Weekly Quizzes Flashcards
An Asset whose benefit will be used up within a year is a description of a … asset
Current
The amount it costs a business to earn income is a description of…?
An expense
The value of a non-current asset should be recorded in which financial statement?
A Statement of Financial Position
A sole trader’s personal transactions should be shown in the business accounts
False
Exercise caution, don’t be overly optimistic. This is the definition of which accounting convention?
Prudence
Freedom from errors and bias is a description of which important qualitative characteristic of accounting?
Reliability
The Income Statement and Statement of Financial position are examples of which type of Accounting?
Financial Accounting
When completing DEBK, which other classes of account behave the same as Revenue?
Capital and Liability
You should never have a transaction (an amount) recorded in a T-account that is labelled the same as the T-account itself is called?
True
The account which is debited is the account which ‘receives’ the value of the transaction?
True
The accounting convention that governs double entry bookkeeping is the … aspect convention
dual
When a business takes out a loan, the loan account will be debited?
False
£650 is spent on paying off a gas bill. Should the gas account be debited or credited by £650?
Debit the gas account
An owner decides to invest £60,000 of their own money into their business. Which two accounts will be needed to record this transaction in?
Bank, Capital
A company makes a sale worth £1000. The customer immediately pays via online bank transfer. In which TWO accounts will this transaction be recorded?
Bank, Sales
A business dec ides to spend £12,000 on a new machine. Should the machine account be debited or credited by £12,000
Debited by £12,000
When the owner invests their own money in to their business the capital account will be credited with the value of the investment?
True
A sale is made. The sales account should be credited with the value of the sale?
True
An owner invests £10,000 of their own money into the business. Should the Capital account be debited or credited?
Credit Capital Account
An organisation purchases new IT equipment which will enable faster data processing. This purchase should be recorded in a ‘purchases’ T-account.
False
The balance c/d from each T-account should be recorded in the Trial Balance?
False
Should be balance b/d
What ‘Class’ of account is a ‘Vehicles’ account?
Asset
If the transaction you are recording into T-accounts will have the effect of reducing a liability, would you record that amount on the debt or the credit side of the liability account?
Debit the liability account
When balancing off T-accounts the balance b/d is recorded at the bottom of the smaller side?
False
Bottom of the biggest side
If a purchase of materials is made on credit should a trade receivables or a trade payables T-account be created?
Trade Payables
Referring to the accounting equation - what ‘class’ of account would a trade receivables account be?
Assets
A customer has returned goods worth £600 for a cash refund. How should this be accounted for?
Which account should be debited and which should be credited?
Sale - £600 cash credited
Cash - £600 sales debited
RETURN:
Cash - £600 sales credited
Sale - £600 cash debited
A supplier has given a prompt payment discount. Should the discount account be debited or credited?
Credited (TP)
(debited in trade payables account to discount)
Show the following transactions in T-accounts
The company buys £650 worth of inventory on credit. The supplier says that a 3% prompt payment discount will be granted for payment within 30 days.
The company pays the supplier the amount due, by cheque, within 20 days.
TP:
£650 Purchases (credit)
£630.50 Bank (debit)
19.50 Discount (debit)
Purchases:
£650 TP (debit)
Bank:
£630.50 TP (credit)
Discount: 650 x 0.03 = 19.50
£19.50 TP (credit)
Show the following transactions in T-accounts:
A company makes sales of £1,000 on credit.
The credit customer returns £350 worth of the goods bought.
The customer pays their remaining balance via cheque.
TR:
Sales £1,000 Debit
Sales £350 Credit
Bank £650 Credit
Sales:
TR £1,000 Credit
TR £350 Debit
Bank:
TR £650 Debit
An accrual is recorded as a current asset in the Statement of Financial Position?
false
Which depreciation method will produce an equal annual depreciation expense each year for a non-current asset?
straight line
What would the total assets value be for the Statement of Financial Position of an organisation owing the following?
Vehicles £250,000
Prepayments £5,000
Trade Payables £16,000
Premises £500,000
Opening Inventory £60,000
Closing Inventory £75,000
Cash £46,000
Overdraft £2,000
Capital £70,000
Only assets should be included in this calculation:
Vehicles, prepayments, premises, closing inventory (opening is not included, this is what you started the year with but not what you owned at year end) and cash.
An asset costs £50,000 has an estimated scrap value of £6,000 and projected lifetime of 5 years. What is the annual depreciation expense using straight line depreciation?
Cost minus scrap divided by number of years SO (50,000 - 6,000) 5 = 8,800.
An organisation does not get around to paying their staff for Christmas overtime work by the time the organisation closes for the bank holiday on 31st December 2024. should the £10,000 overtime bill owed be recorded as an expense in the 2024 Income Statement or the 2025 Income Statement when the bill is finally paid?
2024 Income Statement
Which of the following is NOT included in the Statement os Financial Position?
Current Assets
Owner’s Equity
Sales Revenue
Non-Current Liabilities
Sales revenue
True or false? Prepayments should be excluded from the current years Income Statement?
true
In which section of the Statement of Financial Position would inventory appear?
Current assets
Which deprecation method calculated depreciation based on the ‘net book value’ of an asset rather than its cost?
Reducing balance
A customer has received and signed for the goods they ordered from an organisation. The organisation can now record the value of this sale as sales revenue in the Income Statement - true or false?
true
True or false? Cost of Sales is calculated as follows: Opening inventory plus purchases less closing inventory
True
What would the 2024 depreciation expense be for a £120,000 asset that was purchased 1st Jan 2023 and its depreciation using a reducing balance rate of 20%?
2023 depreciation: £120,000 x 0.20 = £24,000
2024 depreciation: £120,000 - £24,000 = £96,000 (NBV) x 0.20 = £19,200
