Activity 1

Copy and complete the following table by entering 'true' or 'false' for each statement.
Statement True/False
1If an asset increases, the asset account should be debited.
2 Ifa liability increases, the liability account should be debited.
3 Ifan asset decreases, the asset account should be debited.
********************

4 If a liability decreases, the liatbility account should be credited.

.....

5 If capital (owner's equity) increases, the capital account should be

debited.
 correctly, the total of all
At the end of the year, if all transactions are recorded
debit entries should be equal to the total of all credit entries.

Activity 2
below. Copy and complete the table by filling
A business provides the information shown and credited.
in the names of the accounts to be debited
Account to be Account to be
Transactions credited
debited

The owner deposited $27 000 in the business bank

account.
from
2 The business bought furniture $4500 on credit
Neural Furniture.
Loans $6700
3 The business repaida loan from Omni
by cheque.
Tabloid
4 The business took a loan in cash from
Finance $8000.
$500 in
5 Somli, a credit customer, paid the business
cash.
6 The business returned some furniture
valued at $700
to Neural Furniture.
Pascal, $300
7 The owner paid a business creditor,
from her personal funds.
 Activity 3
A business provides the information shown below. Copy and complete the table.
Transactions Account to be debited Account to be credited

1Paid salaries by cheque $6000

2 Paid rent in cash $7 000
3 Received commission $500 cash
4 Received rent by cheque $30 000
5 Paid motor expenses in cash $50
 Activity 4
A business provides the information shown below. Copy and complete the table, naming
the accounts to be debited and credited in the business' books.

Transactions Account to be Account to be

debited credited
1 Purchased inventory for cash $500
2 Purchased goods on credit $700 from Aslam Traders
3 Purchased a motor vehicle paying by cheque $6980
4 Sold goods for cash $230
5 Paid motor expenses in cash $56
6 Sold inventory on credit to Jalan and Sons $239
7 Returned goods to Aslam Traders $34
8 Jalan and Sons returned qoods $45
9 Sold goods to Mason on credit $4500
10 Mason returned goods to us $450
If a personal account has a credit balance, it would show that the business owes
money to the person. This person is therefore a creditor. The totals of all the
credit balances of suppliers will be transferred to the statement of financial
position as trade payables at the end of the financial year.

Activity 5
A business had the transactions shown below for the month of January 2018. Enter
these transactions in the personal accounts (trade payables and trade receivables)
only. Balance off each personal account at the end of the month, then state which of the
balances represent trade receivables and which represent trade payables.
2018
Jan 1 Purchases on credit from S. Louis $560, J. Kelly $346, M. Mallasa $289
Jan 3 Sales on credit to D. Makan $570, R. Stoic $720, B. Brambles $890
Jan 6 Purchases on credit from J. Kelly $876, M. Mallasa $760, S. Po $ 745
Jan 12 Sales on credit to B. Brambles $560, R. Stoic $850, S. Llama $932
Jan 16 Return inwards from B. Brambles $45, R. Stoic $50
Jan 20 Goods returned to J. Kelly $34, M. Mallasa $56
Jan 22 Paid L. Louis by cheque $560
Jan 25 S. Llama paid in cash $932
Jan 29 Paid S. Po in cash $745
Jan 30 D. Makan paid by cheque $570
 C Purchases account.

Exam-style questions
The following multiple choice questions should be completed within five
minutes. Four possible answers are given for each question and you must choose
the one most appropriate answer.
1 B.K. Traders provided the following information:

Inventory 4000
Equipment 10000
Trade receivables 2500
Trade payables 3500
Bank overdraft 600

Division of the ledger

What was the value of total assets?

A $15600
B $16500
C $17 100
D$20600 [1]
2 Acustomer, Neil, pays the business by cheque for goods previously
bought by him on credit. Which entries record the payment in the
business' ledgers? [1)
Account to be debited Account to be credited
******

A Trade payables
********s***************s***...
Bank
B Bank Trade payables
C Bank Trade receivables
*
************ ******.**.

Trade receivables Bank

***.****.

3 Kaye returned damaged goods to her supplier, Mungo. Which entries

are made in Mungo's books? [1]
********

Account to be debited Account to be credited

***************************** ***************************

Sales returns Kaye

B Purchases returns Kaye
C
Kaye Purchases returns
D Kaye Sales returns

4 Machinery was purchased on credit. Which entries are made to record this? [1]
Account to be debited Account to be credited
A Machinery expenses
****************.******.***..
Trade payables
..... ******

B Trade payables Machinery expenses ......

Machinery Trade ................

payables
Machinery Cash

5 Which balance will be recorded as an asset in a statement of financial

position?
AA credit balance on the bank account
BA credit balance on a supplier's account
CA debit balance on the drawings account
DA debit balance on a customer's account [1]
 What was the value of total assets?

A $15 600
B $16500
C $17 100
D $20600 [1]

2 A
customer, Neil, pays the business by cheque for goods previously
bought by him on credit. Which entries record the payment in the
business' ledgers? [1]
Account to be debited Account to be credited
ta******e*******s**********************
***********************************************

Trade payables Bank

B Bank
.*******.
Trade payables
......
C Bank Trade receivables
Trade ********************
receivables Bank

3 Kaye returned damaged goods to her supplier, Mungo. Which entries

are made in Mungo's books? [1]
Account to be debited Account to be credited
*****************e*****************.....
.......**.
Sales returns Kaye
**********************

B Purchases returns Kaye

********

Purchases returns
C Kaye
D Kaye Sales returns
******

4 Machinery was purchased on credit. Which entries are made to record this? [1]
Account to be debited Account to be credited
**********************e***.
..........

A Machinery expenses Trade payables

Trade payables Machinery expenses
.******.s******

C Machinery Trade payables

*******.

D Machinery Cash

5 Which balance will be recorded as an asset in a statement of financial

position?
A Acredit balance on the bank account
BA credit balance on a supplier's account
CA debit balance on the drawings account
DA debit balance on a customer's account [1]
The marks allotted to the structured questions on the next page are a guide to
the length of time that should be taken to complete them.
6 On 1 August 2018 Nelly had the following transactions:
" Paid $100 cash into the bank.
" Transferred private computer $500 to the business office for use by the staff.
" Took cash, $300, as drawings.
" Paid a creditor, Jason, $120 by cheque.
" Paid electricity bill $300 for the month of July by credit transfer.
Copy and complete the table below, stating the double entry needed to
record each transaction. The first has been completed as an example. [8]
Account debited Account credited
1 Bank 100 Cash 100
****.

7 Kelsey is a trader who makes both cash purchases and credit purchases. She
provided the following information.
At 1 January 2018
Amount owing to Josh, a credit supplier 1500
During the year ended 31 December 2018
Jan 17 Amount paid by cheque for inventory 300
Rent received in cash 2 000
Feb 1
Feb 3 Payment made to Josh for the amount owing
500
Jun 29 Rent received by cheque
Inventory bought on credit from Josh 3 700
Nov 28

a Prepare the following accounts in Kelsey's ledgers for the year ended
31 December 2018 and balance off the accounts.
i Purchases account
Josh's account
iiiRent receivable account [14]
b State whether Josh is a creditor or debtor. [1)
8Sahira Ali is a trader. Her ledger is divided into a sales ledger, a purchases
ledger and a nominal (general) ledger.
a State two advantages of dividing the ledger into these three
sections.
[2]
[1]
b Name one account which would appear in the nominal (general) ledger.
On 1 October 2014 Sahira Ali's trade payables included the following:
$

Waheed Khan 390

lqbal Wholesalers 650

 DiVisIon of the ledger

Sahira Ali's transactions for October 2014 included the following:

Oct 5 Purchased goods on credit from lgbal Wholesalers, $280
Oct 13 Purchased goods on credit from Waheed Khan, list price $420, less
20 per cent trade discount
Oct 16 Returned goods, list price $210, to Waheed Khan
Oct 24 Sent a cheque for $380 to Waheed Khan in full settlement of the
amount owing on 1 October
Oct 31 lqbal Wholesalers charged $6 on the overdue account
c Prepare the following accounts in the ledger of Sahira Ali for the month
of October 2014. Balance the accounts and bring down the balances on
1November 2014.
Waheed Khan account
ii Iqbal Wholesalers account [9]
(Adapted from Cambridge IGCSE Accounting 0452/21, October/November
2014, Q1)
9 Imran is a trader. The following information is available about Hannah,
a credit customer.
Mar 1 Owed Imran $200
Mar 6
Purchased goods, list price $320, less 20 per cent trade discount
Mar 12 Returned goods with a list price of $80
Mar 28 Paid the balance due on 1 March after deducting a cash account
of 2 per cent

Prepare Hannah's account for March in the books of Imran. Balance

the account on 31 March and bring down the balances on 1 April. [7]
(Adapted from Cambridge IGCSE Accounting 0452/11, May/June 2013, Q3 a &b)
10On 1 July 2013 a trader had the following transactions:
" Received $800 by cheque from subletting premises.
Took goods costing $200 for his own use.
Received $600 by cheque in full settlement of a debt of $625 from Tabitha,
a credit customer.
" Sold goods costing $1 000 on credit to Samir for $1 400.
Complete the table below showing how these transactions are recorded.
The first one has been completed as an example. [7]
e****

Transaction Debit entry Credit entry

***** ***********************

**************
1 Bank 800 Rent receivable 800
2
3

(Adapted from Cambridge IGCSE Accounting 0452/13, October/November

2013, Q6)
?Chapter review questions
1 State what is meant by an asset.
2 State the difference between a non-current asset and a current asset.
3 State what is meant by a liability.
4 State the difference between a non-current liability and a current liability.
5 Name two accounts which would appear in the nominal lgeneral] ledger.
6 Name the division of the ledger in which a sole trader will maintain his customers'
accounts.
7 Mai Ling is a baker. Suggest one item she would include in her non-current assets.
8 Sally is a trader. The following account appeared in her ledger:
Vera's account
Date Details $Date Details
2018 2018
Jan 10 Returns 35 Jan 1 Balance b/d 440
Jan 19 Bank 226| Jan 6 Purchases 650
Discount 13

a State the division of Sally's ledger which the above account would appear.
b Explain the entry on 10 January and state where the double entry would be made
in Sally's accounts.
9 Melania is a trader. She paid her home electricity invoice from her business bank
account. State how this payment was recorded in Melania's books of account.
Account debited Account credited

lict