1. Which one of the following is an internal user of accounting information?

A. Government
B. Creditor
C. Manager
D. Customer

2. Which of following is not an internal user of financial statements?

A. Board of Director
B. Managers
C. Employees
D. Government

3. Which of the following is correct?

A. Capital = Liabilities + Assets
B. Liabilities = Assets + Capital
C. Assets = Liabilities + Capital
D. Assets = Capital - Sales

4. Which of the following is correct?

Liabilities ($) Capital ($) Assets ($)
A. 125,000 750,000 875,000
B. 280,000 1,100,000 820,000
C. 115,000 820,000 955,000
D. 654,000 112,000 542,000

5. Which of following is capital ?

A. profit
B. cash in hand
C. fixed asset
D. expenses

6. The properties owned by business enterprises are classified as ……………

A. assets
B. liabilities
C. capital
D. cash

7. The account used to record credit sales is ….….….….….

A. Accounts Payable
B. Accounts receivable
C. Cash in hand
D. Loan

8. The liability arising from the purchase of goods on credit is called ….….….….….
 A. accounts payable
B. accounts receivable
C. Equity
D. payable expenses

9. Items which are purchased and sold in the merchandise business is called ………..
A. machine
B. Fixed asset
C. goods
D. expense

10. A person who owes money to a firm against goods sold is called a/an ………….
A. creditor
B. debtor
C. shareholder
D. investor

11. A person to whom money is owed by a firm for the purchase of goods is called a/an
………….
A. creditor
B. debtor
C. investor
D. manager

12. Which account is used to record borrowings from banks?

A. Asset
B. Loan
C. Capital
D. Revenue

13. Which financial statement contains assets, liabilities and capital of a business
enterprise as of a specific date?
A. Income Statement
B. Cash Flow Statement
C. Statement of Financial Position (balance sheet)
D. Profit & Loss Statement

14. Which of the following are the three basic elements of the Statement of Financial
Position (balance sheet)?
A. Assets, liabilities and expense
B. Assets, expense and capital
C. Assets, liabilities and revenue
D. Assets, liabilities and capital

15. Which financial statement represents the accounting equation?

A. Income Statement
 B. Cash Flow Statement
C. Statement of Financial Position
D. Profit & Loss Statement

16. The left side of the Statement of Financial Position should always be .......... to the
total of the right side
A. Equal
B. Greater
C. Lower
D. All of A, B and C

17. Marina is a sole trader. During her first year of trading to 31 December 2024, she
invested $100,000 in the business, made a profit of $250,000, and then, she took cash
$150,000 from the business to persional expenses. What is the balance of the capital
account at 31 December 2024?
A. $100,000
B. $200,000
C. $350,000
D. $50,000

18. The double entry principle requires that ………………

A. the number of debit accounts must equal the number of credit accounts
B. there must always be entries made on both sides of the accounting equation
C. the amount of the debits must equal the amount of the credits
D. there must only be two accounts affected by any transaction

19. What is the journal entry to record salaries paid by cash in hand?
A. Debit capital, Credit cash
B. Debit salaries expenses, Credit cash in hand
C. Debit cash, Credit salaries
D. Debit salaries, Credit accounts payable

20. What is the double entry when the company performs a service but has not yet
received payment?
A. Debit service revenue and credits accounts receivable
B. Debit accounts receivable and credits service revenue
C. Debit service revenue and credits accounts payable
D. Make no entry until cash is received.

21. Which statement is correct?

A. Profit is a form of revenue, so an increase in profit is a debit
B. Losses are a form of expense, so an increase in losses is a credit
C. Increases in the capital are always a credit
D. Liabilities are a form of expense, so an increase in liabilities is a debit

22. Purchase of truck on time will ……………

 A. increase both asset and liabilities
B. decrease both assets and liabilities
C. increase assets and decrease liabilities
D. decrease assets and increase liabilities

23. Recording transaction: Bought equipment on time

A. Dr Equipment, Cr Accounts Payable
B. Dr Accounts Payable, Cr Equipment
C. Dr Bank, Cr Capital
D. Dr Capital, Cr Accounts Payable

24. Recording transaction: Franco Industries purchased goods of $500 on time.

A. Dr Supplies and Cr Accounts Payable
B. Dr Purchases and Cr Accounts Payable
C. Dr Supplies and Cr Cash
D. Dr Accounts Receivable and Cr Supplies

25. Recording transaction: Goods bought by cash

A. Dr Cash; Cr Inventory
B. Dr Purchases; Cr Cash
C. Dr Inventory; Cr Bank
D. Dr Cash; Cr Sales

26. Dawson purchased equipment for $2,500, paid $500 in cash and owed the remaining
amount. Dawson debit the Equipment account $2,500, credit Cash account $500 and
………
A. debit receivable account $2,000
B. debit the capital account $2,000
C. credit another asset account $500
D. credit payable account $2,000

27. What transaction is represented by the following entry?

Dr Fixed Asset
Cr Liability
A. Bought a van on time
B. Sell a van in cash
C. The proprietor paid a creditor from his private funds
D. Return the computer to Timeless Ltd

28. Which are the entries for increases in expenses, revenue and capital?
A. Expenses debited, revenue credited, capital debited
B. Expenses credited, revenue debited, capital credited
C. Expenses debited, revenue debited, capital debited
D. Expenses debited, revenue credited, capital credited
29. As the total of the debit side exceeded the total of the credit side, the balance is said …
A. to be a “debit balance”
B. to be a “credit balance”
C. to be “closed off”
D. to be “balanced off”

30. An account has credit balance when ………….

A. the total of the debit side exceeded the total of the credit side
B. the total of the credit side exceeded the total of the debit side
C. there is a difference between the total of debit and credit sides
D. there is not a difference between the total of debit and credit sides

31. Which of the following statements is correct?

A. The date given to balance carried down is the last day of the period
B. Balance brought down is given the last date of the curent period
C. The date given to balance brought down is the first date of the period
D. Balance brought down is given the closing date of the next period

32. What is the balance of the T account below?

Tandy
Sales $155 Bank $250
Sales $200 Cash $50

A. $55 on credit side

B. $55 sales
C. $55 on debit side
D. $55 Tandy

33. Accrued expense is ………..

A. expense account
B. asset account
C. liability account
D. capital account

34. Short Answers Question: (1 marks)

ABC Ltd has an accounting period ending on December 31, 2023. Here is some information
about the Insurance expense

The 1st January 2023, transfer £3,800 for Insurance expense for the period of 1st January
2023 to 30th July 2024.

Required:

(1) Calculate the company's Insurance expense for the year 2023?
(2) Show the T account for Insurance expense (2023)?
35. Short Answers Question: (1 marks)

ABC Ltd has an accounting period ending on December 31, 2023. Here is some information
about the Rent expense

The 1st June 2023, transfer £35,100 for Rent expense for the period of 1st June 2023 to 31th
December 2024.

Required:

(1) Calculate the company's Insurance expense for the year 2023?
(2) Show the T account for Insurance expense (2023)?