Grade 7 Business Studies – Business Transactions Quiz
1. Which of the following are types of business Transactions?
2. Which one of the following is not a document used in business transactions?
3. Define business transaction.
4. Which one is a type of business transaction?
5. Mrs Mutua boarded a matatu.Her friend paid busfare for her.Which type of business transaction was this ?
6. The following are documents used in business transactions.Which one is not?
7. Below are methods used in making payments.Which category does not include these methods?
8. Which one is not an advantage of mobile money transfer services?
9. Which one is not a party involved in a cheque?
10. ....... is a written order by a bank account holder to his or her bank to pay a specified amount of money to the person named on it.
11. ......... enables an account holder to use his or her money that is deposited in the bank account without having to withdraw cash.
12. A ........ is an instruction by an account holder to a bank to pay a certain sum of money on a regular date to a certain person.
13. ............. is issued by a bank allowing the holder to purchase goods or services on credit.
14. Notes and coins are available in the following denominations.Which one is not?
15. .......... is a supporting document for entries passed in accounting books.
16. ........Is a document that informs the buyer that the amount payable has been increased.
17. ..........is a document that informs the buyer that the amount payable has been reduced.
18. .....is a document sent by the seller to the buyer demanding payment for goods or services delivered.
19. ..........is issued to the buyer by the seller asking payment for goods or services purchased.
20. Which one is not a content of a receipt?
21. A walk in customer shows up at your store and claim that they bought a clock for cash that is not working. What business document would you mostly ask for?
22. All of the following are examples of business documents EXCEPT?
23. Which of the following refers to an airway bill?
24. Which of the following is an example of a business transaction?
Selling clothes involves exchanging goods for money, which is a business transaction.
25. What is the purpose of keeping financial records in business?
Financial records help businesses keep track of their transactions, income, and expenses.
26. Which document is used to record a sale in a business?
A sales invoice is a document used to record a sale in a business, detailing the products sold and the amount owed.
27. What does the term 'revenue' refer to in business?
Revenue in business refers to the income earned from sales of goods or services.
28. Which of the following is an example of an expense for a business?
Paying employee salaries is an example of a business expense as it is a cost incurred in running the business.
29. What type of account would you debit to record a purchase of inventory?
To record the purchase of inventory, you would debit the inventory account to show an increase in inventory on hand.
30. What does the term 'balance sheet' show for a business?
A balance sheet shows a business's financial position at a specific point in time, including assets, liabilities, and equity.
31. Which financial statement would you use to review a company's revenues and expenses over a period of time?
An income statement is used to review a company's revenues and expenses over a period of time to determine its profitability.
32. What does the term 'cash flow' refer to in business?
Cash flow refers to the money coming in and going out of a business, which is crucial for its operations and financial health.
33. Which of the following is an example of an asset for a business?
Office furniture is an example of an asset for a business as it is a tangible resource used to generate revenue.
34. Who is responsible for recording business transactions and maintaining financial records?
Accountants are responsible for recording business transactions and maintaining accurate financial records for a business.
35. What does the term 'net profit' indicate for a business?
Net profit indicates the profit a business makes after deducting all expenses from its total revenue.
36. Which financial statement would show the amount of cash a business has on hand at a specific date?
A cash flow statement shows the amount of cash a business has on hand at a specific date, detailing inflows and outflows of cash.
37. If a business pays off a loan, which accounts would be affected?
Paying off a loan would decrease the liability account (loan) and decrease the cash account (payment made).
38. What is the purpose of a trial balance in accounting?
A trial balance is used to summarize and verify that the total debits equal total credits for all accounts in the ledger.
39. Which financial statement would show the overall financial performance of a business?
An income statement shows the overall financial performance of a business by summarizing revenues, expenses, and profit over a period of time.
40. What does the term 'accounts receivable' refer to in business?
Accounts receivable refers to money owed to a business by its customers for goods or services provided on credit.
41. Which financial statement would show the assets, liabilities, and equity of a business at a specific point in time?
A balance sheet shows the assets, liabilities, and equity of a business at a specific point in time, providing a snapshot of its financial position.
42. If a business purchases new equipment, which accounts would be affected?
Purchasing new equipment would increase the asset account (equipment) and may affect the equity account if cash or loans are used for the purchase.
43. What does the term 'depreciation' refer to in accounting?
Depreciation is the gradual decrease in the value of an asset over time due to wear and tear, usage, or obsolescence.
44. Which financial statement would show the incoming and outgoing cash of a business over a period of time?
A cash flow statement shows the incoming and outgoing cash of a business over a period of time, indicating its ability to generate cash and meet obligations.
45. What does the term 'gross profit' indicate for a business?
Gross profit indicates the profit a business makes after subtracting the cost of goods sold from its total revenue.
46. Which financial statement shows a business's net worth?
A balance sheet shows a business's net worth by detailing its assets, liabilities, and equity, providing a snapshot of its financial position.
47. If a business receives a loan from a bank, which accounts would be affected?
Receiving a loan would increase the liability account (loan) and increase the cash account (funds received).
48. What does the term 'equity' represent in a business?
Equity represents the owner's claim on the assets of a business after all liabilities have been deducted.
49. Which financial statement would show the revenue and expenses of a business for a specific period?
An income statement shows the revenue and expenses of a business for a specific period, helping to assess its profitability.
50. What does the term 'liabilities' refer to in business?
Liabilities in a business refer to the money owed by the business to external parties, such as suppliers, lenders, or vendors.
51. Why is it important for a business to reconcile its bank statement with its cash account?
Reconciling the bank statement with the cash account helps a business identify errors or discrepancies and ensure the accuracy of its financial records.
52. Which financial statement would show the change in a business's cash position over a period?
A cash flow statement shows the change in a business's cash position over a period, detailing cash inflows and outflows.
53. What does the term 'cost of goods sold' represent in a business?
Cost of goods sold represents the direct expenses incurred by a business in producing or purchasing the goods sold during a specific period.
54. Which financial statement would show the amount of money a business has made or lost over a period?
An income statement shows the amount of money a business has made or lost over a specific period by comparing revenues and expenses.
55. If a business returns a defective product to a supplier, which accounts would be affected?
Returning a defective product to a supplier would decrease the expense account (product cost) and decrease the liability account (amount owed to the supplier).
56. What does the term 'inventory' refer to in business?
Inventory in business refers to the goods or products available for sale to customers or used in production.
57. Why is it crucial for a business to keep accurate financial records?
Keeping accurate financial records helps a business track its income and expenses, make informed decisions, and comply with legal requirements.
58. Which financial statement would show the total sales and cost of goods sold for a business?
An income statement shows the total sales and cost of goods sold for a business, helping to calculate gross profit and net profit.
59. What does the term 'cash basis accounting' mean for a business?
Cash basis accounting means recording transactions only when cash is received or paid out, without regards to accounts receivable or accounts payable.
60. If a business sells a product on credit, which accounts would be affected?
Selling a product on credit would increase the asset account (accounts receivable) and potentially increase the equity account if the sale is recorded as revenue.
61. What does the term 'audit' mean in the context of financial records?
An audit involves checking a business's financial records, practices, and procedures to ensure accuracy, compliance, and detect errors or fraud.
62. Which financial statement would show a business's ability to generate cash and meet short-term obligations?
A cash flow statement shows a business's ability to generate cash and meet short-term obligations by detailing cash inflows and outflows.
63. Why would a business create a budget based on its financial records?
Creating a budget based on financial records helps a business predict and plan for future expenses, income, and overall financial health.
64. What does the term 'general ledger' refer to in accounting?
A general ledger is a record that contains all financial transactions of a business, categorized by accounts such as assets, liabilities, revenue, and expenses.
65. Which financial statement would show a business's total assets equal to its total liabilities and equity?
A balance sheet shows a business's total assets equal to its total liabilities and equity, providing a snapshot of its financial position.
66. In double-entry accounting, what does debiting an account signify?
Debiting an account signifies an increase in account balance for assets, expenses, and dividends, and a decrease for liabilities, equity, and revenue.
67. What does the term 'aging of accounts receivable' mean in business?
Aging of accounts receivable involves tracking and categorizing overdue customer payments by the length of time they have been outstanding.