In recording transactions for a business, the accountant will follow the Accounting Entity principle. This means that the accountant will:a.record cash transactions separately from credit transactionsb.separate spending on purchases from spending on non-current assetsc.separate the financial activities of the business from those of the ownerd.record revenues and expenses separately to calculate profits and losses

The special feature of accrual basis of accounting is *a. recording expenses only when cash is paidb. recording revenues only when cash is receivedc. recording adjustments only if it has a favorable effect on the company’s incomed. recording revenues and expenses when they are earned and incurred regardless of when cash is received or paid.

The following statements relate to the business transactions topic. Choose all of the statements that are false:Question 3AnswerAll accrual accounting systems, no matter how simple or complex, follow the same basic recording rules.A numerical error in recording an item in the accounting system will become evident when the balance sheet does not balance.Generally speaking, business events are important and relevant for the entity but often lack the criteria to enable recording.Under ‘double entry’ accounting, all transactions will only affect a maximum of two elements in a business.An owner-related transaction that involves withdrawing inventory for personal use would affect the statement of cash flows.

Identify if the following statement is true or false -  The separate entity accounting principle recognises that the owner’s finances are separate to those of the business and therefore business transactions should be recorded separately.*1 pointTRUEFALSE

_______ is a system of recording and classifying business transactions in separate accounts in order to maintain the balance of the accounting equation.Multiple ChoiceCyclical accountingDouble-entry bookkeepingEquation accountingAnnual reporting

Which of the following is not a transaction to be recorded in the accounting records of a company?Multiple ChoiceInvestment of cash by the ownersReceipt of services from a "quick-print" shop in exchange for the promise to provide advertising design services of equivalent valueSale of product to customersReceipt of a plaque recognizing the company's encouragement of employee participation in the United Way fund drive