Grade 10 Business Studies – Business Transactions (9 Lessons) Quiz
1. Which of the following is a source document for a cash sale made through M-Pesa in Kenya?
A source document records the original evidence of a transaction; an M-Pesa transaction receipt shows proof of a cash sale made via M-Pesa.
2. What is a credit transaction?
A credit transaction means goods or services are exchanged now but payment is deferred to a later date.
3. Which account is increased when a business receives money from a customer for a sale?
Receiving money increases the business's cash or bank balances, so the Cash or Bank account is increased.
4. In double-entry bookkeeping, every transaction must be recorded as:
Double-entry requires each transaction to have equal debits and credits so the accounting equation stays balanced.
5. Which document would a supplier send to a buyer to request payment after goods have been delivered?
An invoice is a bill from a supplier to a buyer requesting payment for goods or services supplied.
6. What is the purpose of a petty cash book?
A petty cash book records small, routine cash expenses such as postage or stationery.
7. Which of the following is an example of a capital expenditure?
Capital expenditure is spending on long-term assets (like a van) that will benefit the business over several years.
8. A sales return (goods returned by a customer) will cause which of the following?
Goods returned by a customer reduce the total sales, so the Sales account is decreased or a Sales Returns account is used.
9. Which sentence correctly describes a contra entry in a cash book?
A contra entry records a transfer between the cash and bank columns and is entered on both sides of the cash book.
10. What is the main purpose of preparing a trial balance?
A trial balance lists all ledger balances to ensure debits and credits are equal, helping detect arithmetical errors.
11. Which of these is a liability on the business balance sheet?
Accounts payable are amounts the business owes to suppliers and are recorded as liabilities.
12. What is meant by 'drawings' in a sole proprietorship?
Drawings are withdrawals of cash or goods by the owner for personal use and reduce owner’s equity.
13. Which record shows the details of each customer’s transactions and balance?
The sales ledger keeps individual customer accounts showing their purchases, receipts and outstanding balances.
14. A credit note is issued by a seller when:
A credit note reduces the amount the buyer owes when goods are returned or an allowance is given.
15. Which entry records the initial investment by the owner into the business?
When the owner invests money, the business receives cash (debit Bank) and the owner's equity increases (credit Capital).
16. What happens to the accounting equation when the business takes a loan from the bank?
Taking a bank loan increases the business's bank balance (asset) and creates a loan payable (liability), keeping the equation balanced.
17. Which document is used to prove that payment has been received by a business?
A receipt is issued to show that payment has been received for goods or services.
18. What is an example of a source document for a credit purchase from a supplier?
A purchase invoice from the supplier is the source document that records details of the credit purchase.
19. Which error will not be detected by preparing a trial balance?
If a transaction is omitted entirely from both debit and credit, the trial balance totals still match and the error won't be detected.
20. Which of the following best describes 'accrued expenses'?
Accrued expenses are obligations for services or goods received but not yet paid for by the reporting date.
21. When a business gives a discount to a customer for early payment, it records this as:
Discounts given to customers reduce sales revenue and are recorded as discount allowed (a reduction of income).
22. Which account is debited when goods are returned to a supplier?
When goods are returned to a supplier, Purchases Returns is debited (or Purchases is reduced) to show the reduction in purchases.
23. What is the effect on profit when business expenses increase while revenue stays the same?
Higher expenses reduce net profit if revenue does not change, since profit = revenue − expenses.
24. Which book is used to record both cash receipts and cash payments for a business?
The cash book records all cash and bank receipts and payments and acts as both journal and ledger for cash transactions.
25. Why is it important for businesses in Kenya to keep accurate source documents and records of transactions?
Accurate records support correct financial statements, compliance with Kenya Revenue Authority requirements, auditing and informed decision-making.