1

A
B
C
D

Which of the following calculates a sole trader s net profit

Closing net assets + drawings
capital introduced opening
Closing net assets drawings + capital introduced
opening
Closing net assets drawings
capital introduced opening
Closing net assets + drawings + capital introduced opening

for
net
net
net
net

a period?
assets
assets
assets
assets

Which TWO of the following errors would cause the total of the debit column and
the total of the credit column
of a trial balance not to agree?
(1) A transposition error was made when entering a sales invoice into the sales
day book
(2) A cheque received from a customer was credited to cash and correctly recogni
sed in receivables
(3) A purchase of non-current assets was omitted from the accounting records
(4) Rent received was included in the trial balance as a debit balance
A 1 and 2
B 1 and 3
C 2 and 3
D 2 and 4
Which of the following are differences between sole traders and limited liabilit
y companies?
(1) A sole trader s financial statements are private and never made available to t
hird parties; a company s financial
statements are sent to shareholders and may be publicly filed
(2) Only companies have share capital
(3) A sole trader is fully and personally liable for any losses that the busines
s might make
(4) Drawings would only appear in the financial statements of a sole trader
A 1 and 4 only
B 2, 3 and 4
C 2 and 3 only
D 1, 3 and 4
Amy is a sole trader and had assets of $569,400 and liabilities of $412,840 on 1
January 20X8. During the year
ended 31 December 20X8 she paid $65,000 capital into the business and she paid h
erself wages of $800 per
month.
At 31 December 20X8, Amy had assets of $614,130 and liabilities of $369,770.
What is Amy s profit for the year ended 31 December 20X8?
A $32,400
B $23,600
C $22,800
D $87,800
Which of the following equations properly represents a derivation of the fundame
ntal accounting equation?
a. Assets + liabilities = owner's equity.
b. Assets = owner's equity.
c. Cash = assets.
d. Assets - liabilities = owner's equity.
Which of the following would not be included on a balance sheet?
a.
b.
c.
d.

Accounts receivable.
Accounts payable.
Sales.
Cash.

Which financial statement is used to show what the firm owns?

a.
Income statement
b.
Balance sheet
c.
Statement of retained earnings
d.
Cash flow statement
Financially, shareholders are rewarded by:
a.
Interest.
b.
Profits.
c.
Dividends.
d.
None of the above
Where does a debt account decrease?
a.
On the debit side
b.
On the credit side
c.
Neither a. nor b.
d.
Both a. and b.

2.
In general, the asset side of the balance sheet is designed to summarize balance
sheet accounts with:
a.
Credit balances.
b.
Debit balances.
c.
Neither a. nor b
d.
Both a. and b
5.
Which of the following statements is false?
a.
If you increase an asset account, you
.
b.
If you decrease an asset account, you
y account.
c.
If you increase an asset account, you
d.
If you decrease an asset account, you
y account.

6.
Each accounting transaction originates in a:
a.

could increase a liability account

could increase a shareholders

equit

could decrease an asset account.

could decrease a shareholders equit

Document.
b.
Ledger.
c.
Journal.
d.
Trial balance.