Which of the following statements about book-keeping and accounting are correct?
1 Accounting must be performed on a daily basis, not just periodically
2 Accounting includes the preparation of financial statements
3 Book-keeping involves the recording of financial transactions
4 Book-keeping uses information kept in the accounting records
1, 2 and 3
1 and 4
2 and 3 only
2, 3 and 4
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What is the purpose of accounting?
to confirm that total credit entries are equal to total debit entries
to prepare financial statements and provide information to help with decision making
to provide financial information for potential investors in a business
to record day-to-day transactions of the business
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Why does the accountant analyse the financial statements of a business?
to provide information so bank managers can decide whether or not to loan money to the business
to provide information so customers can decide whether or not to purchase from the business
to provide information so owners and managers can monitor business progress and make good decisions
to provide information so suppliers can decide whether or not to offer trade discounts to the business
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What is the main job of a book-keeper?
analysing information
communicating information
outlining information
recording information
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Which of the following statements correctly describes the accounting equation?
capital = assets + liabilities
capital = assets - liabilities
capital = liabilities - assets
capital = current assets + current liabilities
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A business had the following closing balances in its books at the end of the year.
$ | |
non-current assets | 32 000 |
trade receivables | 14 500 |
bank overdraft | 2 000 |
other payables | 700 |
What was the business's capital at the end of the year?
$11 800
$14 800
$43 800
$47 800
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Liara is a business owner. Which of the following would let her know that she is receiving a return on her investment in the business?
Her bank overdraft has gone down.
Her income statement shows a profit for the year.
She has been able to increase her drawings.
She has been able to increase her working capital over the year.
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Leosanni started a business on 1 January 2023, using $28 000 of her own money. On 31 December 2023 her assets and liabilities were as shown in the table.
$ | |
equipment at net book value | 39 500 |
other assets | 12 000 |
long-term loan from bank | 21 000 |
What was Leosanni's capital on 31 December 2023?
$28 000
$30 500
$49 000
$51 500
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'Assets', 'capital' and 'liabilities' are the components of a statement of financial position. Which of those components do descriptions 1, 2 and 3 below relate to?
1 property owned by the business, amounts owed by customers, unsold goods and money in the bank
2 finance and other resources that have been provided by the owner
3 money owed for goods supplied, unpaid expenses and loans made to the business
1 = assets, 2 = capital, 3 = liabilities
1 = assets, 2 = liabilities, 3 = capital
1 = capital, 2 = assets, 3 = liabilities
1 = capital, 2 = liabilities, 3 = assets
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Which of the following actions does not reduce the owner's capital?
cash from the business bank account withdrawn for personal use
expenses for the business paid using personal cash
goods taken from the business inventory for personal use
personal expenses paid for using a cheque from the business bank account
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