UNIT 7 Financial Statements Preparation ALL REVISION QUESTIONS
AND CORRECT ANSWERS (GRADED 100%) (2024 UPDATE)
1. Trial Balance - ANSWER- List of all ledger accounts with their balances to check for errors
2. Golden Rules - ANSWER- Guidelines for closing nominal accounts at the end of the
financial period
3. Capital Account - ANSWER- Account reflecting the owner's equity in the business
4. Settlement Discount - ANSWER- Discount given for early payment of invoices
5. Rental Income - ANSWER- Revenue earned from renting out property or equipment
6. Profit or Loss Account - ANSWER- Account showing the net profit or loss of a business
7. Debit - ANSWER- Entry on the left side of an account
8. Credit - ANSWER- Entry on the right side of an account
9. Cost Price of Goods Sold - ANSWER- Total cost of inventory sold in accounting
10. Closing Inventory - ANSWER- Remaining inventory at the end of an accounting period
11. Customs Duty - ANSWER- Tax on imported goods
12. Dock Dues - ANSWER- Fees for using a dock to unload goods
13. Freight - ANSWER- Cost of transporting goods
14. Settlement Discount Granted - ANSWER- Discount given to customers for early payment
15. Settlement Discount Received - ANSWER- Discount received from suppliers for early
payment
16. Inventory (Opening) - ANSWER- Beginning inventory value
, 17. Inventory (Closing) - ANSWER- Ending inventory value
18. General Journal - ANSWER- Book for recording all financial transactions.
19. Shortages - ANSWER- Revealed in perpetual inventory system count
20. Surpluses - ANSWER- Also revealed in perpetual inventory system count
21. Gross Profit - ANSWER- Difference between sales and cost of sales
22. Markup - ANSWER- Percentage added to cost price to determine selling price
23. Trading Account - ANSWER- Records gross profit or loss
24. Purchases Account - ANSWER- Used in periodic inventory system instead of inventory
account
25. Purchases Returns Account - ANSWER- Separate account for returned inventory, not in
inventory account
26. Cost of Sales Determination - ANSWER- Calculated after physical inventory count at
period end
27. Cost Price Calculation - ANSWER- Beginning inventory + Purchases - Ending inventory
28. Cash Purchase Entry - ANSWER- Debit Purchases, Credit Bank in cash payments journal
29. Credit Purchase Entry - ANSWER- Debit Purchases, Credit Creditor in purchases journal
30. Cash Sale Entry - ANSWER- Debit Bank, Credit Sales in cash receipts journal
31. Credit Sale Entry - ANSWER- Debit Debtor, Credit Sales in sales journal
32. Sales Return Entry - ANSWER- Debit Sales Returns, Credit Debtor in sales returns journal
33. Cash Refund Entry - ANSWER- Debit Sales Returns, Credit Bank in cash payments journal
AND CORRECT ANSWERS (GRADED 100%) (2024 UPDATE)
1. Trial Balance - ANSWER- List of all ledger accounts with their balances to check for errors
2. Golden Rules - ANSWER- Guidelines for closing nominal accounts at the end of the
financial period
3. Capital Account - ANSWER- Account reflecting the owner's equity in the business
4. Settlement Discount - ANSWER- Discount given for early payment of invoices
5. Rental Income - ANSWER- Revenue earned from renting out property or equipment
6. Profit or Loss Account - ANSWER- Account showing the net profit or loss of a business
7. Debit - ANSWER- Entry on the left side of an account
8. Credit - ANSWER- Entry on the right side of an account
9. Cost Price of Goods Sold - ANSWER- Total cost of inventory sold in accounting
10. Closing Inventory - ANSWER- Remaining inventory at the end of an accounting period
11. Customs Duty - ANSWER- Tax on imported goods
12. Dock Dues - ANSWER- Fees for using a dock to unload goods
13. Freight - ANSWER- Cost of transporting goods
14. Settlement Discount Granted - ANSWER- Discount given to customers for early payment
15. Settlement Discount Received - ANSWER- Discount received from suppliers for early
payment
16. Inventory (Opening) - ANSWER- Beginning inventory value
, 17. Inventory (Closing) - ANSWER- Ending inventory value
18. General Journal - ANSWER- Book for recording all financial transactions.
19. Shortages - ANSWER- Revealed in perpetual inventory system count
20. Surpluses - ANSWER- Also revealed in perpetual inventory system count
21. Gross Profit - ANSWER- Difference between sales and cost of sales
22. Markup - ANSWER- Percentage added to cost price to determine selling price
23. Trading Account - ANSWER- Records gross profit or loss
24. Purchases Account - ANSWER- Used in periodic inventory system instead of inventory
account
25. Purchases Returns Account - ANSWER- Separate account for returned inventory, not in
inventory account
26. Cost of Sales Determination - ANSWER- Calculated after physical inventory count at
period end
27. Cost Price Calculation - ANSWER- Beginning inventory + Purchases - Ending inventory
28. Cash Purchase Entry - ANSWER- Debit Purchases, Credit Bank in cash payments journal
29. Credit Purchase Entry - ANSWER- Debit Purchases, Credit Creditor in purchases journal
30. Cash Sale Entry - ANSWER- Debit Bank, Credit Sales in cash receipts journal
31. Credit Sale Entry - ANSWER- Debit Debtor, Credit Sales in sales journal
32. Sales Return Entry - ANSWER- Debit Sales Returns, Credit Debtor in sales returns journal
33. Cash Refund Entry - ANSWER- Debit Sales Returns, Credit Bank in cash payments journal
