Effects of Transactions on the Accounting Equation
Authored by Hui Gan
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9th Grade
Used 4+ times
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15 questions
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1.
MULTIPLE SELECT QUESTION
45 sec • 4 pts
John, the owner of John Trading, contributed personal funds of $4 000 into the business' bank account.
State the effect of the transaction on the accounting equation. (Tip: Must select 2 accounts)
Assets: Cash at bank +$4 000
Equity: Drawings
-$4 000
Equity: Capital
+$4 000
Assets: Cash at bank -$4 000
2.
MULTIPLE SELECT QUESTION
45 sec • 4 pts
John Trading purchased goods on credit from Premier Ltd for $2 800.
State the effect of the transaction on the accounting equation. (Tip: Must select 2 accounts)
Assets: Goods
+$2 800
Assets: Inventory
+$2 800
Assets: Trade receivable - Premier Ltd
+$2 800
Liabilities: Trade payable - Premier Ltd
+$2 800
3.
MULTIPLE SELECT QUESTION
45 sec • 4 pts
John Trading received $1 000 cash from its tenant for rental of a part of its shop space.
State the effect of the transaction on the accounting equation. (Tip: Must select 2 accounts)
Assets: Cash in hand +$1 000
Assets: Cash at bank +$1 000
Equity: Rental income
+$1 000
Equity: Rental expense
+$1 000
4.
MULTIPLE SELECT QUESTION
45 sec • 4 pts
John Trading received $2 000 via bank transfer a commission for helping ABC Trading sell its goods.
State the effect of the transaction on the accounting equation. (Tip: Must select 2 accounts)
Assets: Cash in hand +$2 000
Assets: Cash at bank +$2 000
Equity: Commission income
+$2 000
Liabilities: Trade payable - ABC Trading +$2 000
5.
MULTIPLE SELECT QUESTION
45 sec • 4 pts
John, the owner, used $200 cash from the shop to purchase a handbag for his wife.
State the effect of the transaction on the accounting equation. (Tip: Must select 2 accounts)
Assets: Cash in hand -$200
Assets: Cash at bank -$200
Equity: Drawings
-$200
Equity: Drawings +$200
6.
MULTIPLE SELECT QUESTION
45 sec • 4 pts
John Trading made a bank transfer of $300 to pay for the shop's utilities.
State the effect of the transaction on the accounting equation. (Tip: Must select 2 accounts)
Assets: Cash in hand -$300
Assets: Cash at bank -$300
Equity: Utilities
-$300
Equity: Utilities
+$300
7.
MULTIPLE SELECT QUESTION
45 sec • 4 pts
John Trading took a loan of $10 000 from XYZ Finance.
State the effect of the transaction on the accounting equation. (Tip: Must select 2 accounts)
Assets: Cash in hand +$10 000
Assets: Cash at bank +$10 000
Liabilities: Loan from XYZ Finance
+$10 000
Liabilities: Trade payable - XYZ Finance
+$10 000
Answer explanation
If you chose Liabilities: Trade payable - XYZ Finance, please note that this is wrong. Trade payable strictly refers to a supplier who has either sold to business goods or physical assets like office equipment on credit. As this is a loan, XYZ Finance cannot be termed a trade payable ie credit supplier.
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