Activity 1: Matching items
Choose a definition from COLUMN B that matches the type of account in COLUMN A.
Draw a line from COLUMN A to COLUMN B to match the definitions.
Column A | Column B |
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[7]
Answers to activity 1
Column A | Column B |
D G C F A B E |
Activity 2: Multiple-choice questions
Three options are provided as possible answers to the following questions.
Circle the correct answer.
1. Bank overdraft is classified as a... | 2. Consumable stores on hand is classified as... |
A Non-current liability | A Owner’s equity |
B Current asset | B Current asset |
C Current liability | C An expense |
[2]
Answers to activity 2
1 | C | This is a current liability because it will be paid back within 1 year (short-term). |
2 | B | This is a current asset because the business will use them within the next 12 months. |
[2]
Activity 3: Accounting equation
Refer to Steps to recording transactions 1–4 above.
Record the transactions in the Table below assuming bank is favourable (Dr) at all times.
(When a bank is favourable it means it is an asset of the business and remains in a debit balance.)
Account debit | Account credit | A = | O + | L | |
1 | |||||
2 | |||||
3 | |||||
4 | |||||
5 |
[5]
Answers to activity 3
Account debit | Account credit | A = | O + | L | |
1 | Bad debts (expense increasing) | Debtors control (asset decreasing) | -500 | -500 | 0 |
2 | Creditors control (liability decreasing) | Bank (asset decreasing) | -2000 | 0 | -2000 |
3 | Bank (asset increasing) | Rent income (income increasing) | +5000 | +5000 | 0 |
4 | Trading stock (asset increasing) | Creditors control (liability increasing) | +1800 | 0 | +1800 |
5 | Equipment (asset increasing) | Bank (asset decreasing) | ±600 | 0 | 0 |