Objective Assessment no 1

by Ken Delaney-Moore, Sheffield Hallam University

This assessment covers the material of the following work-sheets in the 'accounting principles' module:

1. The users of accounting information
2. The accounting equation
3. Double - entry for assets and liabilities, revenues and expenses

If you are unsure about attempting the assessment, it may be advisable to have a look at the work-sheets first. When you are done, please fill-in the on-line evaluation form in order for us to monitor the quality of the materials we provide for you. Tell us what we're doing right and wrong. It takes very little time, and your opinions are valued - thank you. The assessment starts here. No-one except you will see your score; Biz/ed does not keep a record.

Note that in some of these questions there is only one correct answer, but for other questions there may be more than one answer. You will be told this information in advance, so read carefully:

For questions 1 to 10 there is only ONE correct answer. Each correct answer is worth two marks.

Q1. "The firm must be treated as financially separate and distinct form its' owner(s)". This rule is known as: (Select one answer) (a) The accounting equation (b) The dual aspect concept (c) The business entity concept (d) The balance sheet

Q2. A firm buys stock for £100 by cheque and intends to sell it for £200, so the double-entry should be: (Select one answer) (a) Debit bank £100, Credit Stock £100 (b) Credit bank £200, debit stock £200 (c) Debit Purchases £100, Credit Sales £200 (d) Debit Purchases £100, Credit Bank £100

Q3. The system whereby we make two records for each transaction is known as (Select one answer) (a) Balance Sheet accounting (b) Double-entry (c) Dual aspect (d) Management accounting

Q4. Which of the following is a liability? (Select one answer) (a) Creditors (b) Debtors (c) Stock (d) Vehicles

Q5. A 'trade debtor' of AB ltd. can best be described as: (Select one answer) (a) A person or firm who bought goods from AB Ltd on credit and has not yet paid. (b) A person or firm who borrowed money from AB Ltd in the form of a loan. (c) A person or firm who sold goods on credit to AB Ltd and has not been paid. (d) A person or firm who made a loan to AB Ltd

Q6. The word 'credit' in book-keeping means: (Select one answer) (a) Add value onto an account. (b) Deduct value from an account. (c) Left-hand entry in an account. (d) Right-hand entry in an account.

Q7. Which of the following is an example of 'revenue expenditure'? (Select one answer) (a) The buying of a delivery van (b) Paying for a five-year lease on shop premises in city centre (c) Putting petrol in a delivery van (d) Re-paying a loan which was taken out three years ago.

Q8. A firm pays £50 from its cash till to its bank account. The double-entry should be: (Select one answer) (a) Debit Cash £50, Credit Bank £50 (b) Debit Cash £25, Credit Bank £25 (c) Credit Cash £50, Credit Bank £50 (d) Credit Cash £50, Debit Bank £50

Q9. Which one of the following BEST describes 'purchases'? (Select one answer) (a) Items bought (b) Goods bought for re-sale (c) Goods paid for (d) Fixed assets bought

Q10. G.Simkins sends back stock to J.J. Fabrics (a supplier), having originally purchased it on credit. J.J. Fabrics issued a credit note for the value of these goods. In Simkins' books, The double-entry for this transaction should be: (Select one answer) (a) Debit: J.J. Fabrics; credit Purchases (b) Debit: purchases; credit J.J. Fabrics (c) Debit J.J. Fabrics; credit purchases returns (d) Debit purchases returns; credit J.J. Fabrics.

For the last five questions there may be more than one correct answer. Each question carries a total of four marks.

Q11. Which of the following groups might be interested in the accounts of a business? (Select one or more answers) (a) Shareholders (b) The public (c) Employees (d) The Government

Q12. Which of the following are 'financial accounting' activities? (Select one or more answers) (a) Finding errors in the accounts and making the appropriate corrections. (b) Preparing a cash budget for the next six months. (c) Analysing the payroll records to determine the ratio of normal pay to overtime pay. (d) Drawing up a 'Profit and Loss Account' for the year just ended.

Q13. Which of the following statements is TRUE? (Select one or more answers) (a) Assets = capital + liabilities (b) Capital = assets + liabilities (c) Assets - liabilities = capital (d) Assets = Liabilities - Capital

Q14. An item of stock is sold on credit to T.Marques for £45. The item originally cost £20. Which of the following are TRUE? (Select one or more answers) (a) The double-entry for this transaction is Credit: T. Marques £45, Debit Sales £45 (b) T. Marques becomes a trade debtor. (c) The double-entry for the sale is : Debit T.Marques £20, Credit Sales £20 (d) The original purchase of the stock represents a piece of revenue expenditure.

Q15. Our firm returns goods to a supplier, value £38. We originally bought these goods on credit. Which of the following is true? (Select one or more answers) (a) The total value of liabilities of our firm has been reduced. (b) We will appear in our suppliers' books as a debtor. (c) After we have returned the goods, the supplier owes us a refund. (d) We need to credit the purchases account.

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