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1. Which of the following transactions 4. Which of the following statements is

should be debited in the cash correct?
account?
Effects upon
(a) Bought goods for cash from
J. Jones Assets Liabilities
(b) Sold goods for cash
(c) Paid office cleaner cash (a) Sold goods on credit.
(d) Paid rent by cheque - Stock + Creditors
(b) J.Cob lend us $1 000 in cash
2. Which of the following lists of assets + Cash + Loan - J. Cob
are arranged in the order of (c) We paid a creditor by cheque
liquidity? - Bank - Debtors
(d) Bought goods paying by
(a) Land, machinery, stock, cheque.
debtors, bank, cash + Bank - Creditors
(b) Land, stock, machinery, cash,
debtors, bank 5. The purchase of a motor van on
(c) Cash, bank, debtors, stock, credit from Things Caricom Motors
machinery, land for use in the business should be
(d) Bank, debtors, stock, cash, recorded as
land, machinery
(a) debit Motor Van Expense
3. Which statement shows calculation Account; credit Bank Account
of capital? (b) debit Purchase Account;
credit Things Caricom
(a) Capital = Assets + Liabilities Motors Account
(b) Capital = Assets - Liabilities (c) debit Motor Vehicle
(c) Capital = Assets + Liabilities Account; credit bank
(d) Liabilities – Capital = Assets Account
(d) debit Motor Vehicle
Account; credit Things
Caricom Motors Account

6. Which ONE of the following is a

liability?

(a) Computer
(b) Motor vehicles
(c) Creditors for goods
(d) Cash in hand

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 7. Which of the following is incorrect? 12. Which of the following account does
not have a credit balance?
Assets Liabilities Capital
$ $ $ (a) R. Smith (supplier)
(a) 7,850 1,250 6,600 (b) Rent received
(b) 8,200 2,800 5,400 (c) Capital
(c) 9,550 1,150 8,200 (d) Purchases
(d) 6,540 1,120 5,420
13. A proprietor wins a motor cycle
8. The process of recording, classifying valued at $2 000 and decides to put
and summarizing of data is called: it into his business. Which of the
following is the correct entry?
(a) Bookkeeping
(b) Decision making (a) Debit Motor Cycle Account;
(c) Accounting Credit Drawings Account
(d) Budget (b) Debit Motor Cycle Account;
Credit Capital Account
9. If assets = $25 000, (c) Debit Capital Account; Credit
liabilities = $5 000. What is the net Motor Cycle Account
worth of the business? (d) Debit Bank Account; Credit
Capital Account
(a) $15 000
(b) $20 000 14. Which of the following should NOT
(c) $3 000 be called ‘purchases’?
(d) $10 000
(a) Purchase of a motor van for
10. Which of the following statements is use by the firm
a possible double entry? (b) Goods bought on credit
(c) Goods bought for cash
Account to debit Account to credit (d) Items bought for the prime
purpose of resale
(a) Vehicles Bank
(b) Bank Bank 15. Which of the following statements is
(c) None of the above correct?
(d) Both of the above
(a) When an asset is increased it
11. Which of the following express the is credited.
balance sheet equation? (b) When an asset is increased it
is debited.
(a) Capital=Assets + Liabilities (c) When assets increase they
(b) Assets= Liabilities - Capital are debited and credited.
(c) Liabilities=Asset + Capital (d) When an asset increase they
(d) Liabilities= Asset - Capital are not entered in the books.

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16. If the proprietor introduced $800
more cash into the firm the effect of 19. Which ledger entry is required in the
the transaction would be to: books of D. Wells who started a
business by depositing $4 000 into
(a) Increase cash; Increase bank the business bank account?
(b) Increase capital; Decrease
cash (a) Dr Bank Account; Cr Capital
(c) Increase cash; Decrease bank Account
(d) Increase cash; Increase (b) Dr Bank Account; Cr D. Wells
capital Account
(c) Dr Capital Account; Cr Bank
17. What is the minimum number of Account
entries usually affected by a (d) Dr D. Wells Account; Cr
business transaction? Capital Account

(a) One 20. What is the similarity between

(b) Two assets and expenses?
(c) Three
(d) Four (a) They both appear in the
balance sheet
18. The principle of double entry book- (b) They both appear in the
keeping states that profit and loss account
(c) They are both debited when
(a) Every debit entry has a increased
corresponding credit entry; (d) They are both items of value
Every credit entry has a owned by the business
corresponding debit entry
(b) Every debit entry has a
corresponding debit entry;
Every credit entry has a
corresponding credit entry
(c) Every debit entry has a N
corresponding credit entry;
Every credit entry has a
corresponding credit entry
(d) Every debit entry has a
corresponding debit entry;
Every credit entry has a
corresponding debit entry

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