Chapter 4 Self-test questions

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. Faizal uses double entry bookkeeping in running his business. During the financial year ended 31 August 2021, Faizal records bank receipts of £225,975 and bank payments of £217,432. At 1 September 2020, the balance in his bank account was an asset of £3,432. What figure for the bank account will appear in Faizal's trial balance at 31 August 2021?

£3,432 Debit correct incorrect

£5,111 Debit correct incorrect

£8,543 Debit correct incorrect

£11,975 Debit correct incorrect

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. Making a debit entry to a T account will: Please select all that apply.

Increase the balance on an asset account correct incorrect

Decrease the balance on an income account correct incorrect

Increase the balance on a liability account correct incorrect

Decrease the balance on a capital account correct incorrect

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. The correct double entry to record the receipt of cash from trade receivables is:

Debit trade receivables, credit cash correct incorrect

Debit trade receivables, credit sales correct incorrect

Debit sales, credit trade receivables correct incorrect

Debit cash, credit trade receivables correct incorrect

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. The expanded accounting equation is assets + income = liabilities + expenses + capital.

True correct incorrect

False correct incorrect

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. Match the correct double entry for each transaction.

Cash drawn out by the owner of a business

Debit capital account, credit cash Debit purchases, credit trade payables. Debit trade payables, credit cash Debit cash, credit sales

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Trade payable paid with money from the bank account

Debit cash, credit sales Debit trade payables, credit cash Debit purchases, credit trade payables. Debit capital account, credit cash

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Cash sales

Debit capital account, credit cash Debit cash, credit sales Debit purchases, credit trade payables. Debit trade payables, credit cash

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Goods purchased on credit for resale by a retailer

Debit trade payables, credit cash Debit cash, credit sales Debit capital account, credit cash Debit purchases, credit trade payables.

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. During the year to 31 October 2021, Meera made cash sales to her customers of £475,000 and refunded £12,500 cash to customers for faulty goods returned. She started offering credit to selected customers during the year and recorded total credit sales of £31,000 in the financial year. One of her credit customers became insolvent during the year to 31 October 2021 owing her £500. The administrator of this customer has indicated that Meera will not receive any of the £500 owed to her by this customer. At 31 October 2021, Meera's other credit customers still owed her £5,000. What figure for sales will appear in Meera's trial balance at 31 October 2021?

£488,500 correct incorrect

£493,000 correct incorrect

£493,500 correct incorrect

£498,500 correct incorrect

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. Josie buys and sells goods on credit. During the financial year ended 31 December 2021, Josie made payments to her suppliers of £755,000 for goods purchased on credit. What is the correct double entry to record these payments?

Debit purchases £755,000, credit bank £755,000 correct incorrect

Debit bank £755,000, credit trade payables £755,000 correct incorrect

Debit trade payables £755,000, credit purchases £755,000 correct incorrect

Debit trade payables £755,000, credit bank £755,000 correct incorrect

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. Each and every debit entry must have an ____________ credit entry to ensure that the accounts balance.

Your response

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. At the end of an accounting period asset, liability and capital account balances are carried forward to the next accounting period, while balances on income and expenses accounts are written off to the statement of profit or loss.

True correct incorrect

False correct incorrect

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. Making a credit entry to a T account will: Please select all that apply.

Increase an asset account balance. correct incorrect

Decrease a liability account balance. correct incorrect

Decrease an expense account balance. correct incorrect

Increase a capital account balance. correct incorrect

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. Match the correct double entry for each transaction.

Goods bought on credit returned to supplier

Debit trade payables, credit purchases Debit sales, credit trade receivables Debit cash, credit trade receivables Debit purchases, credit trade payables.

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Cash received from credit customer

Debit sales, credit trade receivables Debit cash, credit trade receivables Debit purchases, credit trade payables. Debit trade payables, credit purchases

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Goods returned by credit customer

Debit cash, credit trade receivables Debit sales, credit trade receivables Debit trade payables, credit purchases Debit purchases, credit trade payables.

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Goods bought on credit from supplier

Debit purchases, credit trade payables. Debit cash, credit trade receivables Debit trade payables, credit purchases Debit sales, credit trade receivables

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. The profit for the year must be credited or the loss for the year must be debited before the balance carried forward on the capital account at the end of an accounting period can be calculated.

True correct incorrect

False correct incorrect

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. Farzana Limited has trade receivables at 30 September 2021 of £275,000. Of these trade receivables, there is a known irrecoverable debt of £15,000. The directors want to create an allowance for receivables of 5% of the remaining trade receivables. At 30 September 2020, the allowance for receivables was £17,000. What is the allowance for receivables figure that will appear in Farzana Limited's trial balance at 30 September 2021?

£4,000 Debit correct incorrect

£11,000 Debit correct incorrect

£13,000 Credit correct incorrect

£13,750 Credit correct incorrect

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. Wolf Associates receives an invoice from their accountants for £12,000. Wolf Associates will pay this invoice in 30 days' time. What is the correct double entry to record this invoice?

Debit accountancy costs £12,000, credit bank £12,000 correct incorrect

Debit bank £12,000, credit trade payables £12,000 correct incorrect

Debit trade payables £12,000, credit accountancy costs £12,000 correct incorrect

Debit accountancy costs £12,000, credit trade payables £12,000 correct incorrect

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. Credits are decreases in assets and expenses while debits are decreases in income, liabilities and capital.

True correct incorrect

False correct incorrect