Deck 5: Introduction to the Worksheet

Question 1

Jamie started his own plumbing business and put £3000 in the bank account and then used £ 2 500 to buy a van. Which of the following represent the correct entries in relation to these transactions?

A) Increase the bank account by £3000 and the van account by £ 2 500
B) Increase the bank account by £3000 and the van account by £ 2 500 and put £5 500 in the owners' equity account
C) Increase the bank account by £3000 and the owners' equity account by £3000 then reduce the bank account by £2 500 and increase the van account by £ 2 500
D) Increase the bank account by £3000, the van account by £2 500 and decrease the bank account by £2 500
E) Increase the bank account by £3000 and owners' equity account by £3000 and put the £2 500 in the van account

Answer 1

C

Question 2

A reduction in equity must be accompanied by a decrease in total assets.

Answer 2

True

Question 3

The total of equity and liabilities must always equal the total assets.

Answer 3

True

Question 4

The definition of duality is the same as the definition of duplicity.

Question 5

Double entry book-keeping relates to keeping two sets of books.

Question 6

A pre-condition or classifying anything as an asset is that there must be a future benefit.

Question 7

A reduction of assets must be accompanied by a reduction in equity, a loss or a reduction of liabilities.

Question 8

Using the facts in question 15 what should be recorded as the increase in assets over the period?

A) £7000
B) £16000
C) £15000
D) £ 4200
E) None of the above

Question 9

A profit results in an increase in liabilities.

Question 10

If the owners of a business withdraw goods from the business for their own personal use it should be recorded as:

A) A sale
B) An expense of the business
C) A decrease in the owners' equity
D) A reduction in inventory and a decrease in the owners' equity

Question 11

A reduction in one asset may be accompanied by a reduction in equity, a loss or a reduction of liabilities.

Question 12

Using the facts in question 15 what should be recorded as the profit or loss and the change in equity over the period?

A) Loss of £3 800 change in equity £9000
B) Loss of £3 800 change in equity £8000
C) Loss of £4 800 change in equity £9000
D) Loss of £4 800 change in equity £8000
E) None of the above

Question 13

Using the facts in question 18 what should be recorded as the change in the bank balance over the period?

A) £6000
B) -£6000
C) -£4500
D) £ 4500
E) None of the above

Question 14

Assets can increase as a result of an increase in liabilities.

Question 15

An increase in assets can only arise when goods are sold.

Question 16

Jamie reckons that the tools he already owned which he will use for the business had cost are worth £500. How should these be dealt with?

A) They are irrelevant as they are Jamie's and do not belong to the business
B) As an increase in the assets of the business as they will be used or the business
C) As an increase in the assets of the business as they will be used or the business with a corresponding increase in the liabilities of the business
D) As an increase in the assets of the business as they will be used or the business with a corresponding increase in the owners' equity

Question 17

The following amounts have been paid out of the business bank account. Purchase of motor car £7000, petrol and car expenses £1 300, wages £4 500, £9000 paid in by the owner, money taken out by the owner, £1000, money from sales £9000, purchases of goods resold £4000, rent of premises £3000. What amount should be recorded as expenses for the period?

A) £13800
B) £20800
C) £19800
D) £12800
E) None of the above