Test Questions & Answers Ch.4 Double-Entry Bookkeeping 1 2e

Chapter 4: Double-entry Bookkeeping 1: Debits, Credits, T accounts, the Trial Balance, and the Financial Statements

Test Bank

Type: multiple choice question

Title: Chapter 04 Question 01

1) The credit side of the T account records:

a. Increases in assets and expenses.

Heading reference: The T Account

b. Increases in income, liabilities and capital.

Heading reference: The T Account

c. Decreases in income and expenses.

Heading reference: The T Account

d. Decreases in assets, liabilities and capital.

Heading reference: The T Account

Type: multiple choice question

Title: Chapter 04 Question 02

2) The debit side of the T account records:

a. Increases in assets and expenses.

Heading reference: The T Account

b. Increases in income, liabilities and capital.

Heading reference: The T Account

c. Decreases in income and expenses.

Heading reference: The T Account

d. Decreases in assets, liabilities and capital.

Heading reference: The T Account

Type: multiple choice question

Title: Chapter 04 Question 03

3) A credit entry to a debit account will:

a. Increase the debit balance on that account IE increase an asset or expense.

Heading reference: The T Account

b. Reduce the debit balance on that account IE reduce an asset or expense.

Heading reference: The T Account

c. Increase the credit balance on that account IE increase a liability, equity or income.

Heading reference: The T Account

d. Reduce the credit balance on that account IE reduce a liability,equity or income.

Heading reference: The T Account

Type: multiple choice question

Title: Chapter 04 Question 04

4) A debit entry to a debit account will:

a. Decrease the credit balance on that account IE decrease a liability, capital or income.

Heading reference: The T Account

b. Increase the credit balance on that account IE increase a liability, capital or income.

Heading reference: The T Account

c. Decrease the debit balance on that account IE decrease an asset or expense.

Heading reference: The T Account

d. Increase the debit balance on that account IE increase an asset or expense.

Heading reference: The T Account

Type: multiple choice question

Title: Chapter 04 Question 05

5) A debit entry to a credit account will::

a. Increase the debit balance on that account IE increase an asset or expense.

Heading reference: The T Account

b. Decrease the debit balance on that account IE decrease an asset or expense.

Heading reference: The T Account

c. Decrease the credit balance on that account IE decrease a liability, capital or income.

Heading reference: The T Account

d. Increase the credit balance on that account IE increase a liability, capital or income.

Heading reference: The T Account

Type: multiple choice question

Title: Chapter 04 Question 06

6) A credit entry to a credit account will:

a. Decrease the credit balance on that account IE decrease a liability, capital or income.

Heading reference: The T Account

b. Increase the credit balance on that account IE increase a liability, capital or income.

Heading reference: The T Account

c. Decrease the debit balance on that account IE decrease an asset or expense.

Heading reference: The T Account

d. Increase the debit balance on that account IE increase an asset or expense.

Heading reference: The T Account

Type: multiple response question

Title: Chapter 04 Question 07

7) Making a debit entry to a T account will:

Please select all that apply.

Heading reference: The T Account

a. Increase an asset balance.

b. Decrease a liability balance.

c. Decrease an income balance.

d. Increase a capital balance.

Type: multiple response question

Title: Chapter 04 Question 08

8) Making a credit entry to a T account will:

Please select all that apply.

Heading reference: The T Account

a. Increase an expense balance.

b. Increase a liability balance.

c. Increase an asset balance.

d. Increase an income balance.

Type: multiple response question

Title: Chapter 04 Question 09

9) Making a debit entry to a T account will:

Please select all that apply.

Heading reference: The T Account

a. Decrease a capital balance.

b. Decrease a liability balance.

c. Increase an expense balance.

d. Increase an income balance.

Type: multiple response question

Title: Chapter 04 Question 10

10) Making a credit entry to a T account will:

Please select all that apply.

Heading reference: The T Account

a. Decrease an asset balance.

b. Decrease an income balance.

c. Decrease a capital balance.

d. Increase a liability balance.

Type: multiple choice question

Title: Chapter 04 Question 11

11) Margot Limited makes cash sales in September of £10,500. Which one of the following is the correct double entry to record these sales in Margot Limited’s books of account?

a. Debit trade receivables £10,500, Credit sales £10,500

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. Debit cash £10,500, Credit trade payables £10,500

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

c. Debit cash £10,500, Credit trade receivables £10,500

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

d. Debit cash £10,500, Credit sales £10,500

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: multiple choice question

Title: Chapter 04 Question 12

12) Charles Limited runs a retail furniture operation. Charles Limited receives a delivery of tables and chairs with a cost of £22,000 from a supplier. Charles Limited will pay for these goods in 30 days’ time. Which one of the following is the correct double entry to record this transaction in Charles Limited’s books of account?

a. Debit trade payables £22,000, Credit purchases £22,000

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. Debit purchases £22,000, Credit cash £22,000

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

c. Debit purchases £22,000, Credit trade payables £22,000

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

d. Debit trade payables £22,000, Credit cash £22,000

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: multiple choice question

Title: Chapter 04 Question 13

13) Tibbles Limited receives cash from a credit customer of £30,000. Which one of the following is the correct double entry to record this cash receipt in Tibbles Limited’s books of account?

a. Debit trade receivables £30,000, Credit sales £30,000

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. Debit cash £30,000, Credit trade payables £30,000

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

c. Debit cash £30,000, Credit trade receivables £30,000

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

d. Debit cash £30,000, Credit sales £30,000

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: multiple choice question

Title: Chapter 04 Question 14

14) Hedge Limited receives notice from its customer Privet Limited that it is in administration and has no cash with which to pay what it owes to its suppliers. Privet Limited owes Hedge Limited £8,000. Which one of the following is the correct double entry to record this event in Hedge Limited’s books of account?

a. Debit sales £8,000, Credit trade receivables £8,000

Heading reference:

Further adjustments to the statement of profit or loss

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. Debit trade receivables £8,000, Credit irrecoverable debts £8,000

Heading reference:

Further adjustments to the statement of profit or loss

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

c. Debit sales £8,000, Credit irrecoverable debts £8,000

Heading reference:

Further adjustments to the statement of profit or loss

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

d. Debit irrecoverable debts £8,000, Credit trade receivables £8,000

Heading reference:

Further adjustments to the statement of profit or loss

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: multiple choice question

Title: Chapter 04 Question 15

15) Maria receives notice from her customer Joseph that he has no cash with which to pay what he owes to his suppliers. Joseph owes Maria £500. Which one of the following is the correct double entry to record this event in Maria’s books of account?

a. Debit cash £500, Credit irrecoverable debts £500

Heading reference:

Further adjustments to the statement of profit or loss

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. Debit sales £500, Credit cash £500

Heading reference:

Further adjustments to the statement of profit or loss

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

c. Debit irrecoverable debts £500, Credit trade receivables £500

Heading reference:

Further adjustments to the statement of profit or loss

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

d. Debit sales £500, Credit trade receivables £500

Heading reference:

Further adjustments to the statement of profit or loss

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: true-false

Title: Chapter 04 Question 16

16) Debit irrecoverable debts, Credit trade receivables is the double entry required to record an irrecoverable debt.

a. True

Heading reference:

Further adjustments to the statement of profit or loss

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. False

Heading reference:

Further adjustments to the statement of profit or loss

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: multiple choice question

Title: Chapter 04 Question 17

17) Puffins Limited takes out a bank loan for £200,000. The bank loan is paid into Puffins’ bank account and is due for repayment in three years’ time. Which one of the following is the correct double entry to record this transaction in Puffin Limited’s books of account?

a. Debit bank account £200,000, Credit bank loan £200,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

b. Debit bank account £200,000, Credit sales £200,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

c. Debit bank loan £200,000, Credit bank account £200,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

d. Debit sales £200,000, Credit bank account £200,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

Type: multiple choice question

Title: Chapter 04 Question 18

18) Barolo Limited receives a statement from the bank showing bank charges of £257. This amount has been deducted from the cash in the company’s bank account. Which one of the following is the correct double entry to record this event in Barolo Limited’s books of account?

a. Debit bank account £257, Credit trade payables £257

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

b. Debit bank charges £257, Credit bank account £257

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

c. Debit bank account £257, Credit bank charges £257

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

d. Debit trade payables £257, Credit bank account £257

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

Type: multiple choice question

Title: Chapter 04 Question 19

19) Frascati Limited buys a new van with which to make deliveries in its distribution business. The cost of the van is £20,000 and the purchase of the van is made on credit with its supplier. Frascati Limited will pay for the new van 30 days after taking delivery of the vehicle. Which one of the following is the correct double entry to record this transaction in Frascati Limited’s books of account?

a. Debit motor expenses £20,000, Credit bank account £20,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

b. Debit motor expenses £20,000, Credit trade payables £20,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

c. Debit motor vehicles £20,000, Credit bank account £20,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

d. Debit motor vehicles £20,000, Credit trade payables £20,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

Type: multiple choice question

Title: Chapter 04 Question 20

20) Which one of the following is the correct double entry to record expenses paid in cash in an entity’s books of account?

a. Debit expenses, Credit cash

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. Debit expenses, Credit trade payables

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

c. Debit trade payables, Credit cash

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

d. Debit cash, Credit trade payables

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: multiple choice question

Title: Chapter 04 Question 21

21) Chianti Limited sells new plant and equipment that it has produced to a customer for £250,000. The customer has agreed to pay the £250,000 due in 60 days’ time. Which one of the following is the correct double entry to record this transaction in Chianti Limited’s books of account?

a. Debit trade receivables £250,000, Credit property, plant and equipment £250,000

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. Debit trade receivables £250,000, Credit sales £250,000

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

c. Debit cash £250,000, Credit sales £250,000

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

d. Debit cash £250,000, Credit property, plant and equipment £250,000

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: multiple choice question

Title: Chapter 04 Question 22

22) Panos invested £10,000 into a small retail business which he runs on his own. His profits each year are added to the balance on his capital account and he draws out money for his own personal living expenses as and when he needs to. Panos has set up a direct debit from his business bank account to pay his personal smart phone bill each month. In September, the smart phone company charged Panos’ business bank account £25 for his personal smart phone usage in August. Which one of the following is the correct double entry to record this transaction in Panos’ books of account?

a. Debit telephone expenses £25, Credit bank account £25

Heading reference:

Drawings and the business entity convention

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. Debit telephone expenses £25, Credit trade payables £25

Heading reference:

Drawings and the business entity convention

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

c. Debit capital account £25, Credit bank account £25

Heading reference:

Drawings and the business entity convention

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

d. Debit bank account £25, Credit capital account £25

Heading reference:

Drawings and the business entity convention

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: true-false

Title: Chapter 04 Question 23

23) Debit cash, Credit sales is the correct double entry to record cash received from trade receivables.

a. True

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. False

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: multiple choice question

Title: Chapter 04 Question 24

24) Cheapo Supermarkets makes a payment of £9,570 from its bank account to pay what it owes to its supplier of breakfast cereals. Which one of the following is the correct double entry to record this transaction in Cheapo Supermarkets’ books of account?

a. Debit bank £9,570, Credit trade receivables £9,570

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. Debit sales £9,570, Credit bank £9,570

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

c. Debit purchases £9,570, Credit bank £9,570

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

d. Debit trade payables £9,570, Credit bank £9,570

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: multiple choice question

Title: Chapter 04 Question 25

25) Arvind is setting up his own business. He opens a business bank account and pays in £25,000 of his own money with which to finance the early months of trading. Which one of the following is the correct double entry to record this transaction in Arvind’s books of account?

a. Debit bank £25,000, Credit income £25,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

b. Debit bank £25,000, Credit capital £25,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

c. Debit bank £25,000, Credit liabilities £25,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

d. Debit capital £25,000, Credit bank £25,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

Type: true-false

Title: Chapter 04 Question 26

26) Debit purchases, Credit trade payables is the correct double entry to record goods purchased on credit for resale in a retail business.

a. True

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. False

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: multiple choice question

Title: Chapter 04 Question 27

27) Which one of the following is the correct double entry to record a payment of loan interest from the bank account in an entity’s books of account?

a. Debit loan interest, Credit bank

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. Debit loan interest, Credit loan interest accrual

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

c. Debit loan, Credit cash

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

d. Debit bank, Credit loan interest

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: multiple choice question

Title: Chapter 04 Question 28

28) Shazia runs a grocery retail business. She trades on credit with her suppliers. At the end of her financial year, her main supplier of goods awards Shazia a £1,000 quantity discount on her purchases of goods during the year. Her main supplier asks her to claim this quantity discount by deducting £1,000 from her next payment for goods supplied on credit. Which one of the following is the correct double entry to record this £1,000 quantity discount in Shazia’s books of account?

a. Debit purchases £1,000, Credit trade payables £1,000

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. Debit bank account £1,000, Credit purchases £1,000

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

c. Debit trade payables £1,000, Credit purchases £1,000

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

d. Debit trade payables £1,000, Credit sales £1,000

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: multiple choice question

Title: Chapter 04 Question 29

29) AC makes a sale on credit to DC. The total value of the sale is £10,000. Some of the £10,000 of goods delivered are damaged in transit. DC returns these damaged goods and asks for a credit to its account of £3,000. Which one of the following is the correct double entry to record the £3,000 reduction in sales in AC’s books of account?

a. Debit sales £3,000, Credit bank £3,000

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. Debit sales £3,000, Credit trade receivables £3,000

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

c. Debit trade receivables £3,000, Credit sales £3,000

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

d. Debit trade receivables £7,000, Credit sales £7,000

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: true-false

Title: Chapter 04 Question 30

30) Debit allowance for receivables expense, credit trade receivables is the correct double entry required to record an increase in the allowance for receivables.

a. True

Heading reference:

Further adjustments to the statement of profit or loss

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. False

Heading reference:

Further adjustments to the statement of profit or loss

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: true-false

Title: Chapter 04 Question 31

31) Debit bank, Credit trade payables is the correct double entry to record cash paid to trade payables.

a. True

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. False

Heading reference:

Determining the amount of income or expense

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: true-false

Title: Chapter 04 Question 32

32) Dr depreciation expense, Credit non-current assets is the correct double entry to record the annual depreciation charge on non-current assets.

a. True

Heading reference: Comprehensive example: double entry and the trial balance

b. False

Heading reference: Comprehensive example: double entry and the trial balance

Type: multiple choice question

Title: Chapter 04 Question 33

33) JC awards quantity discounts to customers for large quantities of goods purchased during the financial year. The total quantity discounts awarded for the financial year to 31 December total up to £9,650. Which one of the following is the correct double entry to record these quantity discounts allowed in JC’s books of account?

a. Debit sales £9,650, Credit trade receivables £9,650

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. Debit trade payables £9,650, Credit purchases £9,650

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

c. Debit trade payables £9,650, Credit discounts allowed £9,650

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

d. Debit discounts allowed £9,650, Credit trade receivables £9,650

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: multiple choice question

Title: Chapter 04 Question 34

34) ZJ purchases raw materials on credit from BD for £5,000. However, when they arrive, half the raw materials turn out to be unsuitable so ZJ returns these goods to BD. Which one of the following is the correct double entry to record the £2,500 goods returned in ZJ’s books of account?

a. Debit purchases £2,500, Credit trade payables £2,500

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

b. Debit purchases £2,500, Credit cash £2,500

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

c. Debit trade payables £2,500, Credit purchases £2,500

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

d. Debit cash £2,500, Credit purchases £2,500

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

Posting accounting transactions to T accounts

Comprehensive example: double entry and the trial balance

Type: multiple response question

Title: Chapter 04 Question 35

35) Which of the following double entries will result in decreases in expense accounts?

Please select all that apply.

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

Correct

a. Debit trade payables, Credit purchases (double entry to record purchase returns made to suppliers).

b. Debit prepayments, Credit rent expense (double entry to record rent paid in advance).

c. Debit cash, Credit irrecoverable debts (double entry to record cash recovered from an insolvent debtor that was previously charged as an expense).

d. Debit allowance for receivables expense account, Credit allowance for receivables (double entry to record an increase in the allowance for receivables).

Type: multiple choice question

Title: Chapter 04 Question 36

36) Luis Limited makes a loan repayment of £50,000 from the company’s bank account. What is correct double entry to record this transaction?

a. Debit trade payables £50,000, Credit loan £50,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

b. Debit loan £50,000, Credit trade payables £50,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

c. Debit bank £50,000, Credit loan £50,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

d. Debit loan £50,000, Credit bank £50,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

Type: multiple choice question

Title: Chapter 04 Question 37

37) Felicia Limited takes out a £500,000 bank loan on 1 January 2021. On 31 December 2021, the company makes the first repayment of £50,000 together with a payment of interest of £25,000. The repayment and the payment of interest are made from the company’s bank account. What is the correct double entry to record this transaction?

a. Debit loan £75,000, Credit bank £75,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

b. Debit loan £50,000, Debit interest payable £25,000, Credit bank £75,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

c. Debit bank £75,000, Credit loan £50,000, Credit interest receivable £25,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

d. Debit loan £50,000, Credit bank £50,000

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

Type: multiple response question

Title: Chapter 04 Question 38

38) Which of the following double entries will result in decreases in assets?

Please select all that apply.

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

Correct

a. Debit sales, Credit trade receivables (double entry to record sales returns made by customers).

b. Debit allowance for receivables, credit allowance for receivables expense (double entry to record a reduction in the allowance for receivables).

c. Debit annual depreciation charge, credit accumulated depreciation (double entry to record the annual charge for depreciation on non-current assets).

d. Debit irrecoverable debts, credit trade receivables (double entry to record trade receivables that cannot or will not pay what is owed).

Type: multiple response question

Title: Chapter 04 Question 39

39) Which of the following double entries will result in increases in income?

Please select all that apply.

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

Correct

a. Debit trade receivables, credit sales (double entry to record sales made on credit to customers).

b. Debit bank account, credit interest receivable (double entry to record a receipt of bank interest).

c. Debit bank account, credit capital account (double entry to record the receipt of cash from the owner of a business).

d. Debit bank account, credit bank loan (double entry to record the receipt of a loan from the bank).

Type: multiple response question

Title: Chapter 04 Question 40

40) Which of the following double entries will result in decreases in liabilities?

Please select all that apply.

Heading reference: Posting accounting transactions to T accounts, Comprehensive example: double entry and the trial balance

a. Debit loan, credit bank (double entry to record the repayment of a loan from the bank).

b. Debit sales, credit cash (double entry to record a refund of cash to a customer for a cancelled sale).

c. Debit trade payables, credit bank (double entry to record cash paid to suppliers of goods and services made on credit).

d. Debit capital account, credit bank (double entry to record the payment of cash to the owner of a business).

Type: multiple choice question

Title: Chapter 04 Question 41

41) Jacob’s rent account shows a prepayment at 1 January 2021 of £750. During the year to 31 December 2021, Jacob paid rent of £11,000 from his bank account. At 31 December 2021 Jacob has a rent prepayment of £875. What is the figure that will appear in Jacob’s trial balance for rent expense at 31 December 2021?

a. £10,875

Heading reference: The trial balance, Julia’s trial balance

b. £11,125

Heading reference: The trial balance, Julia’s trial balance

c. £11,750

Heading reference: The trial balance, Julia’s trial balance

d. £12,625

Heading reference: The trial balance, Julia’s trial balance

Type: multiple choice question

Title: Chapter 04 Question 42

42) Jemima made credit sales of £243,250 in the financial year to 31 October 2021. Her sales returns for the year totalled up to £3,750 and she also allowed customers discounts of £1,000. What is the figure that will appear in Jemima’s trial balance for sales at 31 October 2021?

a. £238,500

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

The trial balance

Julia’s trial balance

b. £239,500

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

The trial balance

Julia’s trial balance

c. £240,500

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

The trial balance

Julia’s trial balance

d. £243,250

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

The trial balance

Julia’s trial balance

Type: multiple choice question

Title: Chapter 04 Question 43

43) Fadia set up her retail business on 1 October 2020. She trades with her suppliers on credit. During her first financial year ended 30 September 2021, Fadia’s suppliers delivered goods with a total value of £78,950. By 30 September 2021, Fadia had returned goods with a value of £2,750, had received discounts from her suppliers totalling up to £895 and had made total payments to her suppliers of £72,308. What is the figure that will appear in Fadia’s trial balance for trade payables at 30 September 2021?

a. £2,997

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

The trial balance

Julia’s trial balance

b. £3,892

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

The trial balance

Julia’s trial balance

c. £5,747

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

The trial balance

Julia’s trial balance

d. £6,642

Heading reference:

Discounts allowed (early settlement accounts)

Discounts received (quantity discounts)

The trial balance

Julia’s trial balance

Type: multiple choice question

Title: Chapter 04 Question 44

44) Ebrahim has been trading for many years. At 31 May 2020, his trade receivables account had a balance of £48,221. During the financial year to 31 May 2021, Ebrahim made credit sales of £385,669. He received cash from his customers of £378,570. On 28 May 2021 a customer went into liquidation owing £4,410: the customer has insufficient assets with which to pay any of this debt. What is the debit figure that will appear in Ebrahim’s trial balance for trade receivables at 31 May 2021?

a. £36,712

Heading reference:

Further adjustments to the statement of profit or loss

The trial balance

Julia’s trial balance

b. £41,122

Heading reference:

Further adjustments to the statement of profit or loss

The trial balance

Julia’s trial balance

c. £50,910

Heading reference:

Further adjustments to the statement of profit or loss

The trial balance

Julia’s trial balance

d. £55,320

Heading reference:

Further adjustments to the statement of profit or loss

The trial balance

Julia’s trial balance

Type: multiple choice question

Title: Chapter 04 Question 45

45) Linda starts her accountancy practice on 1 May 2020. She opens a business bank account and pays in £50,000 of her own money to provide the practice with cash with which to start operating. Her fees to clients in her first year total up to £100,000 (there are no outstanding fees due for payment at 30 April 2021 and all fees received have been paid into her business bank account). Her office expenses are £40,000 (all of these have been paid by the end of the financial year from her business bank account and there are no outstanding expenses at 30 April 2021) and she withdraws £2,000 each month to cover her own personal living expenses. What is the figure that will appear in Linda’s trial balance for her bank account at 30 April 2021?

a. £26,000 credit

Heading reference: The trial balance, Julia’s trial balance

b. £64,000 credit

Heading reference: The trial balance, Julia’s trial balance

c. £86,000 debit

Heading reference: The trial balance, Julia’s trial balance

d. £150,000 debit

Heading reference: The trial balance, Julia’s trial balance

Type: true-false

Title: Chapter 04 Question 46

46) The balance on the accumulated depreciation account represents an expense and is therefore posted to the debit side of the trial balance.

a. True

Heading reference: Julia’s trial balance

b. False

Heading reference: Julia’s trial balance

Type: multiple choice question

Title: Chapter 04 Question 47

47) At 1 June 2020, Madhavi’s telephone expense account showed a prepayment of £250. During the financial year ended 31 May 2021, Madhavi paid £3,400 for all her telephone calls and line rental. At 31 May 2021, Madhavi had an accrual for telephone expenses of £400. What is the figure that will appear in Madhavi’s trial balance for her telephone expense at 31 May 2021?

a. £3,250

Heading reference: The trial balance, Julia’s trial balance

b. £3,550

Heading reference: The trial balance, Julia’s trial balance

c. £3,650

Heading reference: The trial balance, Julia’s trial balance

d. £4,050

Heading reference: The trial balance, Julia’s trial balance

Type: multiple choice question

Title: Chapter 04 Question 48

48) In the trial balance for the financial year ended 31 July 2020, Vanita’s capital account showed a balance of £43,400. Vanita’s loss for the year ended 31 July 2020 amounted to £10,350. During the financial year to 31 July 2021, Vanita made drawings from her capital account of £12,000. Her final accounts for the year ended 31 July 2021 show that she made a profit for the year of £20,450. What is the figure that will appear in Vanita’s trial balance for her capital account at 31 July 2021?

a. £21,050

Heading reference:

The trial balance

Julia’s trial balance

Closing off the T accounts at the end of an accounting period

b. £31,400

Heading reference:

The trial balance

Julia’s trial balance

Closing off the T accounts at the end of an accounting period

c. £41,500

Heading reference:

The trial balance

Julia’s trial balance

Closing off the T accounts at the end of an accounting period

d. £41,750

Heading reference:

The trial balance

Julia’s trial balance

Closing off the T accounts at the end of an accounting period

Type: multiple choice question

Title: Chapter 04 Question 49

49) At 31 October 2020 Famske Limited had an accrual for electricity costs of £675. During the financial year to 31 October 2021, Famske Limited made an £800 payment each month for electricity. At 31 October 2021, Famske’s electricity supplier wrote to confirm that the company had overpaid for electricity for the 12 months to 31 October 2021, the overpayment at that date amounting to £425. What is the figure that will appear in Famske Limited’s trial balance for electricity expense at 31 October 2021?

a. £8,500

Heading reference: The trial balance, Julia’s trial balance

b. £9,350

Heading reference: The trial balance, Julia’s trial balance

c. £9,850

Heading reference: The trial balance, Julia’s trial balance

d. £10,700

Heading reference: The trial balance, Julia’s trial balance

Type: true-false

Title: Chapter 04 Question 50

50) The balance on the allowance for receivables account represents an expense and is therefore posted to the debit side of the trial balance.

a. True

Heading reference: Further adjustments to the statement of profit or loss, Julia’s trial balance

b. False

Heading reference: Further adjustments to the statement of profit or loss, Julia’s trial balance

Type: true-false

Title: Chapter 04 Question 51

51) The balances on asset, liability and income accounts are all carried forward to the next accounting period when accounts are closed off at the end of each accounting period.

a. True

Heading reference: Closing off the T accounts at the end of an accounting period

b. False

Heading reference: Closing off the T accounts at the end of an accounting period

Type: multiple choice question

Title: Chapter 04 Question 52

52) During the financial year ended 31 October 2021, Susie granted her credit customers early settlement discounts of £9,200. However, only £3,700 of these discounts were taken up by her customers, with the remainder paying the full amount for their purchases. What is the correct double entry to record the discounts allowed not taken up by Susie’s customers?

a. Debit cash £3,700, Credit sales £3,700

Heading reference: Discounts allowed (early settlement discounts), The T account

b. Debit cash £5,500, Credit sales £5,500

Heading reference: Discounts allowed (early settlement discounts), The T account

c. Debit expenses (discounts allowed) £3,700, Debit cash £5,500, Credit sales £9,200

Heading reference: Discounts allowed (early settlement discounts), The T account

d. Debit expenses (discounts allowed) £9,200, Credit sales £9,200

Heading reference: Discounts allowed (early settlement discounts), The T account

Type: multiple choice question

Title: Chapter 04 Question 53

53) At 1 January 2021, the allowance for receivables of Trader Limited stood at £22,375. During the financial year ended 31 December 2021, Trader Limited made sales of £852,639, received cash from customers of £858,772 and had irrecoverable debts of £6,400. The total trade receivables at 1 January 2021 were £70,080. The allowance for receivables at 31 December 2021 had been reduced to £19,221. What figure for trade receivables will appear in Trader Limited’s trial balance at 31 December 2021?

a. £38,326

Heading reference: Irrecoverable debts, The allowance for receivables, The trial balance

b. £54,393

Heading reference: Irrecoverable debts, The allowance for receivables, The trial balance

c. £57,547

Heading reference: Irrecoverable debts, The allowance for receivables, The trial balance

d. £60,701

Heading reference: Irrecoverable debts, The allowance for receivables, The trial balance

Type: multiple choice question

Title: Chapter 04 Question 54

54) Which one of the following statements is true?

a. Prepayments at the end of an accounting period are a credit entry to expense accounts.

Heading reference: Comprehensive example: double entry and the trial balance, Illustrations 4.32 and 4.33

b. Accruals at the start of an accounting period are a debit entry to expense accounts.

Heading reference: Closing off the T accounts at the end of an accounting period Illustrations 4.58, 4.60 and 4.62

c. Assets + expenses = Liabilities + income

Heading reference: Double entry and the accounting equation

d. Debit trade receivables, Credit sales is the correct double entry to record the receipt of cash from credit customers.

Heading reference: Determining the amount of income or expense, The T account

Type: multiple choice question

Title: Chapter 04 Question 55

55) Segovia Limited receives £4,000 from a trade receivable previously written off as an irrecoverable debt. What is the correct double entry to record this transaction?

a. Debit cash £4,000, Credit irrecoverable debts £4,000

Heading reference: The T account

b. Debit cash £4,000, Credit sales £4,000

Heading reference: The T account

c. Debit trade receivables £4,000, Credit irrecoverable debts £4,000

Heading reference: The T account

d. Debit trade receivables £4,000, Credit sales £4,000

Heading reference: The T account

Type: multiple choice question

Title: Chapter 04 Question 56

56) Fedora Limited has a year end of 30 September. At 30 September 2020, the allowance for receivables was £19,795. At 30 September 2021, the allowance for receivables was £16,800. What is the correct double entry to record this movement in the allowance for receivables?

a. Debit allowance for receivables expense £2,995, Credit allowance for receivables £2,995

Heading reference: The allowance for receivables, The T account

b. Debit allowance for receivables £2,995, Credit allowance for receivables expense £2,995

Heading reference: The allowance for receivables, The T account

c. Debit trade receivables £2,995, Credit allowance for receivables expense £2,995

Heading reference: The allowance for receivables, The T account

d. Debit trade receivables £2,995, Credit allowance for receivables £2,995

Heading reference: The allowance for receivables, The T account