Double entry bookeeping

What is the purpose of double-entry bookkeeping?

• To complicate the accounting process

• To ignore the effects of a business transaction

• To track only one side of each transaction

• To track all the knock-on effects of a business transaction

What is an example of a liability in business accounts?

• Sales

• Unpaid bills

• Cash

• Office supplies

What is the formula for calculating straight-line depreciation?

• Cost + Useful life

• Cost - Useful life

• Cost x Useful life

• Cost / Useful life

What is the purpose of the chart of accounts in business accounting?

• To track only one side of each transaction

• To ignore the effects of a business transaction

• To complicate the accounting process

• To show the link between daily business activities and the five accounting 'buckets'

What is the purpose of the reducing balance depreciation method?

• To complicate the depreciation calculation

• To ignore the usage of the asset

• To recognize more expense in the early years of the asset's life

• To recognize more expense in the later years of the asset's life

What is the depreciable amount of an asset?

• The original cost of the asset

• The depreciation expense over the asset's useful life

• The length of time the asset will be productively used within operations

• The sale price of the asset

What is the net effect of the differences in straight-line depreciation versus reducing-balance depreciation?

• The total depreciation expense taken will be greater in the earlier years for reducing-balance depreciation.

• The total depreciation expense taken will be the same for both methods.

• The total depreciation expense taken will be greater in the later years for reducing-balance depreciation.

• The total depreciation expense taken will be less for reducing-balance depreciation.

What is the purpose of the accumulated depreciation account?

• To record the original cost of the asset.

• To record the depreciation expense over the asset's useful life.

• To record the sale price of the asset.

• To record the worth as a trade-in or scrapped.

What is the purpose of the balance sheet in business accounting?

• To show the link between daily business activities and the five accounting 'buckets'

• To calculate the straight-line depreciation

• To calculate the reducing balance depreciation

• To track only one side of each transaction

What is the purpose of the profit and loss statement in business accounting?

• To calculate the reducing balance depreciation

• To track only one side of each transaction

• To calculate the straight-line depreciation

• To show the revenue and expenses of the business