Accounting Chapter 1 - Past Year MCQ

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

What is the accounting equation?

• assets = capital – liabilities
• assets = liabilities – capital
• assets – liabilities = capital
• assets + capital = liabilities

What is prepared by a book-keeper?

• appropriation account
• cash book
• income statement
• statement of financial position

Which item is an asset?

• an amount owing by credit customers
• an amount owing to credit suppliers
• interest accrued on bank loan
• rent received in advance from tenant

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.

Which formulas may be used for the accounting equation? 1 assets = owner’s equity minus liabilities 2 liabilities = assets minus owner’s equity 3 owner’s equity = assets plus liabilities 4 owner’s equity plus liabilities = assets

• 1 and 2
• 1 and 3
• 2 and 4
• 3 and 4

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

What increases owner’s capital?

• bank loan extended from five to ten years
• purchase of inventory on credit
• purchase of machinery by cheque
• transfer of vehicle to business from private use

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

What are assets?

• amounts owed to a business - no | amounts owed by a business - no | items owned by a business - yes
• amounts owed to a business - no | amounts owed by a business - yes | items owned by a business - yes
• amounts owed to a business - yes | amounts owed by a business - no | items owned by a business - yes
• amounts owed to a business - yes | amounts owed by a business - yes | items owned by a business - no