Principal book of accounts
Book of original entry
Record of credit transactions
Summary of entries
Correct answer is A
A ledger is the principal book that contains a record of business transactions.
Which of the following is the reason why a seller allows a customer cash discount?
Agreement to become a regular customer
Introducing a new customer to the seller
Settlement of account within a stated period
Placing a larger order
Correct answer is C
Small cash discounts benefit the seller because they increase the likelihood that a buyer will pay quickly, therefore providing the seller with cash in a shorter period of time, as it is better to receive e.g. 95% of an invoice with a few days than wait 30 or more days to receive the full amount.
A trial balance is prepared to
Detect fraud
Ascertain losses in a trading period
Determine opening capital
Test arithmetical accuracy of ledger entries
Correct answer is D
Preparing a trial balance for a company serves to detect any mathematical errors that have occurred in the double-entry accounting system. If the total debits equal the total credits, the trial balance is considered to be balanced, and there should be no mathematical errors in the ledgers.
Which of the following is not an external user of accounting information?
Management
Creditors
Shareholders
Government
Correct answer is A
External users are people outside the business entity (organization) who use accounting information. Examples of external users are suppliers, banks, customers, investors, potential investors, and tax authorities.
The management are internal users of accounting information.
Which of the following date lines is correct for a profit and loss account?
For the year ended 31st December 2009
As 31st December 2009
For the period 31st December 2009
As at the year 2009
Correct answer is A
No explanation has been provided for this answer.