O-Level Principles of Accounts 1

Question 1

Which of the following correctly states the accounting equation?

Accepted Answer

Assets = Liabilities + Capital

Answer

The fundamental accounting equation is Assets = Liabilities + Capital, showing that all assets are funded by either external obligations or the owner's equity.

Question 2

When a business purchases goods on credit from a supplier, which double entry is recorded?

Accepted Answer

Debit Purchases, Credit Creditors

Answer

Purchasing goods on credit increases the Purchases account (debit) and creates a liability to the creditor (credit).

Question 3

Which source document is issued by a seller to a buyer for a credit sale?

Accepted Answer

Sales invoice

Answer

A sales invoice is issued by the seller to the buyer as the source document for recording a credit sale in the books.

Question 4

What does a trial balance verify?

Accepted Answer

That total debits equal total credits in the ledger

Answer

A trial balance verifies that the total of all debit balances equals the total of all credit balances, confirming arithmetical accuracy in the ledger.

Question 5

Which of the following accounts normally carries a credit balance?

Accepted Answer

Capital account

Answer

A capital account has a normal credit balance because it represents the owner's equity — an amount the business owes to its owner.

GCE O-Level Practice Test

GCE O-Level Practice Test

O-Level Principles of Accounts 1