Exercise-Accounting Equation and Double Entry Accounting 1. What will be debited, if business sold goods for $10, 000 on credit? Purchases account Sales account Accounts receivable account Cash account Sales on credit creats Receivable thus Dr. Accounts Receivbles 2. What will be debited, if Mohsin commenced business with cash? Proprietor account Capital account Drawings account Cash account Commencement of Business with cash means Increase in Cash, where as capital account will be Credit 3. Consider the following data: Assets $ 99,500 Owner’s equity $ 50,500, Liabilities $_______________ $125,000 $55,000 $49,000 $115,700 99,500-50,000 > Assets-owner equity=liabilities 4. Which of the following is NOT correct? Decrease in Liabilities will be debit Decrease in Assets will be credit Decrease in Revenue will be debit Decrease in Expenses will be debit Increase in Expense is Debt. Remaining all are Correct 5. Which of the following is the example of current liability? Notes payable Accounts receivable Notes receivable Prepaid expenses All others are the examples of Assets 6. What should be credited, if rent paid in cash? Accounts receivable account Landlords account Rent account Cash account Payment means Decrease in cash asset. 7. What will be debited, if business bought goods on credit from Mr. Ali? Sales account Cash account Mr. Ali account Purchases account 8. Which one of the following will result in increase in revenues? Return of goods, sold on credit Payment to creditors Purchased fixed asset Received discount Discount received is saving in purchase expense 9. Normally single entry book keeping is followed by the Governments only Small businesses only Large scale businesses only Both Small businesses and Governments Both Government and Small business with no concern for Accrual Accounting use single entry accounting 10. An expenditure whose benefit is finished or enjoyed immediately is called Cost Income Liability Expense The Economic outflow with the immediate benefit is called expense 11. What should be debited, if Sales made for cash? Purchases account Sales account Cash account Mahood account Sales on cash result increase in Cash 12. Total assets – Total liabilities =? Retained earnings Owners Equity Retained earnings Expenses Asset=owner equity+liabilities 13. Which of the following statements about accounting concepts and the characteristics of financial information are correct? 1 The concept of accruals requires transactions to be reflected in the financial statements once the cash or its equivalent is received or paid. 2 Information is material if its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements. 3 Based on faithful representation, it may sometimes be necessary to exclude material information from financial statements due to difficulties establishing an accurate figure. 1 only 2 and 3 only 2 only 1 and 2 only Statement (2) only is correct. Information is material if its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements. Statement 1 describes the opposite of the accruals concept. Statement 3 is also incorrect, faithful representation does not prevent estimates being made. 14. Any expense that gives benefit for a period of less than twelve months is called ________. Revenue Receipt Capital Expense Revenue Expense Deferred Expense The Economic outflow with the immediate benefit is called expense 15. What will be debited, if business purchased Vehicle on cash? Cash account Bank account Business account Vehicle account Purchase of Vehicle means increase in Vehicle Asset Loading … Feeling not ready? Still, have anything to ask? AccountingAccounting Equation and Double EntryFinancial Accounting