $4,000, loan from D. Allen, $10,000.

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Which of the following is correct? (A) Capital is reduced by a loss. (B) Profit does not affect capital. (C) If there is no profit, there is no capital, (D) A loan received will reduce capital.

• Capital is reduced by a loss.

• Profit does not affect capital.

• If there is no profit, there is no capital,

• A loan received will reduce capital.

Which of the following should not be called ‘Purchases’? (A) Purchase of a motor van for use by a business (B) Goods bought on credit (C) Goods bought for cash (D) Items bought for the prime purpose of resale

• Purchase of a motor van for use by a business

• Goods bought on credit

• Goods bought for cash

• Items bought for the prime purpose of resale