These questions cover the whole of accounting model and transactions. All businesses and figures are fictional, and all amounts are in RM.
Work in order, since the questions get harder. Write your own answer first, then open the working. Each question has a lesson reference in the final section, so a wrong answer tells you where to go next.
Questions and worked answers
Question 1 (easy). Mira’s Florist has these items. Classify each as an asset, a liability or capital: (a) a flower refrigerator; (b) RM2,400 owed to a flower supplier; (c) RM15,000 the owner paid into the business; (d) a customer owes RM800 for wedding bouquets; (e) a bank overdraft of RM1,000.
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(a) Asset, because the business owns it. (b) Liability, a payable. (c) Capital, the owner’s own investment. (d) Asset, a receivable. (e) Liability, because the business owes the bank.
Question 2 (easy). A business has assets of RM48,000 and liabilities of RM13,500. Find the capital.
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Capital = assets − liabilities = 48,000 − 13,500 = RM34,500. Check: 34,500 + 13,500 = 48,000.
Question 3 (easy). A business has capital of RM30,000 and assets of RM41,200. Find the liabilities.
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Liabilities = 41,200 − 30,000 = RM11,200. Check: 30,000 + 11,200 = 41,200.
Question 4 (easy). The owner pays RM15,000 into the business bank account to start the business. State the effect on the equation.
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Bank (asset) up 15,000 and capital up 15,000. The equation is 15,000 = 15,000 + 0.
Question 5 (easy-medium). A business buys goods for RM3,000 on credit, then later pays RM1,000 to the supplier from the bank. State the net effect on assets and liabilities after both transactions.
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Purchase: inventory up 3,000 and payables up 3,000. Payment: bank down 1,000 and payables down 1,000.
Net: assets up 3,000 − 1,000 = 2,000. Liabilities up 3,000 − 1,000 = 2,000. Capital is unchanged.
Question 6 (medium). The owner pays his personal phone bill of RM180 from the business bank account. Explain the effect and why it is not an expense.
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It is drawings. Bank falls by 180 and capital falls by 180. The phone bill is a personal cost of the owner, not a cost of running the business, so it is kept out of the expenses that measure profit.
Question 7 (medium). A business sells goods that cost RM1,200 for RM1,800 on credit. State all effects.
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Receivables up 1,800 (the selling price). Inventory down 1,200 (the cost). Profit is 1,800 − 1,200 = 600, so capital up 600. Check: assets change by 1,800 − 1,200 = +600, matching the capital change.
Question 8 (medium). Tan’s Tutoring Hub starts with bank RM30,000 and capital RM30,000. Complete the table after each step: (a) buys computers for RM9,000 from the bank; (b) buys a printer for RM1,500 on credit; (c) owner takes drawings of RM2,000 from the bank; (d) pays RM500 of the printer debt from the bank.
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| After | Bank | Equipment | Assets total | Payables | Capital | Liabilities + Capital |
|---|---|---|---|---|---|---|
| Start | 30,000 | 0 | 30,000 | 0 | 30,000 | 30,000 |
| (a) | 21,000 | 9,000 | 30,000 | 0 | 30,000 | 30,000 |
| (b) | 21,000 | 10,500 | 31,500 | 1,500 | 30,000 | 31,500 |
| (c) | 19,000 | 10,500 | 29,500 | 1,500 | 28,000 | 29,500 |
| (d) | 18,500 | 10,500 | 29,000 | 1,000 | 28,000 | 29,000 |
Each step balances. Step (a) swaps assets, (b) raises assets and liabilities, (c) lowers assets and capital, and (d) lowers assets and liabilities.
Question 9 (medium-hard). A student records a RM4,000 loan from the owner’s brother, paid into the business bank, as capital. Does the equation still balance? Is the classification right?
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It still balances, because bank rises by 4,000 and the other side rises by 4,000 whichever group is used. But the classification is wrong. The business must repay the brother, so it is a liability. Recording it as capital overstates the owner’s claim by RM4,000.
Question 10 (hard). Opening capital is RM18,000. During the year the owner introduces RM4,000 and takes drawings of RM6,500. At the year end, assets are RM35,000 and liabilities RM9,500. Find closing capital and the profit for the year.
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Closing capital = 35,000 − 9,500 = RM25,500.
Profit = closing capital − opening capital − capital introduced + drawings = 25,500 − 18,000 − 4,000 + 6,500 = RM10,000.
Check: 18,000 + 4,000 + 10,000 − 6,500 = 25,500.
Question 11 (hard). A business has bank RM6,000, inventory RM4,000, equipment RM4,000 and capital RM14,000, with no liabilities. The owner takes inventory that cost RM350 for personal use and pays RM120 of home electricity from the business bank. Find the new assets and capital.
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Total drawings = 350 + 120 = 470. Bank = 6,000 − 120 = 5,880. Inventory = 4,000 − 350 = 3,650. Equipment = 4,000.
Assets = 5,880 + 3,650 + 4,000 = 13,530. Capital = 14,000 − 470 = 13,530.
Question 12 (hard). Opening capital is RM12,000, profit RM7,500, capital introduced RM1,500 and drawings RM6,000. Closing liabilities are RM4,000. Find the closing assets.
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Closing capital = 12,000 + 7,500 + 1,500 − 6,000 = 15,000.
Closing assets = capital + liabilities = 15,000 + 4,000 = RM19,000.
If you got these wrong
Use the question number to find the lesson that fits your error.
- Questions 4, 5 and 8 (equation does not balance, or one effect missed): the accounting equation through a transaction.
- Questions 1, 2, 3 and 9 (item in the wrong group, or capital and loans confused): distinguishing assets, liabilities and capital.
- Questions 6 and 11 (personal spending treated as an expense, or goods taken forgotten): separating business transactions from personal spending.
- Question 7 (credit sale at the wrong amount, or inventory left out): interpreting a dual effect without cash movement.
- Questions 10 and 12 (profit and capital mixed up, or drawings added instead of taken off): reconciling a closing position from opening data.
Write each error in a mistake log and retest queue so you can try a fresh version of the same question a few days later. The double-entry and ledger trainer is useful for checking your own invented transactions.
Some mistakes repeat even after the explanation makes sense. A teacher who can see your working can often name the habit behind it, and that is part of online one-to-one Accounting tuition.