These eight questions use new items and ramp from classification to a full equation table. Write your answer first, then open the explanation.
They follow the lessons in SPM Accounting foundations.
Questions
Question 1: Classify each: (a) a delivery motorbike owned by the shop; (b) money owed to a flour supplier; (c) the owner’s capital; (d) commission earned.
Answer
(a) Asset. (b) Liability, a payable. (c) Equity. (d) Income.
Question 2: The owner pays RM350 from the business cash for a family holiday. Is this an expense? Explain.
Answer
No. It is drawings, because the money was spent for the owner’s personal benefit. Drawings reduce equity and do not appear as an expense in the income statement.
Question 3: Complete the equation after each step, starting from zero. (a) The owner invests RM12 000 cash. (b) Buys goods on credit, RM3 000.
Answer
(a) Assets 12 000 = liabilities 0 + equity 12 000.
(b) Assets 15 000 = liabilities 3 000 + equity 12 000.
Question 4: From question 3, the business pays wages of RM800 in cash. Find the new equation.
Answer
Cash falls by 800 and equity falls by 800, because wages are an expense. Assets 14 200 = liabilities 3 000 + equity 11 200.
Check: 3 000 + 11 200 = 14 200.
Question 5: The business in question 4 pays RM1 000 to the supplier. Find the new equation.
Answer
Cash falls by 1 000 and the payable falls by 1 000. Assets 13 200 = liabilities 2 000 + equity 11 200.
Question 6: A student records the purchase of a RM6 000 machine, paid in cash, as a fall in assets of RM6 000 only. By how much will the equation be out, and which side is larger?
Answer
The equation will be out by RM6 000. Assets will be too low by RM6 000, so the right side is larger. The purchase should raise equipment by RM6 000 while cash falls by RM6 000, so total assets stay the same.
Question 7: Name two users of accounting information and one piece of information each would use.
Answer
A bank uses profit and liabilities to decide whether to lend. A supplier uses cash and payables to decide whether the business can pay its invoices on time.
Question 8: An owner puts RM4 000 of personal savings into the business. What is the effect on the equation? Is it income?
Answer
Assets rise by RM4 000 as cash increases, and equity rises by RM4 000 as capital. It is not income, because the business did not earn it.
If you got these wrong
Questions 1 and 2 test classifying the five elements. Questions 3 to 6 test the accounting equation. Question 7 tests users of information, and questions 2 and 8 also test separating personal and business transactions.
Keep a record of slips in the mistake log and paper-error review, or build a timed set with the timed original practice session builder. To go through your errors with a teacher, see online one-to-one Accounting tuition.