ACCOUNTING: UNDERSTANDING AND PRACTICE by LEIWY

Author:LEIWY [LEIWY]
Language: eng
Format: epub
Tags: Accounting: Understanding and Practice, Fourth Edition
Publisher: McGraw Hill Higher Education
Published: 2013-01-31T17:00:00+00:00

Self-testing questions

For the purpose of these questions there is no need to separate ‘petty cash’ from ‘bank’ transactions. They can be combined in a single ‘cash account’.

1 Complete the double entry for each of the following transactions:

a Sales made for cash are credited to the sales account and debited to the __________.

b Sales made on credit to Smith are debited to the Smith account, and credited to the __________.

c Purchases made for cash are credited to the cash account, and debited to the _____________.

d Purchases made on credit from Anirroc Company are debited to the purchases account, and credited to the ____________.

e Smith, a trade receivable, pays us part of what he owes; the amount is credited to the Smith account and debited to the ____________.

f The provision for bad debts is increased by £30. This amount is debited to the income statement (perhaps via an income statement) as an expense, and credited to the ____________.

2 Which of the following accounts normally have a credit balance (as shown on a trial balance): sales, purchases, trade receivables, trade payables, non-current assets, share capital, share premium?

3 Which of the following accounts normally have a debit balance (as shown on a trial balance): expenses, non-current assets, receivables, cash at bank?

4 Which of the following statements is true?

a Accounts for assets and expenses have credit balances.

b Accounts for liabilities, share capital, retained earnings and overdrafts have credit balances.

5 Record the following transactions of Carlos using double-entry bookkeeping; summarize them in the form of a trial balance, and prepare an income statement for the three-month period, and a statement of financial position as at the end of the period.

1 Jul

Carlos started a business dealing in second-hand cars and opened a business bank account with £40,000

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