RISE Premier School Of Accountancy
Subject: Introduction To Accounting
Topic: Accounting Equation
Date: 29-08-2025
Name: _______________________________
Total Marks: 30
________________________________________________________________________________
Question 1.
1. Which account will have a debit balance in case of an increase?
A. Drawings account
B. Revenue account
C. Discount received account
D. Capital account
2. Following information is extracted from the books of Naqeeb Enterprises:
R
Current Assets
66,000
Current Liabilities
16,000
Non-current Assets
45,000
Non-current Liabilities
32,000
Capital
63,000
What is the total of Assets?
A. Rs. 127,000
B. Rs. 111,000
C. Rs. 79,000
D. Rs. 63,000
3. Fast Software (FS) is a software house. FS imported 10 Laptops from Japan for their office @ Rs. 50,000
per
Laptop. Payment was made through cheque. How this will be recorded in the books of FS?
Account to be debited
Account to be credited
A. Purchases Account
Bank Account
B. Laptop Account
Bank Account
C. Purchases Account
Accounts Payable
D. Laptop Account
Accounts Payable
4. Which of the following combination includes only liabilities?
A. Machines, Debtors, Cash
B. Creditors, Bank Overdraft, Bills Payable
C. Bank, Payables, Sales
D. Loan Obtained, Loan Issued, Creditors
5. Which of the following combination represents assets only?
A. Debtors, Purchases, Cash in Hand
B. Building, Cash at Bank, Investments
C. Creditors, Insurance, Tax
D. Bank Overdraft, Equipment, Cash in Hand
6. Which of the following is correct representation of accounting equation?
A. Assets – Liabilities = Capital
B. Liabilities – Assets = Capital
C. Capital – Liabilities = Assets
D. Capital – Assets = Liabilities
7. Which of the following are non-current assets?
• Inventory
• Land and building
• Motor vehicles
• Equipment
• Furniture
8. Sultan traders deals in electric fans. The owner of Sultan traders took one electric fan for his home,
which of the following account will be debited?
A. Fans account
B. Purchases account
C. Sales account
D. Drawings account
9. Debit represents all of the following, except:
A. Increase in asset
B. Decrease in liability
C. Decrease in equity
D. Increase in equity
10. Which of the following are current assets?
• Cash at bank
• Bank overdraft
• Accounts receivables
• Equipment
• Inventory
11. Owner’s annual life insurance premium paid from business bank account will be:
A. Debited to insurance account and Credited to bank account
B. Debited to bank account and Credited to drawings account
C. Debited to bank account and Credited to insurance account
D. Debited to drawings account and Credited to bank account
12. Nasir obtained loan from his friend Yasir for his business, by cheque. What journal entry will be
recorded in the books of Nasir?
A. Cash account Debit, Loan from Yasir account Credit
B. Bank account Debit, Loan from Yasir account Credit
C. Loan from Yasir account Debit, Bank account Credit
D. Loan from Yasir account Debit, Yasir account credit
13. A debit entry usually represents decrease in:
A. Assets and expenses
B. Liabilities and income
C. Liabilities and expenses
. Income and assets
14. The goods are given as charity, which of the following is correct effect?
A. Increase in liability, increase in asset
B. Increase in asset, decrease in asset
C. Increase in income, decrease in asset
D. Decrease in asset, increase in expense
15. Capital of Bhai Bhai Associates (BBA) was Rs. 250,000. Which of the following is correct representation
in statement of financial position?
Assets
Liabilities
A. Rs. 240,000
Rs. 10,000
B. Rs. 50,000
Rs. 300,000
C. Rs. 275,000
Rs. 25,000
D. Rs. 30,000
Rs. 280,000
16. The current and non-current assets of Rana Enterprises as at 31 January 2022 were Rs. 400,000 and Rs.
200,000 where as liabilities were Rs. 250,000. The equity of Rana Enterprises as at 31 January 2022 will be?
A. Rs. 600,000
B. Rs. 350,000
C. Rs. 150,000
D. Rs. 50,000
17. Which of the following is NOT an example of non-current asset?
A. Furniture
B. Office building
C. Computer for resale purposes
D. Patents
18. Which of the following is not included in definition of Liability in accordance with conceptual
framework?
A. Present obligation of the entity
B. Future obligation of the entity
C. As a result of past event
D. The settlement of which is expected to result in an outflow of resources
19. Which of the following accounts must be presented on the debit column of a trial balance?
• Sales
• Sales Return
• Purchases
• Purchases Return
• Discount Allowed
• Discount Received
20. which of the following equation is correct?
A. Assets + Liabilities = Equity
B. Assets + Equity = Liabilites
C. Non current assets + current assets = Equity + non current liabilities + current liabilities
D. Assets = Equity – Liabilities
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