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2. A building is purchased using cash for use by the business. Which of these would represent
the entry for the transaction ?
3. A business sells goods on credit. Which of the following statements are true ?
A sale has not been made because the business has not been paid.
4. The owner of a business starts up using $5000 of her own money. The entry of this
transaction is best shown as:
All partners are personally liable for the debts of the business.
6. Select the correct word that describes the amount by which expenses exceed revenues.
retained earnings
assets
cost principle
net loss
7. What is the correct accounting name given to distributions of cash or other assets from an
incorporated business to its shareholders ?
Drawings
Business perks
Dividends
Bonuses
8. What is the correct accounting name given to the net income which is kept in a corporation
for future use and not distributed to shareholders ?
Additional assets
Reserve assets
Preference shares
Retained earnings
9. Jolly Roger is owed $1000 by Buck O'Nere for lead shot that he has supplied. The figure of
$1000 should be recorded as:
10. What is owned by a business and used in carrying out its operating activities is best
described as:
Liabilities.
Purchases.
Revenues.
Assets
11. A financial statement to show what a business owes and owes at a particular point in time
is:
A balance sheet.
A statement of retained earnings.
12. Jolly Roger sells $500 of red wine to the Flamingo Bar and is paid by check. The correct
entry to the accounts is:
Debit the purchases account with $500 and the sales account with $500
Debit the sales account with $500 and the bank account with $500
Debit the bank account with $500 and credit the sales account with $500
Debit the bank account with $500 and the sales account with $500
13. Buck O'Nere receives a bill (invoice) for use of his mobile phone. The correct entry for
recording the liability of the bill is:
14. A financial document that indicates the success or failure of abusiness trading over a
period of time is called:
An income statement
A balance sheet
It has been bought recently and was bought new and not used
It could be sold immediately by the business for other assets.
It could be realized in cash or sold or consumed in the business within one year
It is an piece of new machinery that is expected to last for at least ten years.
16. Which of the following could be regarded as permanent assets (sometimes called fixed
assets) that are used in the business and not intended for resale ?
Inventory
Plant
A rented building
Equipment
17. How might you measure a company's liquidity and short-term debt paying ability ?
18. Jolly Roger transfers $6000 from the current bank account to the savings bank account.
Which of the following statements are correct ?
One type of asset has increased whilst another type of asset has decreased.
As soon as the turnover of a business exceeds a fixed sum it must become a corporation.
21. Which version of Access first provided ODBC connectivity to Oracle databases?
1.1.
2.0.
97.
Noneofthese
Does the tax system affect your choice of dividends over capital gains?
Why?
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Yes, because dividends are taxed more favorably
Yes, one of the above depending on the tax system you are operating in
Yes, one of the above depending on the tax system you are
operating in
Comment on answer:
Yes, one of the above depending on the tax system you are
operating in.
Share is overvalued
Shaire is undervalued
Answer to question 8
Shaire is undervalued
Comment on answer:
Indeed, any investor buying an undervalued share creates
value. It is no different for a firm buying back its own shares.
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