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Basics of Accounting

Total questions: 100

Worksheet time: 1hrs 1mins

Name
Class
Date
1.

You are a business owner. Your business needed additional capital so you obtained a loan from a bank. the bank made you sign a contract promising to repay the loan after a year. Which of the following accounts is increased?

a)

Accounts payable

b)

Notes payable

c)

Accounts receivable

d)

Notes receivable

2.

Which of the following is not a correct variation of the basic accounting equation?

a)

Assets = Liabilities + Equity

b)

Assets - Liabilities = Equity

c)

Assets - Equity = Liabilities

d)

Assets + Liabilities = Equity

3.

You acquired a cellphone through a monthly installment plan. According to your contact, you are required to return the cellphone to the supplier if you miss out two installment payments. upon signing the contract, the supplier gave you the cellphone. Which of the following statements is true?

a)

The cellphone becomes your asset only after you have fully paid the installment price.

b)

The cellphone is already your asset because you control the benefits from it. Legal ownership is not a necessary criterion when determining the existence of an asset.

c)

the cellphone is the supplier's asset until you have fully paid the installment price.

d)

All statements are true.

4.

On March 1, Vicente purchased merchandise with an invoice price of P270,000 and 2/10, n/30 terms. On March 3, Troy paid P10,000 transportation cost on the purchased goods. On March 10, Vicente paid for the merchandise. What was Vicente's total cost of the purchased merchandise?

a)

P270,000

b)

P274,200

c)

P274,600

d)

P280,000

5.

1. Gabriela uses the perpetual inventory system. Gabriela purchased merchandise with an invoice price of P80,000 terms 2/10, n/30. If Gabriela returned merchandise with an invoice price of P20,000 to the supplier, what should the journal entry to record the return include

a)

Debit to Inventory P20,000

b)

Debit to Inventory P19,600

c)

Credit to Inventory P20,000

d)

Credit to Inventory P10,000

6.

Carl purchased P50,000 merchandise from Sartre with terms of 3/10, n/30. How much discount is Carl entitled to take if it paid within the allowed discount period of 10 days?

a)

P500

b)

P1,000

c)

P1,500

d)

P3,000

7.

A physical count of inventory is usually taken

a)

At the end of the fiscal year

b)

At the peak of busy season

c)

At the start of the fiscal year

d)

In the middle of the fiscal year

8.

Which of the following is not a component of the operating cycle?

a)

Collection of cash from merchandise sales

b)

Ordering of merchandise

c)

Purchase of merchandise

d)

Sale of merchandise

9.

A cash deposit made by business appears on the bank statement as _______ balance.

a)

Debit

b)

Credit

c)

Expenses

d)

Liabilities

10.

A consumer has a higher credit score if he has _______ assets and _______ liabilities.

a)

more ... more

b)

more ... less

c)

less ... more

d)

less ... less

11.

What do we call a cheque that the bank refused to pay the payee because the drawer has insufficient funds in his current account?

a)

Stale cheque

b)

Dishonoured cheque

c)

Sad cheque

d)

Dubious cheque

12.

Who will be liable for the full amount of VAT?

a)

Consumer

b)

Business

c)

Government

d)

Producer

13.

When will a business register as a voluntary VAT vendor?

a)

When turnover is more than 1 million rand

b)

When sales is more than 3 million

c)

When the business makes a turnover of more than 50 000

d)

All of the above

14.

VAT will be regarded as a direct tax.

a)

True

b)

False

15.

It measures the ability of the business to pay its current trade payables.

a)

Solvency

b)

Liquidity

c)

Activity

16.

These are the quick assets.

a)

Cash and Cash E

b)

Cash, Accts Receivables, Short term Investments

c)

Cash, Accts Receivables,

17.

Current Ratio = 3.2

a)

Favorable

b)

Unfavorable

18.

What is EBIT?

a)

Earnings Before Interest and Tax

b)

Earnings Before Income Tax

19.

Revenue = £80,000

Cost of sales = £30,000

Other expenses = £10,000

What is the total net profit?

a)

£70,000

b)

£65,000

c)

£50,000

d)

£40,000

20.

Gross profit is the difference between ____

a)

Sales revenue and total costs

b)

Sales revenue and cost of sales

c)

Sales revenue and other expenses

d)

Sales revenue and fixed costs

21.

Cash at Bank is ...

a)

a liability

b)

an asset

c)

an expense

d)

equity

22.

Double entry in accounting means there must be________ entries for every transaction?

a)

two

b)

Three

c)

six

d)

one

23.

A general Leger/T) has a ______ and _______ side.

a)

cash receipt and debtors

b)

debit and payments

c)

debit and credit

d)

creditors and debtors

24.

Assets increase on the ________ side?

a)

subsidiary

b)

T-account

c)

credit

d)

debit

25.

owners equity decreases on the _________ side?

a)

credit

b)

debit

c)

payments

d)

liability

26.

________ are debts of the business?

a)

assets

b)

liabilities

c)

owners equity

d)

vehicles

27.

Equipment are an example of an/a ______?

a)

loan

b)

asset

c)

liability

d)

owners equity

28.

when the owner takes money out of the business's account it is called _________?

a)

credit

b)

drawings

c)

debt

d)

borrowing

29.

water and electricity is an/a __________?

a)

credit

b)

asset

c)

expense

d)

income

30.
The period of time covered by an accounting report is the accounting period.
a)
True
b)
False
31.
Any amounts owed by a business and reported on the balance sheet are referred to as ________________.
a)
assets
b)
liabilities
c)
profit
d)
expenses
32.
An increase in owner's equity resulting from the operation of a business
a)
asset
b)
expense
c)
withdrawl
d)
revenue
33.

The accounting period of a business is separated into activitiess that help the business keep its accounting records in an orderly fashion.

a)

Accounting Period Cycle

b)

Source Document

c)

Fiscal Year

d)

None of the Above

34.
Jeff's Construction, LLC bought a piece of equipment in 2001 for P 10,000. Today this piece of equipment is only worth P 2,000. Jeff would still report the equipment at its purchase price of P 10,000, less depreciation, even though its current fair market value is only P 2,000.
a)
Historical Principle
b)
Business Entity
c)
Accrual Principle
d)
Adequate Disclosure Principle
35.
Concept: Financial information is reported for a specific period of time on financial statements.
a)
Matching Expenses with Revenue
b)
Accounting Period Cycle
c)
Business Entity
36.

Concept: a business's records should never be mixed with an owner's personal records and reports

a)

adequate disclosure

b)

business entity

c)

objective evidence

d)

going concern

37.

Concept: Financial statements are prepared with the expectation that business will remain in operation indefinately

a)

going concern

b)

materiality

c)

accounting period cycle

d)

matching revenue with expenses

38.

Which of the following is correct?

a)

Owner’s Equity = Liabilities + Assets

b)

Liabilities = Assets + Owner’s Equity

c)

Assets = Liabilities + Owner’s Equity

d)

Assets = Owner’s Equity

39.

Which of the following is correct about double entry system of accounting?

a)

Every business transaction brings at least two financial changes in business.

b)

Financial changes are recorded as debits or credits in two or more accounts.

c)

Every debit entry has a corresponding credit entry.

d)

All of the above

40.

Which of the following business has unlimited liability

a)

Sole trader

b)

Limited Liability Partnership

c)

Private Limited Company

d)

Public Limited Company

41.

Which type of business organisation has the following characteristics?

- conducts business separate from its owners

- the owners have limited liability

- the organisation is a taxable entity

a)

Sole trader

b)

Partnership

c)

Company/corporation

d)

None of the above

42.

A partnership business normally owned by 2 to 50 partners

a)

True

b)

False

43.
Anything of value that is owned by the company (such as cash, accounts receivables, vehicles, etc.) are reported on the balance sheet and are referred to as _______________.
a)
assets
b)
liabilities
c)
profit
d)
income
44.

The accounting equation must always be

a)

balanced

b)

uneven

c)

zero

d)

equal to the square root of 5

45.

For an investor, personal and business money are put together and not kept separate.

a)

TRUE

b)

FALSE

46.
It represents advanced payments from customers which requires settlement through delivery of goods or services in the future.
a)
Sales Revenue
b)
Service Revenue
c)
Unearned Revenue
d)
Accrued Revenue
47.
The financial statement that reports the revenues and expenses for a period of time such as a year or a month is the:
a)
Balance Sheet
b)
Income Statement
c)
Statement of Cash Flows
d)
None of These
48.
Resources owned by a company (such as cash, accounts receivable, vehicles) are reported on the balance sheet and are referred to as __________.
a)
Assets
b)
Liabilities
c)
Owner Equity
d)
Equity
49.
Obligations (amounts owed) are reported on the balance sheet and are referred to as __________.
a)
Assets
b)
Liabilities
c)
Debt
d)
Owner Equity
50.
Revenues minus expenses equals:
a)
Assets
b)
Liabilities
c)
Owner Equity
d)
Net Income
51.
The accounting equation is
a)
Assets = Liabilities + Owner's Equity
b)
Assets = Liabilities - Owner's Equity
c)
Assets - Owner's Equity + Liability
52.
Accrual concept is based on :
a)
matching principle
b)
dual aspect principle
c)
cost principle
d)
going concern concept
53.

which category does depreciation fall under in the accounting equation?

a)

assets

b)

owners equity

c)

liability

d)

expense

e)

imputed expense

54.

A balance sheet reports a business's financial

a)

Condition over a specific period of time

b)

Progress over a specific period of time

c)

Condition on a specific date

d)

Progress on a specific date

55.
______________________ is the transfer of journalized transactions to their accounts.
a)
Posting
b)
Recording
c)
Updating
d)
Journalizing
56.
To increase a liability account requires a
a)
credit
b)
debit
57.
What is the normal balance for assets?
a)
DEBIT
b)
CREDIT 
58.
Term to describe the amount of an expense due in an accounting period which is unpaid at the end of that period
a)
Prepayment
b)
Expense
c)
Accrual
d)
Unpaid income
59.
Depreciation method where a fixed percentage or fraction is written off the original cost, less any residual value, of the asset each year
a)
Carrying value
b)
Reducing balance
c)
Residual value
d)
Straight line
60.
A cash book with a credit balance indicates a bank _________
a)
Asset
b)
Loan
c)
Account
d)
Overdraft
61.
It represents advanced payments from customers which requires settlement through delivery of goods or services in the future.
a)
Sales Revenue
b)
Service Revenue
c)
Unearned Revenue
d)
Accrued Revenue
62.

Planning, recording, analyzing, and interpreting financial information

a)

Accounting

b)

Asset

c)

Liability

d)

Owner's Equity

63.

Anything of value that is owned

a)

Accounting

b)

Asset

c)

Liability

d)

Owner's Equity

64.

An amount owed by a business

a)

Accounting

b)

Asset

c)

Liability

d)

Owner's Equity

65.

The amount remaining after the value of all liabilities is subtracted from the value of all assets.

a)

Accounting

b)

Asset

c)

Liability

d)

Owner's Equity

66.

An accounting device used to analyze transactions

a)

T-Account

b)

Debit

c)

Credit

d)

Chart of Accounts

67.

An amount recorded on the left side

a)

T-Account

b)

Debit

c)

Credit

d)

Chart of Accounts

68.

An amount recorded on the right side

a)

T-Account

b)

Debit

c)

Credit

d)

Chart of Accounts

69.

What is the accounting equation?

a)

Assets + Liabilities = Owner's Equity

b)

Assets = Liabilities + Owner's Equity

c)

Assets = Liabilities - Owner's Equity

d)

Owner's Equity = Assets + Liabilities

70.

Assets are $50,000. Liabilities are $12,000. What is Owner's Equity?

a)

$38,000

b)

$62,000

c)

None of the Choices

71.

Assets are $120,000. Owner's Equity is $95,000. What is the Liability?

a)

$215,000

b)

$25,000

c)

None of the Choices

72.

Liabilities are $20,000. Owner's Equity is $50,000. What are the Assets?

a)

$70,000

b)

$30,000

c)

None of the Choices

73.

What type of account is Cash?

a)

Asset

b)

Liability

c)

Owner's Equity

74.

What type of account is Supplies?

a)

Asset

b)

Liability

c)

Owner's Equity

75.

What type of account is Accounts Payable?

a)

Asset

b)

Liability

c)

Owner's Equity

76.

What type of account is Capital?

a)

Asset

b)

Liability

c)

Owner's Equity

77.

Mrs. Smith invests $20,000 in her new company. Which of the following would be correct?

a)

+ $20,000 Cash; + $20,000 Mrs. Smith, Capital

b)

- $20,000 Cash; - $20,000 Mrs. Smith, Capital

c)

+ $20,000 Cash; - $20,000 Mrs. Smith, Capital

d)

- $20,000 Cash; + $20,000 Mrs. Smith, Capital

78.

Mrs. Smith bought $200 in supplies. Which of the following would be correct?

a)

+ $200 Cash; + $200 Supplies

b)

- $200 Cash; - $200 Supplies

c)

+ $200 Cash; - $200 Supplies

d)

- $200 Cash; + $200 Supplies

79.

Double entry in accounting means there must be________ entries for every transaction?

a)

two

b)

Three

c)

six

d)

one

80.

A general Leger/T) has a ______ and _______ side.

a)

cash receipt and debtors

b)

debit and payments

c)

debit and credit

d)

creditors and debtors

81.

Assets increase on the ________ side?

a)

subsidiary

b)

T-account

c)

credit

d)

debit

82.

owners equity decreases on the _________ side?

a)

credit

b)

debit

c)

payments

d)

liability

83.

assets decreases on the _______ side?

a)

debit

b)

two

c)

credit

d)

sixth

84.

Equipment are an example of an/a ______?

a)

loan

b)

asset

c)

liability

d)

owners equity

85.

when the owner takes money out of the business's account it is called _________?

a)

credit

b)

drawings

c)

debt

d)

borrowing

86.

water and electricity is an/a __________?

a)

credit

b)

asset

c)

expense

d)

income

87.

rates and taxes are an/a ________?

a)

profit

b)

income

c)

VAT

d)

Expense

88.

_______ can also be in a form of assets?

a)

tax

b)

capital

c)

customers

d)

bank

89.

general ledgers are _________?

a)

VAT

b)

Mark-Up

c)

debit

d)

T-account

90.

current income is an _______ to the business?

a)

expense

b)

capital

c)

income

d)

credit

91.

opening balance is __________?

a)

balance of payments

b)

balance carried down

c)

balance broad-down

d)

money

92.

________ are debts of the business?

a)

assets

b)

liabilities

c)

owners equity

d)

vehicles

93.

trading stock is an/a ________?

a)

equity

b)

liabilities

c)

assets

d)

owners equity

94.
Assets are usually reported on the balance sheet at which amount?
a)
Cost
b)
Current Market Value
c)
Expected Selling Price
d)
None of These
95.
When cash is received, the account Cash will be
a)
Debited
b)
Credited
96.

This runs from Jan 1 to Dec 31

a)

accounting period

b)

calendar year

c)

Chinese calendar

d)

fiscal year

97.

Cash or other items that can be converted into cast quickly

a)

fixed assets

b)

cash assets

c)

quick assets

d)

current assets

98.

The debts of a business

a)

assets

b)

debts

c)

liabilities

d)

equity

99.

An individual who has been state certified to provide accounting services ranging from the preparation of financial records to complex audits.

a)

Accounting

b)

Certified Accountant

c)

Cash Flow

d)

Budget

100.

Summary of a firm’s financial information, products, and growth plans for owners and potential investors.

a)

Annual Report

b)

Assets

c)

Liabilities

d)

Accounting Cycle

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