Double Entry

1. Started business with cash

• Dr Cash

  Cr Business

• Dr Cash

  Cr Capital

• Dr Capital

  Cr Cash

• Dr Business

  Cr Cash

Answer explanation

To record starting a business with cash, you would debit the Cash account to increase it and credit the Capital account to show the owner's investment in the business.

2. Paid rent by cheque

• Dr Bank

  Cr Rent

• Dr Rent

  Cr Bank

• Dr Rent

  Cr Cheque

• Dr Cheque

  Cr Rent

Answer explanation

To record the payment of rent by cheque, we debit the Rent account to decrease it and credit the Bank account to show the decrease in cash.

3. Rent received by cheque

• Dr Bank

  Cr Rent received

• Dr Rent received

  Cr Bank

• Dr Bank

  Cr Rent

• Dr Bank

  Cr Rent

Answer explanation

When rent is received by cheque, it increases the bank account balance (Dr Bank) and is recorded as income (Cr Rent received).

4. Cash Sales

• Dr Sales

  Cr Cash

• Dr Cash

  Cr Sales

• Dr Purchase

  Cr Sales

• Dr Sales

  Cr Bank

Answer explanation

The correct entry for cash sales is to debit Cash and credit Sales, as cash is received for the sale of goods or services.

5. Bought goods by cash

• Dr Goods

  Cr Cash

• Dr Purchases

  Cr Cash

• Dr Cash

  Cr Purchases

• Dr Cash

  Cr Bought

Answer explanation

The correct choice is Dr Purchases and Cr Cash because when goods are bought by cash, it increases the Purchases account (Dr) and decreases the Cash account (Cr).

6. Bought machinery by cash

• Dr Furniture

  Cr Cash

• Dr Bank

  Cr Office equipment

• Dr Cash

  Cr Machinery

• Dr Machinery

  Cr Cash

Answer explanation

The correct entry for buying machinery by cash is to debit Machinery and credit Cash to reflect the transaction accurately.

7. Sold motor vehicle to Ali

• Dr Ali

  Cr Disposal Motor Vehicle

• Dr Disposal Motor Vehicle

  Cr Ali

• Dr Ali

  Cr Sold

• Dr Motor vehicle

  Cr Ali

Answer explanation

The correct entry for selling a motor vehicle to Ali is to debit Ali's account and credit the Disposal Motor Vehicle account.

8. Received cheque from Edward

• Dr Edward

  Cr Cheque

• Dr Edward

  Cr Bank

• Dr Bank

  Cr Edward

• Dr Cheque

  Cr Edward

Answer explanation

The correct entry for receiving a cheque is to debit the Bank account (Dr Bank) and credit Edward's account (Cr Edward). This reflects an increase in the Bank balance and a decrease in Edward's balance.

9. Owner withdrew cash from business for own use

• Dr Cash

  Cr Drawings

• Dr Drawings

  Cr Cash

• Dr Business

  Cr Cash

• Dr Cash

  Cr Own use

Answer explanation

The correct entry for the owner withdrawing cash for personal use is to debit Drawings and credit Cash to reflect the decrease in business equity and cash assets.

10. Owner withdrew goods from business for own use

• Dr Goods

  Cr Drawings

• Dr Drawings

  Cr Purchase

• Dr Drawings

  Cr Goods

• Dr Purchas

  Cr Drawings

Answer explanation

Owner withdrawing goods for personal use is considered a withdrawal from the business, hence it should be recorded as a debit to Drawings and a credit to Purchase.