Common mistakes

Which accounts should be opened to record the purchase of goods by cash?

• Inventory account and Cash account

• Stock account and Bank account

• Purchase account and Cash account

• Sales account and Cash account

Answer explanation

1. "Purchase of goods" - buy the inventories, so record in "Purchase account"

2. "by cash" - already paid, and paid by cash, so record in "Cash account"

Which accounts should be opened to record the purchase of goods by cheque?

• Purchase account and Cash account

• Inventory account and Bank account

• Purchase account and Cheque account

• Purchase account and Bank account

Answer explanation

1. "Purchase of goods" - buy the inventories, so record in "Purchase account"

2. "by cheque" - already paid, and paid using a cheque, which affects the bank balance, so record in "Bank account"

Which accounts should be opened to record the purchase of goods on credit from XW?

• Purchase account and AP - XW account

• Inventory account and Bank account

• Purchase account and Cash account

• Sales account and AP - XW account

Answer explanation

1. "Purchase of goods" - buy the inventories, so record in "Purchase account"

2. "on credit" - haven't paid, the payment should be made in future, so record in Account Payables /Account Receivables

Which accounts should be opened to record the goods sold on cash terms?

• Purchase account and Cash account

• Cash account and Sales account

• Cash account and Inventory account

• Bank account and Sales account

Answer explanation

1. "goods sold" - sell the inventories, so record in "Sales account"

2. "on cash terms" - already paid, and paid by cash, so record in "Cash account"

Which accounts should be opened to record the goods sold on credit to XW?

• AR - XW account and Sales account

• Bank account and Purchase account

• Inventory account and Sales account

• AR - XW account and Inventory account

Answer explanation

1. "goods sold" - sell the inventories, so record in "Sales account"

2. "on credit" - haven't paid, the payment should be made in future, so record in Account Payables /Account Receivables

Cash paid into business by owner. Which accounts should be opened?

• Cash account and Bank account

• Cash account and Capital account

• Sales account and Capital account

• Cash account and Owner account

Answer explanation

1. "Cash paid into business" - business get the cash, so record in "Cash account"

2. "from owner" - Every value from owner, record in "Capital account"

Started a business with Vehicle. Which accounts should be opened?

• Cash account and Capital account

• Vehicle account and Cash account

• Vehicle account and Capital account

• Cash account and Owner account

Answer explanation

1. "Started a business" - Who start? The owner started the business, the owner gave the value to business, so record in "Capital account"

2. "with vehicle" - What the business gets? The business gets a vehicle, so record in "Vehicle account"

Withdraw cash for personal use. Which accounts should be opened?

• Cash account and Capital account

• Drawing account and Capital account

• Bank account and Capital account

• Drawing account and Cash account

Answer explanation

1. "for personal use" - the owner take something form business, so record in "Drawing account"

2. "withdraw cash" - What did the owner take? The owner took the business's cash, so record in "Cash account"

Paid RM100 utility in cash. Choose the correct journal.

• 
• 
• 
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Answer explanation

Be careful about the format.

1. Must record debited account first, then credited account

2. 2. Reserve a space before "Cr"

3. 3. Record the amount in the correct column

Which account has a debit balance?

• Purchases

• Sales

• Cash

• Salaries expenses

• Capital

Answer explanation

Purchases always debit.

Expenses always debit.

When cash increase, record in debit side.