The accounting equation — Paper 1 · IGCSE Accounting (9-1) 0985

2 The balances remaining on the books of a business after the preparation of the income statement included the following. $ loan from XY Finance 10 000 wages due 620 rent prepaid 240 trade receivables 3 300 trade payables 4 650 motor vehicles 8 000 provision for depreciation of motor vehicles 2 000 What was the total of the liabilities? A $13 920 B $14 890 C $15 270 D $17 270

1 marks

Answer: C

This question in 0985/11 May/June 2020

20 On 31 December 2019 John had net assets of $2000 and capital of $2000. On 1 January 2020, goods costing $140 were sold on credit for $220. What was the effect of this transaction on the statement of financial position? net assets capital $ $ A 80 decrease 80 decrease B 80 increase 80 increase C 220 decrease 220 decrease D 220 increase 220 increase

1 marks

Answer: B

This question in 0985/11 May/June 2020

26 Hassan’s capital decreased by $200 over the year, even though he made a profit of $7000. Which transactions caused this? capital introduced drawings $ $ A 1000 8200 B 1200 6000 C 2000 8800 D 2200 4600

1 marks

Answer: A

This question in 0985/11 May/June 2020

3 A trader bought new fixtures. He paid half of the purchase price in cash and agreed to pay the balance in two months’ time. How does this purchase affect the accounting equation? owner’s assets liabilities equity A decrease decrease no effect B decrease no effect increase C increase decrease increase D increase no effect increase

1 marks

Answer: D

This question in 0985/12 May/June 2020

3 The following balances appeared in Hussein's books. $ fixtures 6000 inventory 3300 trade receivables 3000 trade payables 4500 other receivables 500 other payables 300 loan to Imran 1000 bank overdraft 1400 What was the total of the liabilities? A $4800 B $6200 C $6400 D $7200

1 marks

Answer: B

This question in 0985/12 Oct/Nov 2020

4 What does the owner’s equity consist of? A the amount of money in the business bank account B the amount owed by the business to the owner C the total of the assets owned by the business D the total of the current assets less the current liabilities

1 marks

Answer: B

This question in 0985/12 Oct/Nov 2020

2 What increases owner’s capital? A bank loan extended from five to ten years B purchase of inventory on credit C purchase of machinery by cheque D transfer of vehicle to business from private use

1 marks

Answer: D

This question in 0985/11 May/June 2021

19 A business provided the following information. $ long-term loan 20 000 trade receivables 12 000 trade payables 9 700 bank overdraft 2 000 prepaid insurance 400 accrued wages 1 000 rent receivable prepaid 500 What was the total of the current liabilities? A $13 200 B $15 400 C $31 200 D $32 700

1 marks

Answer: A

This question in 0985/11 May/June 2021

2 What increases owner’s capital? A bank loan extended from five to ten years B purchase of inventory on credit C purchase of machinery by cheque D transfer of vehicle to business from private use

1 marks

Answer: D

This question in 0985/12 May/June 2021

29 Nula provided the following information for the year ended 31 March 2021. $ drawings for the year 3 900 net assets at 1 April 2020 60 500 net assets at 31 March 2021 72 275 What was the profit or loss for the year ended 31 March 2021? A $7875 loss B $7875 profit C $15 675 loss D $15 675 profit

1 marks

Answer: D

This question in 0985/12 May/June 2021

2 Which formulas may be used for the accounting equation? 1 assets = owner’s equity minus liabilities 2 liabilities = assets minus owner’s equity 3 owner’s equity = assets plus liabilities 4 owner’s equity plus liabilities = assets A 1 and 2 B 1 and 3 C 2 and 4 D 3 and 4

1 marks

Answer: C

This question in 0985/12 Oct/Nov 2021

18 What is shown in the capital and liabilities section of a statement of financial position of a business? A how the resources are being used by the business B the working capital of the business C total amounts owed by and to the business D where the resources of the business have come from

1 marks

Answer: D

This question in 0985/12 Oct/Nov 2021

20 A sole trader paid off the business’s overdraft using his own personal funds. How did this affect the statement of financial position? liabilities capital assets A no effect increase increase B decrease increase increase C decrease increase no effect D decrease no effect increase

1 marks

Answer: C

This question in 0985/12 Oct/Nov 2021

2 What is the accounting equation? A assets = capital – liabilities B assets = liabilities – capital C assets – liabilities = capital D assets + capital = liabilities

1 marks

Answer: C

This question in 0985/11 May/June 2022

1 Which transaction will increase both assets and capital by the same amount? A A credit customer settled his account after deducting a cash discount. B Goods were sold for cash at a price higher than their cost price. C Rent received included an amount prepaid for the next accounting period. D The owner repaid a business loan from his personal bank account.

1 marks

Answer: B

This question in 0985/12 Oct/Nov 2022

2 Padma started a business on 1 April 2022 with $30 000 of her own money. On 31 March 2023, her assets and liabilities were as shown. $ machinery at net book value 38 000 other assets 15 000 long-term loan from bank 16 500 What was Padma’s capital on 31 March 2023? A $30 000 B $36 500 C $46 500 D $53 000

1 marks

Answer: B

This question in 0985/11 May/June 2023

21 Which group consists of only intangible assets? A bank balance, brand names, goodwill B bank balance, trademarks, trade receivables C brand names, goodwill, trademarks D goodwill, trademarks, trade receivables

1 marks

Answer: C

This question in 0985/11 May/June 2023

30 Hassan’s capital decreased by $200 over the year, even though he made a profit of $7000. Which transactions caused this? capital introduced drawings $ $ A 1000 8200 B 1200 6000 C 2000 8800 D 2200 4600

1 marks

Answer: A

This question in 0985/11 May/June 2023

34 Manvinder started a business and paid a cheque for $1000 into a business bank account. He recorded this in the books of the business by debiting the bank account and crediting the capital account. Which accounting principles did he apply? A business entity and duality B business entity and going concern C going concern and matching D matching and duality

1 marks

Answer: A

This question in 0985/11 May/June 2023

2 Which components of a statement of financial position do descriptions 1, 2 and 3 relate to? 1 finance and other resources that have been provided by the owner 2 money owed for goods supplied, unpaid expenses and loans made to the business 3 property owned by the business, amounts owed by customers, unsold goods and money in the bank 1 2 3 A assets capital liabilities B assets liabilities capital C capital assets liabilities D capital liabilities assets

1 marks

Answer: D

This question in 0985/12 May/June 2023

2 A trader supplied the following information at her year end. $ non-current assets 4000 inventory 350 trade receivables 180 cash at bank 650 debit trade payables 280 What was the trader’s capital? A $4900 B $5100 C $5180 D $5460

1 marks

Answer: A

This question in 0985/12 Oct/Nov 2023

20 A trader has capital of $24 400. His non-current assets are $16 100 and his current liabilities are $4500. There are no non-current liabilities. What is the amount of his current assets? A $8300 B $11 600 C $12 800 D $28 900

1 marks

Answer: C

This question in 0985/12 Oct/Nov 2023

2 The balances remaining on the books of a business after the preparation of the income statement included the following: $ loan from XYY Finance 10 000 wages due 620 rent prepaid 240 trade receivables 3 300 trade payables 4 650 motor vehicles 8 000 provision for depreciation of motor vehicles 2 000 What was the total of the liabilities? A $13 920 B $14 890 C $15 270 D $17 270

1 marks

Answer: C

This question in 0985/12 May/June 2024

2 A trader bought new fixtures. He paid half the purchase price in cash and agreed to pay the balance at a later date. How does this purchase affect the accounting equation? assets owner’s equity liabilities A decrease decrease no effect B decrease no effect increase C increase decrease increase D increase no effect increase

1 marks

Answer: D

This question in 0985/12 Oct/Nov 2024

30 Anya did not keep a full set of double entry records but provided the following information. $ At 1 February 2022 capital 10000 At 31 January 2023 bank overdraft 1500 equipment 20000 inventory 2000 trade receivables 15000 trade payables 10500 Anya’s drawings during the year ended 31 January 2023 were $8500. What was her profit for the year ended 31 January 2023? A $23500 B $25000 C $26500 D $29500

1 marks

Answer: A

This question in 0985/12 Oct/Nov 2024

34 Which accounting principle is the accounting equation based on? A duality B going concern C materiality D realisation

1 marks

Answer: A

This question in 0985/12 Oct/Nov 2024

2 What are assets? amounts owed amounts owed items owned to a business by a business by a business A no no yes B no yes yes C yes no yes D yes yes no

1 marks

Answer: C

This question in 0985/11 May/June 2025

19 Which items are shown in a statement of financial position? current non-current revenue capital assets liabilities A ✓ ✓ ✓ ✗ B ✗ ✗ ✓ ✓ C ✗ ✓ ✗ ✓ D ✓ ✗ ✓ ✓

1 marks

Answer: D

This question in 0985/11 May/June 2025

21 Which item is a current liability? A bank overdraft B commission receivable C mortgage loan on a property D provision for doubtful debts

1 marks

Answer: A

This question in 0985/11 May/June 2025

27 A trader’s assets increased by $25 000 and liabilities decreased by $5000 during the year. He took no drawings during the year. What was the profit or loss for the year? A $20000 loss B $20000 profit C $30000 loss D $30000 profit

1 marks

Answer: D

This question in 0985/11 May/June 2025

2 How is owner’s equity calculated? A total assets −total liabilities B total assets + total liabilities C current assets −current liabilities D non-current assets −non-current liabilities

1 marks

Answer: A

This question in 0985/12 May/June 2025