3. Of the following, which are incorrect? (i) Sold van for cash (ii) Bought stat

Question

3. Of the following, which are incorrect? (i) Sold van for cash (ii) Bought stationery by cheque (iii) Received refund of insurance by cheque Insurance Debit Cash Stationery Credit Sales Bank Bank Commission received (iv) Received commission by cash Cash A. (ii) and (iv) only C. (ii) and Giii) only B. (i) and (ii) only D. () and Giii) only 4. If the assets of a business increased £76,000 during a period of time and its liabilities increased £48,000 during the same period, equity in the business must have A. Increased £28,000 B. Decreased £28,000 C. Decreased £124,000 D. Increased£124,000 5. In the business of H. Ward, a food merchant, which of the following are capital expenditures? (G) Legal charges on acquiring new premises for the shop (ii) Wages of assistants (iii) Installing extra toilet (iv) Fire insurance premium A. (ii) and (ii) B. (i) and (ii) C. (i) and (ii) D. (ii) and Giv) 6. The sales day book is best described as A. Part of the double entry system B. Containing customers' accounts C. Containing real accounts D. A list of credit sales

Explanation / Answer

3 For (i) debit will be cash and credit will be Van For (iii) debit will be bank and credit will be Insurance Option D (i) and (iii) are incorrect 4 Increase in Equity = Increase in assets-Increase in liabilities = 76000-48000 = 28000 Option A is correct 5 Legal charges on acquiring new premises for the shop and Installing new toilets are capital expenditures Wages and fire insurance premium are revenue expenditures Option B (i) and (iii) are correct 6 Sales day book is described as list of credit sales Option D is correct

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