DBA121 Accounting

Tutorial Questions
Topic 5: Trading Entries
Week 5, Semester 2, 2019

Section A: Multiple Choices/ Tasks Question

1. A debit entry to an account:

A increases liabilities. C increases assets.

B increases owners’ equity. D both A and C.

2. Which account types normally have a credit balance?

A liabilities C expenses
B revenues D both A and B

3. An attorney performs services of $800 for a client and receives $200 cash with the
remainder on account. The double entry for this transaction would be:

A DR Cash at bank, CR Accounts receivable, CR Service Revenue

B DR Cash at bank, DR Accounts receivable, CR Service Revenue
C DR Cash at bank, CR Service Revenue
D DR Cash at bank, DR Service Revenue, CR Creditor

4. Accounts payable had a normal beginning balance of $1,000. During the period, there were
debit postings of $400 and credit postings of $600. What was the ending balance?

A $800 debit C $1,200 debit

B $800 credit D $1,200 credit

5. The list of all accounts with their balances is the:

A trial balance. C ledger.

B chart of accounts. D balance sheet.

6. The beginning Cash at bank’s balance was $5,000. At the end of the period, the balance was
$6,000. If total cash paid out during the period was $24,000, the amount of cash receipts
was:

A $23,000. C $25,000.
B $13,000. D $35,000.

7. In a double-entry accounting system:

A a debit entry is recorded on the left side of a T-account.

B half of all the accounts have a normal credit balance.
C liabilities, owners’ equity, and revenue accounts all have normal debit balances.
D both A and C are correct.
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8. Which accounts appear on which financial statement?

SOFP SOCI
A Cash at bank, revenues, land Expenses, payables
B Receivables, land, payables Revenues, supplies
C Expenses, payables, cash Revenues, receivables, land
D Cash at bank, receivables, payables Revenues, expenses

9. When cash is received, the Cash at bank’s account will be:

A debited.
B credited.
C none of the above.
D both A and B.

10. When a company pays a bill, the Cash at bank’s account will be:

A debited.
B credited.
C none of the above.
D both A and B.

11. Entries to expenses such as Rent Expense are usually:

A debits.
B credits.
C none of the above.
D both A and B.

12. In double entry bookkeeping, which of the following statements is true?

A Credit entries decrease liabilities and increase income.

B Debit entries decrease income and increase assets.
C Credit entries decrease expenses and increase assets.
D Debit entries decrease expenses and increase assets.

13. The double entry to record a cash discount granted by a supplier is:

A DR accounts payable; CR discount allowed.

B DR accounts payable; CR discount received.
C DR discount received; CR creditor.
D DR discount allowed; CR creditor.

14. What would be the double entry for the payment of wages to employees?

A DR Employees CR Wages
B DR Wages CR Cash at bank
C DR Cash at bank CR Wages
D DR Cash at bank CR Employees

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15. What would be the double entry for the purchase of a car on credit?

A DR Creditor CR Motor vehicle

B DR Motor vehicle CR Cash at bank
C DR Motor vehicle CR Creditor
D DR Creditor CR Cash at bank

16. What would be the double entry for payment of an amount owing to a supplier?

A DR Purchases CR Cash at bank

B DR Creditor CR Purchases
C DR Purchases CR Creditor
D DR Creditor CR Cash at bank

17. A credit balance on a ledger account indicates:

A an asset or an expense.
B a liability or an expense.
C an amount owing to the organisation.
D a liability or revenue.

18. Gross profit for the year can be calculated from:

A purchases for the year, plus closing stock, less opening stock.
B purchases for the year, less closing stock, plus opening stock.
C cost of goods sold during the year, plus total sales of the year.
D net sales, minus cost of sales for the year.

19. Which of the following would be a credit balance in the trial balance?

A Bank overdraft
B Drawings
C Discount allowed
D Bad debts

20. Which of the following types of account would normally appear on the debit side of the trial
balance?

A Assets
B Liability
C Income
D Capital

21. “The purchase of furniture, $10,000, is debited to the Purchases account instead of being
debited to a Furniture account”. This transaction is referred to as:

A error of omission.
B error of commission.
C error of principle.
D compensating error.

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22. A debit entry in the cash account and a corresponding credit entry in David Levin’s account
records are made for the transaction:

A receipts of cash from David Levin.

B payment of cash to David Levin.
C sale of goods to David Levin for cash.
D purchase of goods from David Levin for cash.

23. A major limitation of the trial balance is that even though a trial balance balances, it does
not mean that all transactions have been correctly recorded. The following are errors not
shown by the trial balance except:

A error of omission.
B error of commission.
C complete reversal of entries.
D error of transposition.

24. Narita, on checking her accounting records, discovers that she has made the following
errors:

Error 1- A second hand motor van recently purchased worth $14,000 had been charged in
error to the maintenance of motor van expense.
Error 2- A payment of $1,000 for salaries had been debited in error to the rent account.

Identify the types of errors revealed.

25. A sole trader had receivables of $2,700 at 1 May and during May made cash sales of $7,200,
credit sales of $16,500 and received $15,300 from his credit customers.

The balance on his receivables account at the end of May was:

A. $1,500.
B. $3,900.
C. $8,700.
D. $11,100.

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Section B: Written Based Question

Question 1
What would be the double entry for the following transactions in the ledger of T Chan, retailer.

2016
8 Jun T Chan commenced business with the following assets: cash at bank, $5,000; stock,
$3,000.
10 Bought stock for resale on credit from ACL Traders, $2,000.
Bought stock for cash, $1,000 from AR Manufacturers.

Question 2
What would be the double entry for the following transactions in the ledger of S Dixon, retailer.

2017
1 Jul S Dixon commenced business with the following assets and liabilities: cash at bank,
$8,000; loan from Better Financing, $250,000; stock, $15,000; land and buildings,
$460,000.
3 Purchased stock for resale on credit from BY Supplies, $5,000.
10 Purchased stock for cash from NU Supplies, $2,000.

Question 3
What would be the double entry for the following transactions in the ledger of P Clements,
merchant.

2017
1 Apr Cash sales, $500; credit sales to T Nelson, $350.
4 Cash refund given for returns of goods previously sold for cash, $100.
5 T Nelson returned damaged goods, $50.

Question 4
What would be the double entry for the following transactions in the ledger of M Tan, retailer.

2017
1 Mar Cash sales, $600; credit sales to D Parsons, $200.
5 Cash refund of $50 given for goods previously sold for cash.
6 D Parsons given an allowance of $80 for soiled goods.

Question 5
S Vella commenced business as a retailer on 1 July 2017. He asks you to open a ledger to record the
following transactions and to prepare a trial balance as at 31 July 2017.

2017
1 Jul Commenced business with the following assets: cash in bank, $5,500; stocks,
$3,600; premises, $257,000; furniture, $2,000.
4 Purchase stock for cash, $5,400.
9 Sold stock on credit to J Osborne for $6,300.
11 Credit purchases of stock from J Bramly, $4,800.
16 Gave an allowance to J Osborne, $300, for damaged goods.
21 Cash sales of stock, $2,600.
26 Received a $270 refund for returns of stock previously purchased for cash.
31 Cash sales of stock, $1,200.
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Question 6
G Wills operates a soft-drink stall at the football. What would be the double entry for the following
transactions?

2016
1 Jul Purchased five crates of orange pop on credit from Harry’s Drinks at $10 per crate.
2 Returned one crate of orange pop to Harry’s Drinks.
9 Purchased three crates of cola from BY Drinks at $7 per crate. Paid cash.
Paid account of Harry’s Drinks, taking advantage of a 4% discount offered for
prompt payment.
Returned one crate of cola to BY Drinks. Cash refund received.

Question 7
What would be the double entry for the following transactions in the ledger of G Big, retailer.

2017
1 Apr Sold goods on credit to B Purt, $200.
5 B Purt given an allowance of $50 for soiled goods.
8 Sold goods on credit to B Purt, $100.
30 B Purt declared bankrupt. $50 received as full settlement of amount owing.

Question 8
Record the following transactions in the ledger of C McReilly, building supplier, and prepare a trial
balance as at 30 September 2016.

2016
1 Sep Commenced business with the following assets and liabilities: cash at bank, $40,000;
stock, $20,000; building, $360,000; fixtures, $2,000; mortgage loan on buildings,
$240,000.
2 Purchased stock, $400 cash.
3 Purchased stock on credit, $4000 from A Wily.
4 Returned stock to A Wily, $50.
5 Purchased vehicle for $10,000 paying a cash deposit of $5,000; balance to be paid to
Vroom Motors Ltd within 60 days.
8 Settled account with A Wily, less 2% discount.
10 Cash sales, $600.
11 Cash sales, $600.
Credit sales to S Pooner, $400.
12 S Pooner returned faulty goods valued at $10.
13 Cash sales, $609.
Paid wages, $800.
Paid Vroom Motors Ltd $2,000 of the amount owing.
17 Cash sales, $200.
Cash purchases, $200.
Credit purchases from D Brown, $2,000.
20 Purchased adjoining property for storage. The terms arranged were: cash deposit,
$10,000; mortgage loan (20 years), $140,000; total price $150,000.
30 Cash sales, $1,000.
S Pooner settled his account less 5% discount.
Paid wages, $800.
Owner withdrew timber valued at $600 (cost) for personal use.

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Question 9
J Melon has operated a greengrocery business for a number of years. Using the information below,
prepare a ledger for March 2018 and a trial balance as at 31 March 2018.

The transactions for March 2018 were:

3 Mar Cash purchases, $3,480.
5 Credit sales to J Atkins, $1,220.
6 Sales returns from J Atkins, $100.
11 Received $900 cash from debtor, R Brown. $30 discount was allowed.
14 Paid creditor, M Meyer, the amount owing on 1 March, less 5% discount.
15 Received a cash refund of $40 following the return of stale vegetables.
18 Cash sales, $3,100.
23 Paid wages, $680.
25 Gave a refund of $110 to a customer for the return of fruit.
28 J Melon deposited $6,000 of her own savings in the business bank account.
31 Made mortgage loan repayment: principal, $2,000; and interest $800.

End of Tutorial Question

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