1) What is the accounting equation? a) Assets = Liabilities + Equity b) Assets = Liabilities - Equity c) Assets + Liabilities = Equity d) Assets - Liabilities = Equity 2) Which is a current asset? a) Land b) Inventory c) Equipment d) Buildings 3) Which financial statement shows a business’s profit or loss for the year? a) Statement of Financial Position b) Income Statement c) Trial Balance d) Statement of Cash Flows 4) What does a balance sheet show? a) Income and expenses b) Assets, liabilities, equity c) Cash flow d) Profit and loss 5) Which entry correctly records the purchase of equipment on credit? a) Debit Equipment, Credit Bank b) Debit Equipment, Credit Creditors c) Debit Creditors, Credit Equipment d) Debit Expenses, Credit Bank 6) Which of the following represents an example of an asset increasing and liability increasing at the same time? a) Owner invests cash into the business b) Payment of salaries c) Business purchases stock on credit d) Business receives interest income 7) What is depreciation? a) Increase in value b) Decrease in value c) Asset purchase d) Liability payment 8) Which document serves as proof of cash received from a customer? a) Invoice b) Debit Note c) Bank Statement d) Cash Receipt 9) What is accrual accounting? a) Cash basis b) Recording when earned c) Recording when paid d) Only credit sales 10) If a business pays R5 000 for rent, which accounts are affected? a) Rent (Expense) and Bank b) Rent Income and Bank c) Bank and Capital d) Assets and Liabilities 11) Which depreciation method results in higher depreciation expense ONLY in the early years of an asset’s life? a) Straight-line method b) Reducing / Diminishing balance method c) No method d) Both A & B 12) Which of the following costs should be capitalised as part of Property, Plant, and Equipment (PPE)? a) Regular maintenance costs b) Administrative overheads c) Training costs for staff d) Land 13) If a company issues shares at a premium, how is the premium recorded? a) As part of Share Capital b) In the Share Premium account under Equity c) As Revenue in the Income Statement d) As Deferred Income 14) A customer pays R10,000 for services to be performed next month. What is the journal entry? a) DR Debtors R10,000; CR Revenue R10,000 b) Debit Revenue R10,000; Credit Bank R10,000 c) DR Bank R10,000; CR Deferred Income R10,000 d) Debit Interest R10,000; Credit Bank R10,000 15) A business purchases office equipment worth R15,000 on credit. What is the journal entry? a) Debit Equipment R15,000; Credit Accounts Payable R15,000 b) Debit Accounts Payable R15,000; Credit Equipment R15,000 c) Debit Cash R15,000; Credit Equipment R15,000 d) Debit Equipment R15,000; Credit Cash R15,000

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