N-Level Principles of Accounts

Question 1

What is the accounting equation?

Accepted Answer

Assets = Liabilities + Capital (Owner's Equity)

Answer

Assets = Liabilities - Capital

Answer

Assets + Liabilities = Capital

Answer

Capital = Assets + Liabilities

Question 2

What is the difference between a 'debit' and a 'credit' in double-entry bookkeeping?

Accepted Answer

Debits record increases in assets and expenses (left side); credits record increases in liabilities, capital, and revenue (right side)

Answer

Debits are always bad; credits are always good

Answer

They mean the same thing

Answer

Debits are only for cash transactions

Question 3

What is a 'trial balance' in accounting?

Accepted Answer

A list of all ledger account balances to check that total debits equal total credits

Answer

A bank statement

Answer

A balance sheet for new businesses

Answer

A type of profit calculation

Question 4

What is the purpose of a 'balance sheet' (statement of financial position)?

Accepted Answer

To show the financial position of a business at a specific point in time, listing assets, liabilities, and capital

Answer

To show profit for the year

Answer

To show cash received and paid

Answer

To show sales revenue only

Question 5

What is 'depreciation' in accounting?

Accepted Answer

The systematic allocation of the cost of a non-current asset over its useful life to reflect its declining value

Answer

An increase in asset value

Answer

A type of income

Answer

The amount paid for an asset

Question 6

What is the difference between 'revenue expenditure' and 'capital expenditure'?

Accepted Answer

Revenue expenditure is day-to-day spending (e.g., rent, wages); capital expenditure is spending on long-term assets (e.g., equipment, vehicles)

Answer

There is no difference

Answer

Capital expenditure is smaller

Answer

Revenue expenditure only involves cash