CIE Accounting Paper-1: Specimen Questions with Answers 60 - 61 of 214

Question number: 60

MCQ▾

Question

On which side the deposits in Bank Account are recorded in passbook?

Choices

Choice (4) Response

a.

Right

b.

Debit

c.

Credit

d.

Left

Answer

c.

Explanation

The deposits in Bank Account are recorded in passbook on the credit side and on debit side in the cash book. Likewise the withdrawals from bank are recorded on credit side in the cash book and on debit side in the pass book.

Question number: 61

MCQ▾

Question

How assets, liabilities and capital are affected by each of the following transaction with an accounting equation:

Purchase of machinery for cash $300000

Choices

Choice (4) Response

a.

Accounting equation for the purchase of assets.

shows given table in value of Machinery purchased

Transaction

Assets = Capital + Liabilities

Machinery purchased

Cash + Machinery = Capital + Liabilities

-300000 + 300000 = 0+0

b.

Accounting equation for the purchase of assets (Choice B)

shows given table in value of Machinery purchased

Transaction

Assets = Capital + Liabilities

Machinery purchased

Cash + Machinery = Capital + Liabilities

0 + 300000 = 0+300000

c.

Accounting equation for the purchase of assets (Choice C)

shows given table in value of Machinery purchased

Transaction

Assets = Capital + Liabilities

Machinery purchased

Cash + Machinery = Capital + Liabilities

300000 + 0= 0 + 300000

d.

Accounting equation for the purchase of assets (Choice D)

shows given table in value of Machinery purchased

Transaction

Assets = Capital + Liabilities

Machinery purchased

Cash + Machinery = Capital + Liabilities

300000 - 300000 = 0+0

Answer

a.

Explanation

Accounting equation always has a two sided effects. If Machinery purchased during the year for cash then it will reflected as increase the value of assets and decrease the value of cash.