ACCOUNTING TEST 1

NOV 2022
TIME: 40 MINUTES
Attempt all the questions
1. Define the following:
a) An asset

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b) A liability

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c) Owner’s equity

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[6]

2. Sylvester, a sole trader, had the following assets and liabilities on 31 December
2019: $

Equipment 50000

Motor vehicle 10000

Balance at bank 2500

Debts owing to suppliers 3800

Calculate Sylvester’s owner’s equity on 31 December 2019. Show your workings.

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3. Complete the following table by placing a tick (√) in the correct column to indicate
whether each item is an asset or a liability

Item Asset Liability

Motor van
Trade receivables
Long-term loan

Property and buildings

Bank overdraft

Equipment
Inventory

Trade payables

Cash in hand

[9]
4. Complete the following table to calculate the value of the missing items

Assets $ Liabilities $ Owner’s equity $

a 4500 1800
b 35700 49500
c 7890 6350
d 5680 2470
e 5240 6570
f 23760 13770

[6]

5. Complete the following table with the words ‘decrease’ or ‘increase’ to show which effect
each transaction would have on the assets, liabilities and owner’s equity of a business.
The first one has been completed as an example

Transaction Effect
a Bought goods on credit Increase (inventory) Increase (trade payables)
b The owner introduced cash into business bank account

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c The owner takes money out of the business bank
account for personal use
d The business sold goods for cash
e The business pays the amount owed to a trade payable
by cheque
f The business sold goods on credit
g The business took a loan in cash
h A credit customer pays the business in cash
i The business bought a motor vehicle paying by bank
transfer
j The business pays back the loan by bank transfer

[9]

6. Copy and complete the following table with the words ‘decreases’ or ‘increases’ to
show which effect each transaction would have on the assets, liabilities and owner’s
equity of a business:

Transaction Asset Liabilities Owners’ Equity

The owner introduced $45000 cash into the business
bank account.
The business bought goods on credit from Sully
Benjamin, a friend of the owner, lent the business
$3000 in cash.
The business sold goods for cash $500
The business paid Benjamin $3000 by cheque
The business returned goods $50 to Sully & Sons.
The owner withdrew $400 from the business bank
account for personal use.
The business bought a motor vehicle $4500, paying
by cheque.
The business paid a creditor $58 cash

[8]

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 7. Copy and complete the table below and place a tick (✓) against those items which
are correctly classified:

Asset ✓ Liability ✓
Furniture and fixtures Trade payables
Machinery Equipment
Bank loan Inventory
Overdraft Trade receivables
Property and buildings Cash in hand

[4]

8. The following statements refer to the effect of transactions on the assets, liabilities
and owner’s equity in an accounting equation. Copy and complete the following table
by entering ‘true’ or ‘false’ for each statement.

Statement True/false
If an asset increases, then either a liability or owner’s equity will also increase
If an asset increases, then another asset involved in the transaction will also
increase.
If an asset decreases, then either a liability or owner’s equity will also decrease.
If a liability or owner’s equity increases, then another liability involved in the
transaction will increase.
If a liability or owner’s equity decreases, then another liability involved in the
transaction will increase.

[5]

Total marks [50]

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