Question 1

A sole trader is a business entity that is:

a.the simplest form of business organisation and is owned by multiple persons as a separate legal entity, an example is a shoe shop

b.a complex structure that is owned by multiple shareholders as a separate legal entity, an example is WalMart

c.the simplest form of business entity, owned and bound to one person, an example is a cabinet maker contractor

d.a separate legal entity owned by a single proprietor, an example is a cabinet maker contractor

Question 2

With regard to companies, select a statement that best describes their form:

a.where a business requires large amounts of capital, it may combine ownership and control with an unrestricted number of shareholders

b.a company is a separate legal entity from its owners, and it is required to comply with various regulations

c.a company is a not separate legal entity, but it is required to comply with various regulations

d.companies are evil; they suck resources out of the greater good of humanity

Question 3

The most widely accepted definition of accounting emphasizes:

a.The importance of recording and storing accounting data.

b.The need to produce General Purpose Financial Statements.

c.The analysis and communication of economic information to assist users make informed decisions regarding the allocation of scarce resources.

d.The objective of becoming a member of a professional association.

Question 4

Accounting is mainly divided into:

a.fiscal accounting and control

b.cost accounting and management accounting

c.financial accounting and management accounting

d.environmental accounting and ethical accounting

Question 5

Which of the following represents the balance sheet equation:

a.assets = liabilities + equity

b.liabilities = equity - assets

c.assets = liabilities - equity

d.equity = liabilities - assets

Question 6

From the following select the correct statement:

a.assets may comprise short-term liabilities and long-term liabilities

b.assets may comprise current liabilities and non-current liabilities

c.assets may comprise cash at bank and inventory

d.assets may comprise amounts owed to creditors

Question 7

Choose the best statement on the recording of transactions:

a.a transaction is a record of exchange of value between two parties and do not necessarily need to be recorded

b.a transaction is a record of exchange of value between two parties and ought to be recorded by the firm

c.accounting records, comprising transaction records are never used by the firm

d.transactions are first recorded in ledgers and then posted to journal.