Chapter 17 Multiple-choice questions

Double-entry Bookkeeping I
. The accounting equation states that 'assets + liabilities = capital'.

. Double-entry bookkeeping requires two entries be made to record every business transaction, one a debit entry and one a credit entry.

. If Mira buys a computer using a bank payment to do so, then the computer equipment account would be debited and the bank account would be credited.

. To increase a liability account, the account has to be credited.

. To increase an expense account, the account has to be credited.

. A trade receivables account will usually show a credit balance.

. If the trial balance totals agree, this does not necessarily mean that all transactions have been recorded.

. If the statement of financial position shows a bank overdraft of £34,000, then the bank T account will have a credit balance of £34,000 at that date.

. When a business makes a profit as shown by the statement of profit or loss, the profit figure is debited to the capital account to show the owner's increased investment in the business.

. The statement of financial position is a summary of the balances remaining after the statement of profit or loss has been prepared.

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