1) What is the basic accounting equation? a. Capital+Liabilities=Assets b. Assets+ liabilities =Capital c. Capital+assets=liabilities d. Liabilities+Capital
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2) Which of the following is a liability? a. Cash b. Equipment c. Debtors d. Creditors
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3) What is equity? a. Cash from the business b. liability of a business c. Owner’s claim on total assets d. Owner’s claim on total liabilities
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4) Identify the asset from the following: a. Cash and cash equivalent b. Creditors c. Notes payable d. Bank loan
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5) _______ the withdrawal of cash and goods by the owner of the busienss for his/her personal use? a. Depreciation b. Drawings c. Outflow of cash d. Appreciation
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6) Net loss occurs when______________? a. Expenses are greater than Income b. Expenses are less than Income c. Expenses=Income d. Liabilities are greater than income
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7) Double entry implies that a. Recording entries in journal b. Recording entries in Ledger account c. Recording two aspects of every transaction d. Recording every transaction in books
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8) Identify the nominal account a. Machinery account b. Building account c. Creditors account d. Rent expenses account
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9) Which of the following accounts can be classified as a real account? a. Rent expenses account b. Rent income account c. insurance expenses account d. Cash account
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10) Transferring entries from journal to ledger account is commonly known as____________? a. Recording b. Transferring c. Posting d. Entry making
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11) An account records the ___________ in the balance of an item? a. Increase b. Decrease c. Increase or decrease d. Appreciation
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12) If credit side of a bank account is greater than the debit side, it indicates which of the following? a. Bank overdraft b. Cash at bank c. Bank balance d. Current Asset
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13) If debit side of a bank account is greater than credit side it indicates which of the following? a. Cash at bank b. Bank understatement c. Bank overdraft d. Balance overstatement
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14) _________ will be credited if goods are given as charity? a. Cash b. Charity c. Purchases d. Sales
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15) Which of the following is known as the base for preparing trial balance? a. Journal b. Cash account c. Ledger account d. Balance sheet
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16) If debit balance is greater than creadit balance then the account blance will be__________? a. Credit balance b. Debit and credit balance c. Cash balance d. Debit balance
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17) The normal balance of capital account is_____________? a. Credit balance b. Debit balance c. Cash balance d. Neither debit nor credit balance
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18) The normal balance of asset account is____________? a. Credit balance b. Debit balance c. Cash balance d. Neither debit nor credit balance
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19) The normal balance of liability account is____________? a. Debit balance b. Credit balance c. Cash balance d. Neither debit nor credit balance
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20) Which of the following statements is incorrect regarding capital account? a. Debit increases the capital account balance b. Credit increases the capital account balance c. Fresh capital increases the capital account balance d. Net income increases the capital account balance
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