Exercise-Accounting Equation and Double Entry Accounting 1. What will be debited, if Mohsin commenced business with cash? Proprietor account Drawings account Capital account Cash account Commencement of Business with cash means Increase in Cash, where as capital account will be Credit 2. Any expense that gives benefit for a period of less than twelve months is called ________. Deferred Expense Revenue Receipt Capital Expense Revenue Expense Any expense bearing befits lesser then one year is a revnue expense 3. An expenditure whose benefit is finished or enjoyed immediately is called Income Expense Cost Liability The Economic outflow with the immediate benefit is called expense 4. What will be debited, if business purchased Vehicle on cash? Bank account Business account Cash account Vehicle account Purchase of Vehicle means increase in Vehicle Asset 5. What will be debited, if business sold goods for $10, 000 on credit? Sales account Accounts receivable account Cash account Purchases account Sales on credit creats Receivable thus Dr. Accounts Receivbles 6. The IASB’s Conceptual Framework for Financial Reporting gives six qualitative characteristics of financial information. What are these six characteristics? Relevance, Faithful representation, Consistency, Verifiability, Timeliness and Understandability Relevance, Faithful representation, Comparability, Verifiability, Timeliness and Understandability Accuracy, Faithful representation, Comparability, Verifiability, Timeliness and Understandability Relevance, Comparability, Consistency, Verifiability, Timeliness and Understandability 7. What should be debited, if Sales made to Mr. Jamed for cash? Cash account Mr. James account Sales account Purchases account Cash sales means increase in Cash Asset 8. Which one of the following will result in increase in revenues? Received discount Purchased fixed asset Payment to creditors Return of goods, sold on credit Discount received is saving in purchase expense 9. Normally single entry book keeping is followed by the Both Small businesses and Governments Small businesses only Large scale businesses only Governments only Both Government and Small business with no concern for Accrual Accounting use single entry accounting 10. Consider the following data: Assets $ __________ Owner’s equity 35,000 Liabilities 90,000 $ 1, 05,000 $ 1, 25,000 $55,000 $35,000 Assets=capital+Liabilities 11. Which of the following is the example of current liability? Notes receivable Accounts receivable Prepaid expenses Notes payable All others are the examples of Assets 12. What will be debited, if business bought goods on credit from Mr. Ali? Mr. Ali account Cash account Purchases account Sales account 13. What should be credited, if rent paid in cash? Rent account Landlords account Cash account Accounts receivable account Payment means Decrease in cash asset. 14. Total assets – Total liabilities =? Owners Equity Expenses Retained earnings Retained earnings Asset=owner equity+liabilities 15. When total liabilities are subtracted from total assets the remaining amount is known as Total expenses Total revenue Net income or net loss Equity or net assets Asset=Capital+liability Loading … Feeling not ready? Still, have anything to ask? AccountingAccounting Equation and Double EntryFinancial Accounting