Chapter 2

Question 1

What are the five elements of financial statement?

Answer 1

Asset
Liability
Income
Capital – equity
Expense

Question 2

What is the formula for statement of financial position?

Answer 2

Asset = liability + expense

Question 3

What is the formula for statement of financial performance?

Answer 3

Income and expense

Question 4

What is assets?

Answer 4

Resources owned and controlled by the business which generate income

Question 5

What are the two types of assets?

Answer 5

Non-current assets and current assets

Question 6

What are non-current assets?

Answer 6

Non-current assets are assets that are less liquid and provide benefits for more than one year

Question 7

What are current assets?

Answer 7

Current assets are more liquid and provide benefits within one accounting period

Question 8

Is LAND a current asset or non-current asset

Answer 8

Non-current asset

Question 9

Is PROPERTY CURRENT ASSET OR NON-CURRENT ASSET?

Answer 9

Non-current asset

Question 10

It is furniture and fittings, current asset or non-current asset

Answer 10

Non-current asset

Question 11

Is motor vehicles, current asset or non-current asset

Answer 11

Non-current asset

Question 12

Is office equipment, current asset or non-current asset

Answer 12

Non-current asset

Question 13

Is machinery, current asset or non-current asset

Answer 13

Non-current asset

Question 14

Is inventory or stock for resale, current asset or non-current asset

Answer 14

Current asset

Question 15

Is cash at bank, current asset or non-current asset

Answer 15

Current asset

Question 16

Is cash at hand, current asset or non-current asset

Answer 16

Current asset

Question 17

Is trade receivable current asset or non-current asset?

Answer 17

Current asset

Question 18

Is prepaid expense current asset or non-current asset

Answer 18

Current asset

Question 19

What is liability?

Answer 19

Liability is amount of debts, odd to the third party by business as a result of past transactions

Question 20

What are the two types of liability?

Answer 20

Current liability and non-current liability

Question 21

Is long-term boring, a non-current liability or current liability

Answer 21

Non-current liability

Question 22

Is mortgage, a current non-current liability, or a current liability?

Answer 22

Non-current liability

Question 23

Is trade payable a non-current liability, or a current liability?

Answer 23

Current liability

Question 24

A short-term borings, a non-current liability or a current liability

Answer 24

Current liability

Question 25

Is bank overdraft, a non-current liability or a current liability?

Answer 25

Current liability

Question 26

Expense payable, non-current liability of current liability

Answer 26

Current liability

Question 27

What is equity?

Answer 27

Equity is the amount that represents the interest of the owners in the business Also called the net asset of the business

Question 28

Is capital given by owner, sole proprietorship or private limited company

Answer 28

sole proprietorship

Question 29

Is drawings sole proprietorship or private limited company

Answer 29

sole proprietorship

Question 30

Is shared capital sole proprietorship a private limited company

Answer 30

Private limited company

Question 31

Is dividends sole proprietorship or private limited company

Answer 31

Private limited company

Question 32

What is income?

Answer 32

Income is the amount earned from conducting a business, main activities or other activities

Question 33

What are the two types of income?

Answer 33

Main income and other income

Question 34

What are the two types of income in main income?

Answer 34

Trading business, sales revenue and service business service income

Question 35

What are four types of other incomes?

Answer 35

Rent, income, interest income, commission income discount received income

Question 36

What is expense?

Answer 36

Expense is the amount incurred to operate the business and provide support for the business to generate income

Question 37

What are the two types of expenses?

Answer 37

Common expenses and non-cash expenses

Question 38

What are common expenses?

Answer 38

Cost of sales, salary rent, interest expense

Question 39

What are non-cash expenses

Answer 39

1.Impairment laws on trade receivable 2. Impairment loss on inventory. 3. Depreciation on non-current asset.

Question 40

What is the accounting equation?

Answer 40

Asset = liabilities + owner’s equity

Question 41

What is the expanded accounting equation for sole proprietorship?

Answer 41

Assets = liabilities + capital - drawings + income - expenses

Question 42

What is the expanded accounting equation for private limited company?

Answer 42

Assets = liabilities + shared capital - dividends + income - expenses

Question 43

What is working Capital equation

Answer 43

Working capital = current assets - current liabilities

Question 44

What is net assets equation

Answer 44

Net assets = total assets - total liabilities

Question 45

Assets, debit increase or decreases

Answer 45

Increases

Question 46

Assets credit increases and decreases

Answer 46

Decreases

Question 47

Liability, debit increases or decreases

Answer 47

Decreases

Question 48

Credit liability increases or decreases

Answer 48

Increases

Question 49

Debit income increases or decreases

Answer 49

Decreases?

Question 50

Credit income increases or decreases

Answer 50

Increases

Question 51

Credit capital increases or decreases?

Answer 51

Increases

Question 52

Debit capital increases or decreases

Answer 52

Decreases

Question 53

Debit expense increases or decreases

Answer 53

Increases

Question 54

Credit expense increases or decreases?

Answer 54

Decreases