2) The double entry system which results in the initial recognition of an asset would result in:

a) An increase in the carrying amount of the asset b) The initial recognition of a liability or a decrease in cash

c) The derecognition of a liability

d) The decrease in the carrying amount of a liability

3) Which of the following rules for recognitions of transactions in accounts in incorrect?

a) When an asset decreases, the relevant asset account is credited.

b) When expenses increase, the expense account is debited.

c) When drawings increase, the drawings account is debited.

d) When capital decreases, the capital account is credited.

4) Which form of ownership has the following characteristics: "belongs to more than one natural person and has a limited lifespan"?

a) Close Corporation

b) Companies

c) Partnerships

d) Sole Traders

5) Which of the following is not an expense?

a) Salaries

b) Machinery

c) Refreshments

S

E

E