SELF TEST QUESTIONS

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  • 1 Explain the difference between a customer and a supplier.
  • 2 What is a cash transaction?
  • 3 What is a credit transaction?
  • 4 Give examples of purchases and expenses.
  • 5 When would petty cash be used?
  • 6 Name three payments made by the payroll department.
  • 7 Give two reasons why a business keeps a record of business transactions.
  • 8 Senior personnel should authorise major expenditure in a business. Why?
  • 9 Give one reason for maintaining a system of internal checks or controls.
  • 10 Why is it important for a business to pay expenses, such as wages, on time?

EXAM-STYLE QUESTIONS

1 A business buys goods on credit. When will this require the accounting records to be updated?

  • A Only when the goods are received
  • B Only when the goods are paid for
  • C When the goods are received and again when they are paid for
  • D When the goods are received, again when they are paid for and when the goods are resold

2 Which of the following describes the receipts generated by an Internet Service Provider?

  • A Income from sale of goods
  • B Income from giving a service
  • C Payments for employees
  • D Payments for share capital

3 How would you describe petty cash?

  • A Cash for some small everyday expenses
  • B An overdraft arranged by the bank
  • C Spare cash invested in a separate bank account
  • D Money in the current account

4 A stationery business sold computer supplies to a customer for payment in one month Which of the following are true in respect of this transaction?

  • (i) It is a cash transaction
  • (ii) The expenditure must be authorised by the stationery business
  • (iii) A record of the transaction must be kept in case of future query by the stationery business
  • (iv) The stationery business will need to ensure that it receives payment in one month
  • A (i) only
  • B (ii) and (iii)
  • C (iii) and (iv)
  • D All of the above

5 Which section of a grocery business pays salaries?

  • A Accounts department
  • B Payroll
  • C Sales
  • D Store manager

For suggested answers, see the Answers section at the end of the book.