PrepClass Quiz

In the double-entry bookkeeping, the following statement is FALSE:

• Debit entry represents increase in asset

• Debit entry represents decrease in liability

• Debit entry represents increase capital

• Debit entry represents increase in drawing

Douglas receive cash payment from credit customers, the following is the double entry required:

• a. Dr cash , Cr sales

• b. Dr cash, Cr payables

• c. Dr cash, Cr receivables

• d. Dr sales, Cr cash

Douglas needs to record an electricity payment that has been accrued in the last period. What is the journal entry for this transaction?

• Dr Electricity Cr Cash

• Dr Accrual Cr Cash

• Dr Electricity Cr Accrual

• Dr Accrual Dr Electricity

Douglas needs to record a credit sales transaction totaling £480, exclusive of 20% VAT. What is the journal entry for this transaction?

• Debit Receivables £576, Credit Sales £480, Credit VAT £96

• Debit Sales £400, Debit VAT £80, Credit Receivables £480

• Debit Sales £480, Debit VAT £96, Credit Receivables £576

• Debit Receivables £480, Credit Sales £400, Credit VAT £80

Douglas transfer £5,000 from his personal bank account to business bank account to open plumbing business, double entry for this transactions is

• DrCapital £5000,
  Cr Cash £5000

• DrDrawing£5000
  Cr Capital £5000

• Dr Cash £5000, Cr Capital £5000

• Dr Cash  £5000
  Cr Bank  £5000

The image is a T account ledger for cash. What is the figure for cash in the next period?

• Cr 650

• Cr 1,000

• Dr 650

• Dr 1,000

Which of the following would be a debit balance in the trial balance?

• Delivery outwards

• Bank overdraft

• Revenue

• Accounts payable

In preparing the statement of profit or loss for manual system, Douglas create a profit and loss ledger account, in which all the ledger account balances relating to the statement of profit or loss are aggregated. Which of the following is the correct statement?

• Income & expense ledger account balances will be brought forward to the next accounting period

• Income & expense ledger account balances will be transferred to profit or loss ledger account and will not be brought forward to the next accounting period

• Only income ledger account balances will be brought forward to the next accounting period

• Only expense ledger account balances will be transferred to profit or loss ledger account and will not be brought forward to the next accounting period

Douglas then also need to prepare the statement of financial position, Which of the following is correct statement?

• Douglas need to transfer profit or loss for the period to the capital account

• In preparing trial balance, if trial balance total credit is higher than total debit meaning Douglas has profit

• Assets and liabilities account balances will be transferred to capital account and will not be brought forward to next period

• In preparing trial balance, if trial balance total credit is higher than total debit meaning Douglas has experience loss

Anchor Ltd is preparing its financial statements. After transferring the balances on all the income and expense ledger accounts to the profit and loss ledger account, the total credits in the profit and loss ledger account exceed the total debits by £4,000. Requirement Which two of the following statements about Anchor Ltd are correct?

• Anchor Ltd has reported a loss for the year of £4,000

• Anchor Ltd has reported a profit for the year of £4,000

• To begin to calculate the closing capital account balance, Anchor Ltd should credit the capital account and debit the profit and loss ledger account with £4,000

• The opening balance on the profit and loss ledger account for the next reporting period is £4,000 credit

• The closing balance on the profit and loss ledger account of £4,000 should be deducted from the capital account to give the profit for the year.