The purpose of accounting: Practice Questions

• a.

  to ensure that the bank statement and cash book balances always match

• b.

  to record every transaction in the books of prime entry as they occur

• c.

  to provide financial information for monitoring progress and decision-making

• d.

  to prepare an invoice to send to a customer for goods sold on credit

• a.To check that the petty cash voucher system is operating correctly
• b.To assist the bookkeeper in balancing the sales ledger control account
• c.To ensure that all physical inventory is counted at the end of every month
• d.To evaluate the long-term profitability and growth potential of the business

• a.By providing a chronological list of every business document received
• b.By comparing current profitability ratios with those of previous years to identify trends
• c.By ensuring that the total of the debit balances in the ledger equals the total of the credit balances
• d.By requiring that every transaction is recorded at its original historical cost

• a.

  To record the total weight of inventory held in the warehouse.

• b.

  To assess whether the business has earned a surplus or incurred a deficit over a period of time.

• c.

  To provide a list of all customers who have ever visited the business.

• d.

  To determine the market value of the owner's private residence.

• a.

  By replacing the need for a manager to understand the daily operations of the business.

• b.

  By providing interpreted financial data that helps evaluate the feasibility of future business projects.

• c.

  By guaranteeing that every decision made will result in a profit for the business.

• d.

  By strictly recording transactions without ever analyzing the resulting data.

Write your answer out first, then check it against the worked solution.

Write your answer out first, then check it against the worked solution.