Accounting Basics Quiz

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Questions and Answers

What does SP represent in the context of pricing?

Selling Price (correct)

Service Price

Standard Price

Starting Price

Which formula correctly represents the concept of Mark-up (MU)?

MU = Selling Price - Cost Price (correct)

MU = Cost Price - Selling Price

MU = Selling Price ÷ Cost Price

MU = Cost Price ÷ Selling Price

If a business generates revenue from selling physical items, what is the correct term to describe this type of business?

Franchise business

Investment business

Service business

Merchandising business (correct)

What does a profit signify in a business context?

Total revenue exceeds total expenses Signup and view all the answers

In financial terms, what does the term 'loss' refer to?

Excess expenses over income Signup and view all the answers

What does R1008 represent in the given content?

A numerical value Signup and view all the answers

What is the result of the expression R330 x 100 + 33?

R33,033 Signup and view all the answers

How is R15 represented in the context of the operations?

R1,500 Signup and view all the answers

If 50% of R15,000 is calculated, what is the resultant value?

R7,500 Signup and view all the answers

What does the expression R3500 * 45000 equal?

R1,575,000 Signup and view all the answers

What is an asset in a business context?

A long-lasting item utilized for business operations Signup and view all the answers

Which statement best describes a long-lasting item for business?

It provides ongoing utility in business activities. Signup and view all the answers

What is NOT considered an asset?

A business loan that is to be repaid Signup and view all the answers

Which of the following is an example of a tangible asset?

Office machinery Signup and view all the answers

What characteristic primarily defines a long-lasting asset?

Continuous usefulness over time Signup and view all the answers

Which of the following items typically depreciates in value?

Vehicle used for deliveries Signup and view all the answers

Which accounting principle involves the long-term value of assets?

Going concern assumption Signup and view all the answers

In a balance sheet, how are assets categorized?

As current and non-current assets Signup and view all the answers

What effect does an income increase have on the debit and credit sides?

Increases equity on the credit side and decreases on the debit side. Signup and view all the answers

In the context of bank transactions, what is the role of a rent receipt in transactions?

It is a record of income received. Signup and view all the answers

When a cash sale is made, what is the expected impact on the bank?

Cash sales increase the bank balance. Signup and view all the answers

What is typically recorded when a bank deposit occurs?

An increase in capital. Signup and view all the answers

In a bank transaction, how is a duplicate receipt important?

It acts as evidence of a transaction for record-keeping. Signup and view all the answers

What describes a transaction?

Receiving payment or money between two people. Signup and view all the answers

Which of the following represents a current liability?

Accounts payable due within 30 days. Signup and view all the answers

Which equation correctly represents the relationship between assets and owner's equity?

Assets = Owner’s Equity + Liabilities Signup and view all the answers

What is an example of a non-current asset?

Vehicles owned for business use. Signup and view all the answers

What happens to assets during a debit entry?

Assets increase on the debit side. Signup and view all the answers

What is typically kept in a cash float?

Cash in small denominations to give change. Signup and view all the answers

Which condition describes when a loss exceeds profit?

Negative cash flow Signup and view all the answers

How is owner's equity calculated?

Owner's Equity = Assets - Liabilities Signup and view all the answers

Study Notes

Profit and Loss

Profit is when a business earns more money than it spends
Loss occurs when a business spends more money than it earns
Tax is paid based on profit

Business Types

A business that provides a service in exchange for money is a sole trader
A business that sells a physical item in exchange for money is also a sole trader

Accounting Terms

Asset : A long-lasting item used for a business
Transaction : An exchange of money between two people, involving either receiving or paying
Current Liabilities: Debts due within 12 months
Non-current Liabilities: Debts due after 12 months

Assets

An asset is anything of value that a business owns. Examples include:
- Current Asset: A bank account
- Non-current Asset: Vehicles

Accounting Equations

Assets = Owner's Equity + Liabilities
Owner's Equity = Assets - Liabilities

Other Accounting Concepts

Cash float: Money kept in the cash register to give change to customers
Credit: The right side of the accounting equation
Debit: The left side of the accounting equation
Income: Money earned by a business
Equity: Represents the owner's investment in the business
Expense: Money spent by a business
Journal Entries: Records of financial transactions

Example Journal Entries

Journal entry 1:
- Debit: Bank account
- Credit: Capital account
- Amount: R20,000
Journal entry 2:
- Debit: Bank account
- Credit: Rent income
- Amount: R2,500
Journal entry 3:
- Debit: Bank Account
- Credit: Cash sales
- Amount: R3,000

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Description

Test your knowledge on profit, loss, and key accounting terms. Explore the concepts of assets, liabilities, and different types of businesses. This quiz covers essential accounting equations and concepts that are fundamental for any business operation.