Question 1

Which of the following statements about a trial balance is not true?

Accepted Answer

A trial balance only checks if the total debits and credits are equal for each account, but it may not detect errors such as posting to the wrong account or errors in the original journal entries.

Question 2

The ___________ ___________ accounting method requires each transaction to have at least two effects on the accounting equation.

Accepted Answer

The answer of The ___________ ___________ accounting method requires each...

Question 3

A worksheet is a ___________ spreadsheet used by accountants to organise information and assist in the preparation of financial statements.

Accepted Answer

The answer of A worksheet is a ___________ spreadsheet used...

Question 4

Profit (or loss)= ___________________ less expenses

Accepted Answer

The answer of Profit (or loss)= ___________________ less expenses...

Question 5

A journal is a record in which each business transaction appears in ___________ order.

Accepted Answer

The answer of A journal is a record in which...

Question 6

If assets are $225 000,opening equity is $100 000,liabilities are $60 000 and income is $145 000,expenses must be:

Accepted Answer

Assets = Liabilities + Equity 
225,000 = 60,000 + 100,000 + Income - Expenses 
225,000 = 160,000 + Income - Expenses 
Income - Expenses = 225,000 - 160,000 
Income - Expenses = 65,000 
Expenses = 65,000 - Income 
Expenses = 65,000 - 145,000 
Expenses = -80,000 
Since expenses cannot be negative, the answer must be $80,000.

Question 7

Expenses have a (positive/negative)____________________ effect on Equity.

Accepted Answer

The answer of Expenses have a (positive/negative)____________________ effect on Equity....

Question 8

When recording a sale of inventory on credit,the office clerk records the debit entry to accounts payable instead of to accounts receivable.This error will result in:

Accepted Answer

The answer of When recording a sale of inventory on...

Question 9

The trial balance at the end of the month shows the total debit balance is $1500 greater than the total credit balance.When recording the transaction for payment of wages of $1500 the following error would most likely have occurred:

Accepted Answer

Option A involves a single-entry error where only one side of the transaction is recorded. This could result in a debit balance being higher than the credit balance since only the debit side of the entry was recorded. Option B and C both involve both wages expense and cash being credited or debited which would not result in a difference between the debit and credit balances. Option D involves a transposition error but doesn't account for why the total debit balance is $1500 greater than the credit balance. Therefore, option A is the most likely error that occurred.

Question 10

The error that would be detected by a trial balance is:

Accepted Answer

A trial balance checks the mathematical accuracy of the general ledger by ensuring that total debits equal total credits. It would detect an error like in choice A, where different amounts were recorded for the same transaction in two accounts, causing an imbalance. Choices B, C, and D involve misclassifications and theft, which do not affect the trial balance's numerical balance.

Question 11

_________ is added to opening equity to calculate ending equity.

Accepted Answer

The answer of _________ is added to opening equity to...

Question 12

If a transaction worth $50 is not recorded,the trial balance will:

Accepted Answer

If a transaction is not recorded at all, it does not affect the trial balance because both the debit and credit sides are equally omitted, keeping the trial balance in balance.

Question 13

If total claims equal $950 000 and equity is $460 000,assets must be:

Accepted Answer

Assets equal the sum of liabilities and equity. Since total claims include both liabilities and equity, the assets must equal the total claims of $950,000.

Question 14

Blitz Pty Ltd has the following accounts and balances listed in its trial balance.Assuming all transactions have been entered correctly,the total debits and credits in the trial balance equal:
$ \begin{array}{lr}\text { Capital } & \$ 15000 \ \text { Cash } & 2000 \ \text { Accounts payable } & 7000 \ \text { Inventory } & 5500 \ \text { Accounts receivable } & 9500 \ \text { Property, plant and equipment } & 15000 \ \text { Loan payable } & 24000 \ \text { Motor vehicles } & 14000\end{array} $

Accepted Answer

To find the total debits and credits in the trial balance, add all the debit balances together and all the credit balances together. Debit balances include Cash, Inventory, Accounts Receivable, Property, Plant and Equipment, and Motor Vehicles. Credit balances include Capital, Accounts Payable, and Loan Payable. Debits: Cash ($2000) + Inventory ($5500) + Accounts Receivable ($9500) + Property, Plant and Equipment ($15000) + Motor Vehicles ($14000) = $46,000Credits: Capital ($15000) + Accounts Payable ($7000) + Loan Payable ($24000) = $46,000Both sides equal $46,000, confirming that the trial balance is correctly balanced.

Question 15

The numbers below represent the difference between the total debits and credits in a trial balance.Which of these numbers is most likely to be the result of a transposition error?

Accepted Answer

Transposition errors occur when the digits in a number are accidentally reversed. The number with the largest difference between its digits is therefore more likely to be the result of a transposition error. In this case, the number 252 stands out as having the largest difference between its digits (5 and 2), so it is the most likely to be a result of a transposition error.

Question 16

A supplier sold inventory to Bikes & Autos Pty Ltd valued at $9000.Bikes & Autos Pty Ltd paid half in cash and received 30 days credit for the balance owing.The debit and credit entries for Bikes & Autos Pty Ltd are:

Accepted Answer

Bikes & Autos Pty Ltd would debit inventory for the total value of the inventory received ($9000) because this increases their assets. They would credit accounts payable for the half not paid immediately ($4500) because this increases their liabilities, and credit cash for the half that was paid immediately ($4500) because this decreases their asset (cash).

Question 17

The ________________ ________________ is the accounting principle that requires separation of business transactions from any personal transactions of the owners.

Accepted Answer

The answer of The ________________ ________________ is the accounting principle...

Question 18

Occurrences that have the potential to affect the entity in some way,but that will not be recorded as business transactions until an exchange of goods or services takes place between the entity and an outside party are known as ______________ ______________.

Accepted Answer

The answer of Occurrences that have the potential to affect...

Question 19

Invoices,purchase orders,and credit card slips are examples of _____________ _____________ which provide written evidence to verify a business transaction.

Accepted Answer

The answer of Invoices,purchase orders,and credit card slips are examples...

Question 20

If the value of Assets is $165 000 and the value of Equity is $100 000,then Liabilities must be equal to ________________.

Accepted Answer

The answer of If the value of Assets is $165...

Quiz 4: Business Transactions