T level Finance Double Entry Bookkeeping Quiz

What is the purpose of double entry bookkeeping?

• To keep personal expenses separate from business expenses

• To ensure every transaction has equal debits and credits

• To reduce tax liability

• To track customer satisfaction

What is the basic accounting equation?

• Capital + Liabilities = Assets

• Revenue - Expenses = Net Profit

• Assets - Liabilities = Capital

• Liabilities + Expenses = Revenue

In double entry bookkeeping, what happens when Sara invests £20,000 into her business bank account?

• Debit capital, credit bank

• Debit bank, credit capital

• Debit cash, credit sales

• Debit expenses, credit liabilities

What is a creditor in bookkeeping terms?

• A customer who owes the business money

• A supplier the business owes money to

• An investor in the business

• A person who makes financial forecasts

If a business purchases equipment on credit, how is the transaction recorded?

• Debit equipment, credit bank

• Debit bank, credit equipment

• Debit equipment, credit liabilities

• Debit liabilities, credit equipment

What does an increase in an asset account result in?

• A credit entry

• A debit entry

• No entry needed

• A liability entry

Which document records all invoices for credit sales?

• Purchase order

• Cash book

• Sales journal

• Petty cash book

What is one disadvantage of accounting software?

• It is always free

• It eliminates human error

• It can be complex to set up and require training

• It does not comply with tax regulations

When Sara sells goods on credit to A Green, what is the impact?

• Stock decreases, and A Green is recorded as a debtor

• Stock decreases, and cash increases

• Liabilities increase, and capital decreases

• There is no impact until A Green pays

What happens when a liability is paid off?

• Liabilities decrease, and cash decreases

• Liabilities increase, and cash decreases

• Liabilities increase, and cash increases

• Liabilities decrease, and assets increase