Multiple choice questions: Set 1 Each of these multiple choice questions has four suggested answers, (A), (B), (C) and (D). You should read each question and then decide which choice is best, either (A) or (B) or (C) or (D). Write down your answers on a separate piece of paper. You will then be able to redo the set of questions later without having to try to ignore your answers. MC1 Which of the following statements is incorrect? (A) (B) (C) (D) Assets - Capital = Liabilities Liabilities + Capital = Assets Liabilities + Assets = Capital Assets - Liabilities = Capital MC2 Which of the following is not an asset? (A) Buildings (B) Cash balance (C) Debtors (D) Loan from K Harris MC3 Which of the following is a liability? (A) Machinery (B) Creditors for goods (C) Motor Vehicles (D) Cash at Bank MC4 Which of the following is incorrect? Liabilities Capital (A) (B) (C) (D) Assets E 7,850 8,200 9,550 6,540 1,250 2.800 1,150 1,120 6,600 5,400 8,200 5,420 MC5 Which of the following statements is correct? Effect upon Assets Liabilities (A) We paid a creditor by cheque -Bank -Creditors (B) A debtor paid us 90 in cash +Cash +Debtors (C) Hall lends us 500 by cheque +Bank -Loan from Hall (D) Bought goods on credit Stock +Capital MC6 Which of the following are correct? Accounts To record Entry in the account (i) Assets an increase Debit a decrease Credit (1) Capital an increase Debit a decrease Credit (iii) Liabilities an increase Credit a decrease Debit (A) (B) (C) (D) () and (in) (in) and (ii) (i) and (ii) (i), (ii) and (iii) MC7 Which of the following are correct? Account to be debited Office furniture Bank Capital B Lee Account to be credited Cash P Sangster Bank Cash 6) Bought office furniture for cash (ii) A debtor, P Sangster, pays us by cheque (iii) Introduced capital by cheque (iv) Paid a creditor, B Lee, by cash (A) (). (ii) and (iii) only (B) (i), (ii) and (iv) only (C) (i), (ii) and (iv) only (D) () and (iv) only MC8 Which of the following are incorrect? Account to be debited Cash Office Equipment Account to be credited Van Suppliers Ltd (1) Sold van for cash (ii) Returned some of Office Equipment to Suppliers Ltd (iii) Repaid part of loan from C Charles by cheque (iv) Bought machinery on credit from Betterways Ltd Bank Loan from C Charles Betterways Ltd Machinery (A) (B) (C) (D) (i) and (iv) only (ii) and (iv) only (i) and (iii) only (i) and (iii) only MC9 Which of the following best describes the meaning of 'Purchases? (A) Items bought (B) Goods bought on credit (C) Goods bought for resale (D) Goods paid for MC10 Which of the following should not be called "Sales? (A) Office fixtures sold (B) Goods sold on credit (C) Goods sold for cash (D) Sale of item previously included in "Purchases MC11 Of the following, which are correct? Account to be debited () Goods sold on credit to R Williams R Williams (ii) S Johnson returns goods to us Returns inwards (iii) Goods bought for cash Cash (iv) We returned goods to A Henry A Henry (A) () and (ii) only (B) (i) and (ii) only (0) (i) and (iv) only (D) (iii) and (iv) only Account to be credited Sales S Johnson Purchases Returns inwards MC12 Which of the following are incorrect? Account to be debited Cash Purchases C Barry Purchases Account to be credited Sales T Carter Returns outwards Cash (1) Goods sold for cash (in) Goods bought on credit from T Carter (iii) Goods returned by us to C Barry (iv) Van bought for cash (A) () and (iii) only (B) (iii) only (0) (in) and (iv) only (D) (iv) only MC13 Given the following, what is the amount of Capital? Assets: Premises 20,000; Stock 8,500; Cash 100. Liabilities: Creditors 3,000; Loan from A Adams 4,000 (A) 21,100 (B) 21,600 (C) 32,400 (D) 21,400 MC14 Which of the following is correct? (A) Profit does not alter capital (B) Profit reduces capital (C) Capital can only come from profit (D) Profit increases capital MC15 Which of the following are correct? Account to be debited Bank Rates Motor expenses Insurance Account to be credited Commission received Cash Bank Bank 6) Received commission by cheque (1) Paid rates by cash Gin) Paid motor expenses by cheque (iv) Received refund of insurance by cheque (A) 0) and (ii) only (B) (), (ii) and (iii) only (C) 0), (ii) and (iv) only (D) 0), (ii) and (iv) only MC16 of the following, which are incorrect? Account to be debited Cash Stationery Cash General expenses Account to be credited Sales Bank Drawings Bank 6) Sold van for cash 6) Bought stationery by cheque Gi) Took cash out of business for private use (iv) Paid general expenses by cheque (A) () and (iv) only (B) () and (ii) only (C) () and (iii) only (D) () and (iii) only MC17 What is the balance on the following account on 31 May 20X5? De Freitas 20X5 May " 1 Sales 14 Sales E 205 360 180 20X5 May 17 Cash " 28 Returns 30 Sales (A) A credit balance of 395 (B) A debit balance of 380 (0) A debit balance of 395 (D) There is a nil balance on the account MC18 What would have been the balance on the account of C De Freitas in MC17 on 19 May 20X5? (A) A debit balance of 265 (B) A credit balance of 95 (O A credit balance of 445 (D) A credit balance of 265 MC19 Which of the following best describes a trial balance? (A) Shows the financial position of a business (B) It is a special account (o Shows all the entries in the books (D) It is a list of balances on the books MC20 Is it true that the trial balance totals should agree? (A) No, there are sometimes good reasons why they differ (B) Yes, except where the trial balance is extracted at the year end (C Yes, always (D) No, because it is not a balance sheet