NAME: ANGLICAN CATHEDRAL COLLEGE

CLASS APRIL 23, 2021

4TH PRINCIPLES OF ACCOUNTS
GRADED QUIZ

MULTIPLE CHOICE: HIGHLIGHT OR BOLD YOUR RESPONSE

1. Which of the following is not an asset?
(A) Stock
(B) Creditors
(C) Cash at bank
(D) Premises
2. Gross profit is calculated in the:
(A) trading account
(B) balance sheet
(C) trial balance
(D) balance sheet
3. A contra item is where:
(A) cash is banked before it has been paid
out
(B) double entry is completed within the
cash book
(C) sales have been paid by cash
(D) the proprietor has repaid his capital in
cash.
4. A statement of affairs is similar to:
(A) Bank statement
(B) Statement of account
(C) Balance sheet
(D) An Appropriation account
5. Which of the following is a liability?
(A) Buildings
(B) Equipment
(C) Debtors
(D) Loan from P. Smith
6. What is the correct order for current assets
in the balance sheet?
(A) stock, bank, cash, debtors
(B) cash, bank, debtors, stock
(C) stock, debtors, bank, cash
(D) debtors, stock, bank, cash
7. The total of the discount received column in
the cash book is posted to the:
(A) credit of the discounts received account
(B) credit of the discount allowed account
(C) debit of the discounts allowed account
(D) debit of the discount received account
8. Which of the following is incorrect?
(A) Liabilities increase on the credit and
decrease on the debit
(B) Assets increase on the debit and
decrease on the credit
(C) Capital increase on the debit and
decrease on the credit
(D) None of them
9. In the trading account the returns inwards
should be:
(A) added to sales
(B) deducted from sales
(C) added to cost of goods sold
(D) deducted from purchases
10. The straight line method of depreciation
consists of:
(A) increasing amounts of depreciation each
year
(B) unequal amounts of depreciation each
year
(C) equal amounts of depreciation each year
(D) reducing amounts of depreciation each
year
11. Which of the following is correct?
(A) Refund of rent by cash- Dr. Rent and Cr.
Cash
(B) Goods returned to W. Wood- Dr. W.
Wood and Cr. Returns Out
(C) Cash Sales- Dr. Sales and Cr. Cash
(D) Bank charges paid- Dr. Bank and Cr.
Cash
12. You agree to buy an existing business for $
245,000. Premise is valued at $105,000,
equipment at $27,000, stock at $40,000 and
debtors at $31,000. This means that:
(A) you are paying too much for the assets
 (B) you have made a mistake
(C) you should not have bought an existing
business
(D) you are paying $42,000 for goodwill
13. When should the trial balance totals differ?
(A) If drawn up halfway through the
financial year
(B) Only when it is drawn up by the
accountant
(C) When drawn up before the profit and
loss account is prepared
(D) Never
14. The balances in the purchases ledger are
usually:
(A) credit balances
(B) contras
(C) nominal account balances
(D) debit balances
15. A bank overdraft is best described as:
(A) a business having bought too many
goods
(B) having more receipts than payments
(C) a business having paid more out of its
bank account than it has put in it
(D) a business wasting its money
16. Which of the following statement is
INCORRECT?
(A) Assets - Capital = Liabilities
(B) Liabilities + Capital = Assets
(C) Liabilities + Assets = Capital
(D) Assets – Liabilities = Capital
17. Net Profit is:
(A) sales less purchases add opening stock
less closing stock
(B) gross profit add expenses of the period
(C) gross profit less expenses of the period
(D) capital plus all expenses
18. A business starts each month with a petty
cash float of $550. If $275 is spent during
the month how much will be reimbursed at
the end of the period?
(A) $825
(B) $550
(C) $275
(D) None of the above
19. When the trial balance totals do not agree,
the difference is entered in:
(A) a suspense account
(B) the balance account
(C) an errors account
(D) the profit and loss account
20. If stock of goods is purchased for cash from
S. Smithson, which two accounts are being
affected?
(A) Stock of goods/S. Smithson
(B) Stock of goods/Cash
(C) S. Smithson/Cash
(D) None of the above