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Business Accounting and Finance

Tony Davies, University of Wales, Lampeter, UK
Brian Pain, University of Luton, UK

Double-entry - the basics

Self-test Questions


1	Which of the following statements is incorrect?
		A)	purchase invoice = debit payables and credit something else
		B)	cash payment = credit cash and debit something else
		C)	cash receipt = debit cash and credit something else
		D)	sales invoice = debit receivables and credit something else


2	A company sells goods on credit for 5,000 pounds. Which of the following entries correctly records the transaction?
		A)	credit trade creditors and debit sales 5,000 pounds
		B)	credit stocks and debit trade debtors 5,000 pounds
		C)	debit cash and credit sales 5,000 pounds
		D)	debit trade debtors and credit sales 5,000 pounds


3	Appendix Diagram A What are the trade debtors at 31 July 2001?
		A)	61,000 pounds
		B)	41,000 pounds
		C)	39,000 pounds
		D)	57,000 pounds


4	Appendix Diagram B How much was paid to suppliers in June 2001?
		A)	345,000 pounds
		B)	379,000 pounds
		C)	381,000 pounds
		D)	415,000 pounds


5	A company had a bank balance of 10,000 pounds at 1 August 2001. During August total payments were 128,000 pounds and total receipts were 119,000 pounds. Bank charges of 3,000 pounds had not yet appeared on the bank statement. What is the cash book balance/overdraft (in pounds) at 31 August 2001?
		A)	1,000 balance
		B)	1,000 overdrawn
		C)	2,000 balance
		D)	2,000 overdrawn


6	Questions 6 to 8 refer to the following diagram: Appendix Diagram C What is the profit or loss for the year 2001 (in pounds)?
		A)	18,000 profit
		B)	8,000 loss
		C)	8,000 profit
		D)	18,000 loss


7	What are the total assets as at 31 December 2001?
		A)	132,000 pounds
		B)	126,000 pounds
		C)	108,000 pounds
		D)	62,000 pounds


8	What is the total shareholders' equity as at 31 December 2001?
		A)	100,000
		B)	32,000
		C)	76,000
		D)	108,000


9	The balance on the telephone account in the profit and loss account for the 12 months to 31 December 2001 is 270,000 pounds (total charges up to 30 September 2001). An accrual is required for last quarter of the year assuming that charges continue at the same level throughout 2001. What is the balance on the telephone accrual account at 31 December 2001 (in pounds)?
		A)	90,000 credit
		B)	90,000 debit
		C)	135,000 credit
		D)	135,000 debit


10	The balance on the rent (payable) account in the profit and loss account for the period January 2001 to January 2002 is 312,000 pounds. A prepayment is required in respect of January 2002, assuming that rent payable charges are evenly spread over 2001/2002. What is the rent payable charge for 2001?
		A)	264,000
		B)	288,000
		C)	432,000
		D)	336,000

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