Principles of Accounts

Graded Class Activity

1. Which of the following is the MOST permanent asset in a business?
(a) Stock
(b) Land
(c) Cash
(d) Motor Vehicle

2. Which of the following expresses the Balance Sheet equation?

(a) Capital= Assets + Liabilities
(b) Assets= Liabilities - Capital
(c) Liabilities= Assets - Capital
(d) Liabilities= Assets + Capital

3. There are several steps in the accounting cycle. Which of the following is NOT a step
in the accounting cycle?
(a) Posting to trial balance
(b) Preparing source documents
(c) Posting to cashbook
(d) Posting to ledgers

4. Which of the following group of items are listed in the order of liquidity?
(a) Cash, Bank, Debtors, Stock, Machinery, Land
(b) Machinery, Land, Bank, Furniture, Cash, Debtors
(c) Cash, Furniture, Debtors, Bank, Land, Machinery
(d) Cash, Bank, Furniture, Debtors, Machinery, Land

5. Which of the following BEST describe the Trial Balance?

(a) Is the final accounts in the books.
(b) Shows all the asset balances.
(c) Is a list of balances on the books.
(d) Discloses the financial position of a business.

6. Which of the following is a liability?

(a) Debtors
(b) Buildings
(c) Creditor
(d) Cash in Bank
7. When the order of permanence is used in the balance sheet:
(a) The current assets are listed before the fixed assets
(b) The assets are listed starting with the item that is hardest to be converted to cash
(c) The balance sheet is done in the vertical format
(d) The assets are listed starting with the item that is easiest to be converted to cash

8. A business which owns goods valued at $500, also has a van at $1000; it owes $50 for
goods. What is the capital of the business?
(a) $1050
(b) $1450
(c) $1500
(d) $1550

9. _____________ is money that is used to start a business

(a) Capital
(b) Asset
(c) Liability
(d) Purchase order

10. Select the correct definition of a balance sheet.

(a) A double entry account
(b) A list of balances after the profit and loss account has been drawn up
(c) A statement of all the assets
(d) An account proving that the books balance.

11. Which of the following is a part of the accounting cycle?

(a) Journalizing
(b) Posting to ledgers
(c) Source documents
(d) All of the above

12. What the business own is referred to as a?

(a) Liability
(b) Assets
(c) Source documents
(d) All of the above

END of ACTIVITY