FAC1502 SEMESTER 2 ASSIGNMENT 1

DUE DATE: 19 August 2020 UNIQUE NUMBER: (MULTIPLE-CHOICE QUESTIONS) 1. When a service is rendered on credit, the effect will be the following: (1) Income from services rendered account will decrease and the debtors account will increase. (2) Income from services rendered account will increase and the debtors account will increase. (3) Income from services rendered account will increase and the creditors account will increase. (4) Income from services rendered account will increase and the creditors account will decrease. (5) Income from services rendered account will decrease and the debtors account will decrease. Explanation Service rendered on credit increase income and will also increase debtors. Refer to study guide page 29 2. The following statements relate to general accounting concepts and principles: (a) If a business entity settles its outstanding account with a creditor, a receipt will be issued by the business receiving the money. (b) The effect of a cash purchase of equipment on equity is positive. (c) The general ledger is a book of prime entry. (d) The general ledger of a business entity is started off from scratch (all accounts with zero balances) at the beginning of each financial year. (e) Duplicate receipts are used as the source document to record payments received from debtors. Which one of the following groups correctly reflects all the statements that are true? (1) (a), (c), (d) (2) (b), (d) (3) (a), (d), (e) (4) (a), (e) (5) (b), (c), (d) Explanation A receipt is issued by an entity which is receiving cash to acknowledge receipt of the cash. The key source documents used in the cash receipts journal are cash register roll, duplicate receipts, duplicate cash invoices and duplicate deposit slips. 3. Which one of the following transactions will result in a change in the equity of an entity operating on a bank overdraft? (1) A direct deposit in the bank account of an entity by a creditor in payment of his/her account. (2) A direct deposit of the salary of an employee into his/her bank account.