Double-entry review quiz
for Unit 3
Judith Blazejewski
Glen Waverley Secondary College
Accounting Unit 3
VCTA © J Blazejewski
Published February 2013
The Accounting Equation is:
A. A
= L B. A
= L +
C. Oe = A +
D. Oe = A -
VCTA © J Blazejewski
Oe
Oe
L
L
Published in Compak February 2013
Every transaction affects:
A. At least one ledger
B. At least two ledgers
 So the Accounting Equation stays in
balance.
A = L + Oe
VCTA © J Blazejewski
Published in Compak February 2013
When Assets increase, they are recorded on
the _________ side of the ledger account
A. Debit
B. Credit
VCTA © J Blazejewski
Published in Compak February 2013
When Liabilities increase, they are recorded
on the _________ side of the ledger account
A. Debit
B. Credit
VCTA © J Blazejewski
Published in Compak February 2013
When Owner’s Equity increases, it is recorded on
the Debit side of the ledger account
A. True
B. False

A
Debits
VCTA © J Blazejewski
=
L
+
Oe
Credits
Published in Compak February 2013
Purchasing Equipment for Cash would
result in the following ledger entries:
A.
B.
C.
D.
Debit Cash at Bank, Credit Equipment
Debit Equipment, Credit Cash at Bank
Debit Equipment, Credit Capital
Debit Cash at Bank, Credit Capital
Equipment is an Asset, it is increasing, so it is
debited; money is coming from the Bank, so as it
is an Asset and it is decreasing, it is credited.
VCTA © J Blazejewski
Published in Compak February 2013
Purchasing a Vehicle on credit would
have the following ledger entries:
A.
B.
C.
D.
Debit Vehicle; Credit Cash at Bank
Credit Vehicle; Debit Capital
Debit Creditor; Credit Vehicle
Debit Vehicle; Credit Creditor
Assets are increasing, so the Vehicle is
debited; Liabilities are also increasing, so are
credited.
VCTA © J Blazejewski
Published in Compak February 2013
Drawings is classified as:
A. Owner’s Equity
B. Negative Owner’s Equity
C. Expense
D. Asset
Drawings is used to record Assets the owner
withdraws from the business. It decreases
Owner’s Equity, so is recorded as a DEBIT
and is classified as ‘Negative Owner’s
Equity’.
VCTA © J Blazejewski
Published in Compak February 2013
The Cash Sale of stock would
require the following entry:
A. Cash Sales DEBIT; Stock Control CREDIT;
Bank DEBIT; Cost of Sales CREDIT
B. Cash Sales CREDIT; Bank DEBIT; Stock
Control CREDIT; Cost of Sales DEBIT
C. Cash Sales CREDIT; Debtors Control
DEBIT; Stock Control CREDIT; Cost of
Sales DEBIT
D. Cash Sales DEBIT; Bank CREDIT; Stock
Control CREDIT; Cost of Sales DEBIT
VCTA © J Blazejewski
Published in Compak February 2013
Cost of Sales is classified as an
Expense because:
A. The stock has been consumed
B. There has been an outflow of economic benefit
C. The Asset, Stock of the business has been
decreased
D. All of the above
Definition of Expense: Outflow or consumption of
economic benefit (or reduction in inflows) in the
form of a decrease in Assets (or increase in
Liabilities) that reduces Owner’s Equity.
VCTA © J Blazejewski
Published in Compak February 2013
The owner withdrawing Stock for
his/her own use would be recorded as:
A. DEBIT Capital; CREDIT Stock Control
B. CREDIT Capital; DEBIT Stock Control
C. DEBIT Drawings; CREDIT Stock Control
D. CREDIT Drawings; DEBIT Stock Control
Drawings are increasing and because it is a
–Oe, it is a DEBIT.
Stock Control is CREDITED, as Stock is
decreasing.
VCTA © J Blazejewski
Published in Compak February 2013
The word ‘Control’ appears with
which set of ledger accounts?
A.
B.
C.
D.
Stock, Debtors, Creditors
Capital, Stock, Bank
Stock, Rent, Creditors
All of the above
Why?The business would have many different types of
Stock and many different Debtors and Creditors
and the detail of these will be recorded elsewhere,
but in the General Ledger, a summary of these
transactions is recorded in the ‘Control’ accounts.
VCTA © J Blazejewski
Published in Compak February 2013
Why are receipts from Debtors not
recorded as revenue?
A. There is no net increase in Assets
B. The Revenue was recorded when the Credit
Sale was made
C. It is just swapping one Asset for another
D. All of the above
Definition of Revenue: An inflow of economic
benefit (or savings in outflow) in the form of
an increase in Assets (or decrease in
Liabilities) that increases Owner’s Equity.
VCTA © J Blazejewski
Published in Compak February 2013
Why are Expense accounts
debited when they increase?
A. They increase Assets
B. They decrease Liabilities
C. They decrease Owner’s Equity
D. They increase Owner’s Equity
Expenses will decrease Profit and therefore will
decrease Owner’s Equity. So the more
Expenses you consume, the more that
Owner’s Equity will decrease, and so they
must be debited in their own Expense
Published in Compak February 2013
VCTA © accounts.
J Blazejewski