Accounting for IGCSE & O level - Accounting Procedures (Section 14)
1
If a payment was made to an employee, what is the implication if it was debited to the wages, and credited to the bank account?
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(B)
Will affect the profit.
2
Which depreciation method usually results in the largest depreciation expense in the final years of an asset's life?
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(A)
Straight-line method
3
If a customer makes a cash payment, which of the following is the correct accounting treatment?
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(B)
Credit customer account, debit cash
4
What is the impact on the financial statements if a non-current asset is debited instead of repairs, and also a sales commission amount is overstated?
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A
C
5
What are some of the entries in the Sales Ledger Control Account related to?
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A
C
D
6
What is the main difference between revenue and capital expenditures regarding accounting treatment?
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(A)
Revenue expenditures are immediately expensed, while capital expenditures are capitalized (recorded as assets) and depreciated.
7
Which of the following would not be included in the cost of an asset?
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(D)
Training Costs
8
Which of the following best describes how the depreciation expense would be treated when disposing of an asset?
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(B)
Recognize depreciation expense up to the date of disposal and then cease.
9
Which of the following best describes the purpose of a Sales Ledger Control Account?
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(C)
To summarize all credit sales transactions.
10
What is a primary function of the Sales Ledger?
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(B)
Record of individual customer transactions on credit.
11
What are the main objectives of accounting for depreciation?
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A
C
12
Which financial statement would be affected if the incorrect entry for a payment to an employee was recorded?
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(B)
Balance Sheet
13
What is the impact of a depreciation expense on the statement of cash flow?
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(B)
Increases cash flow from operating activities.
14
Which of the following would be classified as revenue expenditure?
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(B)
Repairs to equipment.
15
If a customer overpays an invoice, how is this reflected in the Sales Ledger Control Account?
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(B)
The account is credited.
16
What is the impact on the profit if a discount allowed to a customer was not recorded?
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(B)
Profit will be overstated.
17
What is the effect on the financial statements if an asset is sold for an amount that is the same as its book value?
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(D)
All of the above
18
What is the effect of recording a cash purchase of inventory twice?
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(B)
The purchases figure will be overstated.
19
In what situation will the trial balance be imbalanced?
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(C)
An error in the amount.
20
What is the primary difference between the cost and the book value of an asset?
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(C)
Cost is the initial purchase price; book value is reduced by accumulated depreciation.
21
Bradley made an error by debiting the wrong account. What kind of error has he made?
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(A)
Error of commission.
22
Which of the following situations result in a credit entry in the Purchases Ledger Control Account?
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A
B
C
23
What is the impact on net profit if the sale price of an asset is more than its carrying amount?
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(A)
Net profit will increase.
24
A delivery van was purchased for $40,000. It has an estimated useful life of 5 years and a salvage value of $5,000. Using the straight-line method, what is the annual depreciation expense?
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(A)
$7,000
25
What is the purpose of a trial balance?
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(D)
To check the equality of debits and credits.
26
In a purchases ledger control account, what would be the effect of a discount received from a supplier?
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(B)
Decreases the balance.
27
What is the primary function of a Purchases Ledger Control Account?
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(B)
To summarize all transactions with suppliers.
28
How does depreciation expense affect the balance sheet?
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(C)
Decreases the value of assets.
29
What is the correct treatment for the disposal of a fully depreciated asset?
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(B)
Debit accumulated depreciation and credit the asset account.
30
What is the primary impact on a business when a revenue expenditure is incorrectly capitalized (treated as a capital expenditure)?
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(C)
Profit is overstated in the current period.
31
How does a payment made to a supplier affect the Purchases Ledger Control Account?
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(A)
The account is debited.
32
If a business makes a credit purchase, which account is debited?
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(A)
Purchases
33
Why might the balance on the sales ledger control account NOT agree with the total of the individual customer balances?
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A
D
34
What types of errors are likely to cause the trial balance to be imbalanced?
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A
C
D
35
In a compensating error, what happens?
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(A)
Two errors cancel each other out.
36
If a business records a capital expenditure as a revenue expenditure, what is the impact on the income statement?
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A
C
37
If a customer returns goods, which of the following is true in the sales ledger?
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(B)
Decreases the customer's balance.
38
What is the primary effect of depreciation on a business?
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(D)
Reduces profit and increases the cost of the assets.
39
Which of the following is represented by entries in the Purchases Ledger Control Account?
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A
B
C
40
Which of the following statements best describes the purpose of calculating the depreciation expense up to the date of disposal?
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(C)
To determine the asset's net book value.
41
If the drawings of £6,000 were omitted, what is the implication to the financial statements?
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A
D
42
What journal entry would be made to record a cash refund from a supplier in the Purchases Ledger?
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(D)
Debit Cash; Credit Supplier Account.
43
Which of the following errors would *not* cause a trial balance to be imbalanced?
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(B)
Omitting a transaction entirely
44
What effect does offering a cash discount to a customer have on their account in the sales ledger?
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(B)
Decreases the balance.
45
If an item of inventory was counted twice during the year-end inventory count, how would this error affect the financial statements?
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(B)
Cost of Goods Sold (COGS) is overstated, and profit is understated.
46
What is the primary purpose of a suspense account when correcting errors in a trial balance?
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(B)
To temporarily hold the difference until the error is found.
47
When should a company use the units of production method?
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(A)
When the asset's usage varies significantly year to year
48
What kind of entry is made after a mistake is identified?
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(B)
Correcting entry.
49
Which of the following is NOT usually recorded in the sales journal?
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(C)
Sales returns
50
Which of the following entries will *increase* the balance on the purchases ledger control account?
