Accounting for IGCSE & O level - Accounting Procedures (Section 20)
1
Which events cause profit to be misstated?
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A
C
2
Advertising expenses were understated by £300 and sales were understated by £300. What is the required correction in the journal?
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(A)
Debit advertising account and credit sum amount.
3
Which of the following situations would *not* affect the trial balance?
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(C)
Error of principle
4
Which of the following would be classified as capital expenditure for a business?
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(C)
Buying a new delivery van
5
Which of the following statements is true regarding the accumulated depreciation account?
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(B)
It increases with each depreciation entry.
6
A business has a sales ledger control account balance of $50,000. The total of the individual customer account balances in the sales ledger is $48,000. Which of the following is the most likely reason for the difference?
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(B)
There are errors in the sales ledger.
7
Which of the following are objectives of preparing a trial balance?
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A
B
C
8
In the sales ledger, a credit note issued to a customer would have which impact?
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(B)
Decreases the customer's balance.
9
In which ledger will the impact of the error of principle be felt?
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(A)
General ledger
10
Which of the following errors will not be revealed by a trial balance?
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B
D
11
The correct classification of expenditures is important because:
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B
C
12
How does an error of principle affect a trial balance?
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(D)
It doesn't affect the trial balance.
13
Which of the following statements best describes the treatment of depreciation in accounting?
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(A)
It is an expense that reduces a company's taxable income.
14
What is the effect on the financial statements when a loss on disposal is recognized?
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A
C
15
How is a dishonored cheque handled in the sales ledger?
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(A)
Customer's account debited, bank account credited
16
What is the usual impact of a discount allowed on the sales ledger control account?
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(B)
Decreases the balance.
17
What is the effect of a trade discount offered to a customer on the sales ledger?
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(B)
It decreases the balance.
18
What would be the effect of incorrectly crediting the sales account instead of crediting the bank account for cash sales?
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(B)
Sales revenue would be overstated.
19
What entry is made in the Purchases Ledger Control Account if a debit note is received from a supplier?
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(B)
Credit
20
What is the primary purpose of a trial balance?
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(B)
To prove the mathematical accuracy of the general ledger.
21
Which entry typically *increases* the balance of the Purchases Ledger Control Account?
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(C)
Receiving an invoice from a supplier for purchases on credit.
22
What is the key step after finding an error?
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(C)
Identify the original mistake.
23
A company buys a new machine for $10,000. The machine's estimated useful life is 5 years, and the estimated salvage value is $1,000. What is the annual depreciation expense using the straight-line method?
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(C)
$1,800
24
What type of balance does a Sales Ledger Control Account normally have?
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(A)
Debit
25
Which statement accurately describes the accumulated depreciation account?
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(C)
It reduces the book value of an asset.
26
A company buys a new machine, and pays for its installation. How should these costs be treated?
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(C)
Both are capital expenditures.
27
During the closing of the books, the suspense account must have a balance of:
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(A)
$0
28
Which of the following items would be considered a revenue expenditure?
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(B)
Paying for building insurance
29
What happens to the suspense account after correcting entries are made?
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(A)
It is closed with a zero balance.
30
What is the impact on the Purchases Ledger Control Account when there is an interest charge on overdue trade payables?
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(A)
The account is debited.
31
What does the term 'depreciation' represent in accounting?
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(B)
The allocation of the cost of an asset over its useful life.
32
If a business purchased a computer with cash, which of the following accounts are affected?
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(B)
Computer equipment and cash
33
What is the correct entry when the error where the sales commission amount of £160 was misposted as £400?
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(D)
Debit the sales commission account for £240, and credit the sales account for £240.
34
What type of account is the sales ledger control account?
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(B)
A personal account.
35
Which of the following are considered non-current assets?
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A
B
D
36
Which of the following would cause a credit entry in the Purchases Ledger Control Account?
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A
B
D
37
What type of prime entry would be used to record the payment of a trade payable?
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(B)
Cash Book
38
What type of account is a purchases ledger control account considered to be?
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(C)
A personal account.
39
What's the impact on the Sales Ledger Control Account if a customer's account is written off as a bad debt?
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(B)
Credit the account.
40
Which of the following is NOT a step in accounting for the disposal of a non-current asset?
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(D)
Increasing the accumulated depreciation by the asset's initial cost.
41
Which of the following is a key purpose of the matching principle in accounting?
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(B)
To match revenues with the expenses incurred to generate those revenues.
42
What is the main reason to record depreciation?
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(B)
To allocate the cost of an asset over its useful life.
43
Why is it important to correct errors in accounting records?
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(D)
All of the above.
44
What is the correct accounting treatment if a business acquires a non-current asset?
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(A)
Debit the asset account and credit the bank account.
45
Which errors are likely to be revealed by a trial balance?
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C
D
46
What steps are taken when correcting the errors in a trial balance?
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A
B
D
47
If a customer pays their account balance, what happens in the sales ledger?
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(B)
The customer's account is credited.
48
What type of receipt typically involves funds from investments of owner's equity?
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(A)
Capital receipt
49
What is the primary purpose of preparing revised financial statements after identifying and correcting errors?
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(B)
To provide a true and fair view of the financial performance and position.
50
Which of the following transactions would be recorded in the general journal?
