ACCA Foundations in Accountancy qualification (ACCA FA1) Questions With Complete Solutions

What are the two main type of business transactions correct answer: Cash or Credit. Debit correct answer: Is always on the left-side of the column Credit correct answer: Is always on the right-side of the column Debit To own/have AN ASSET INCREASES eg: new office furniture CAPITAL/A LIABILITY DECREASES eg: pay an account payable INCOME DECREASES eg: cancel a sale AN EXPENCE INCREASES eg: incur advertising cost Left hand side correct answer: CERDIT To owe AN ASSET DECREASES eg: pay out cash CAPITAL/A LIABILITY DECREASES eg: buy good on credit INCOME INCREASES eg: make a sale AN EXPENCE DECREASES eg: cancel a purchase Right hand side Accounting Equation correct answer: Assets = Liabilities + Capital + Revenue - Expenses - Drawings Cash correct answer: Coins, currency (paper money) checks, credit card receipts, and money orders received from others, as well as money deposited in the bank. Cash transactions correct answer: Buyer pays cash to the seller at the time the goods or services are transferred.( simplest form of business) Credit transactions correct answer: Sale or a purchase which occurs some time earlier than cash is received or paid. What is a Business correct answer: An organization or economic system where goods and services are exchanged for one another or for money.