C The use of double-entry bookkeeping and accounting systems

Written by Fahad Mirza (ACCA)

ACCA · Financial Accounting · 6 questions

Name: ____________________ Date: ____________

A business has assets of $80,000 and liabilities of $30,000. What is the equity?
- A $80,000
- B $50,000
- C $30,000
- D $110,000
A business buys goods for resale for $2,500 on credit. What is the correct entry?
- A Debit payables $2,500, credit purchases $2,500
- B Debit receivables $2,500, credit sales $2,500
- C Debit purchases $2,500, credit bank $2,500
- D Debit purchases $2,500, credit payables $2,500
Which document is created by the customer when goods arrive, to record what was actually received?
- A Purchase order
- B Goods despatched note
- C Remittance advice
- D Goods received note
At the end of the accounting period, which balances are carried forward to the next period?
- A Only equity accounts
- B Asset, liability and equity accounts
- C Income and expense accounts
- D Only asset accounts
Which of these is a debit entry?
- A An increase in income
- B An increase in share capital
- C An increase in an expense
- D An increase in a liability
Which is a benefit of a cloud-based accounting system?
- A It makes backups unnecessary
- B It removes the need to enter any data
- C It removes all security risks
- D Data can be accessed from different locations through the internet

Answer key

1. B, 2. D, 3. D, 4. B, 5. C, 6. D

Equity = assets less liabilities = $80,000 - $30,000.
The expense or inventory increases (debit) and the liability to the supplier increases (credit).
The customer's goods received note is compared with the purchase order and the supplier's invoice.
Income and expense accounts are closed to profit or loss. Statement of financial position balances continue.
Debits increase assets and expenses. Credits increase liabilities, equity and income.
Cloud systems give flexible access, but data entry, backups and security still need managing.