Accounting for IGCSE & O level - Accounting Procedures (Section 10)
1
How would you correct the error where a $240 receivable fee was recorded in the purchase journal?
Answer
(C)
Debit Supplier's account, Credit Trade payables
2
What document usually supports an entry in the cash book?
Answer
(C)
Receipt
3
In the context of depreciation, what does 'useful life' refer to?
Answer
(B)
The estimated period the asset will be used by the business.
4
Which of the following relate to the use of a debit note?
Answer
B
C
5
Which of the following is generally *not* a factor in calculating depreciation expense?
Answer
(D)
Current market value
6
If profit is understated, which of the following could happen?
Answer
A
B
7
Which of the following is NOT a characteristic of revenue receipts for a business?
Answer
(D)
Increase the owner's equity.
8
What will cause an understatement of owner's equity?
Answer
(C)
Incorrectly recording a revenue receipt as a capital receipt.
9
What is the primary purpose of depreciating a non-current asset?
Answer
(B)
To accurately reflect the asset's decline in value over time.
10
Capital receipts will typically be used to finance which of the following?
Answer
(C)
The capital expenditures of the business.
11
The balance on the purchases ledger control account should equal:
Answer
(A)
The total of balances on trade payable accounts in the purchases ledger.
12
How does a sales return impact the sales ledger control account?
Answer
(B)
Decreases it.
13
What happens to the accumulated depreciation when an asset is sold?
Answer
(C)
It is closed and removed.
14
Which accounting principle supports the recording of depreciation?
Answer
(B)
Matching principle
15
Which financial statement does accumulated depreciation appear on?
Answer
(B)
Balance Sheet
16
Which of the following transactions *decrease* the balance on the Purchases Ledger Control Account?
Answer
A
B
D
17
What effect does the payment of an account payable have on the accounting equation?
Answer
(C)
Assets decrease, liabilities decrease.
18
What would be the effect of a loss on disposal of an asset?
Answer
(B)
Decrease Profit
19
What account would be debited to record a credit sale?
Answer
(B)
Sales Ledger Control Account
20
Which of the following does NOT affect the balance on the Sales Ledger Control Account?
Answer
(A)
Cash sales
21
What do debit entries in a Purchases Ledger Control Account generally represent?
Answer
(B)
Payments made to suppliers.
22
Which errors are likely to be revealed by the trial balance?
Answer
(C)
Error of transposition.
23
Which of the following actions would result in a credit entry in the Sales Ledger Control Account?
Answer
(C)
Allowing a discount.
24
Which accounts are involved when recording the gain or loss on disposal?
Answer
A
B
C
D
25
What is the correct entry if the repairs were entered into the premises account?
Answer
(A)
Debit £240 in repairs account and credit premises account
26
In the sales ledger, what happens when a customer pays their account?
Answer
(B)
Credit the customer's account
27
If a purchase invoice for $200 was recorded in the purchases journal but was completely omitted from the supplier's account in the purchases ledger, what is the effect?
Answer
(A)
The trial balance will balance.
28
Which of the following actions will *decrease* the balance in a customer's account in the sales ledger?
Answer
(B)
Granting a sales discount
29
Which ledger contains individual customer accounts?
Answer
(C)
Sales Ledger
30
When is the owner's financial perception of the business altered?
Answer
(D)
When profits are understated.
31
What does an error of principle involve?
Answer
(C)
An entry is recorded in the wrong class of account.
32
Which of the following are considered depreciation methods?
Answer
A
B
33
If a machine costs $50,000, has a residual value of $5,000, and a useful life of 5 years. What is the depreciation using the straight line method?
Answer
(D)
$11,000
34
If a business's financial statements show a true and fair view, and that is a core principle. What is the implication?
Answer
(D)
The financial information must be accurate and reliable.
35
Which account is debited when an asset is sold for cash?
Answer
(B)
Cash
36
What is the effect on the profit when an asset is incorrectly debited for repairs?
Answer
(B)
Overstated
37
When a business receives cash from the introduction of owner's equity, which of the following entries are recorded?
Answer
(C)
Debit bank account and credit owner's equity.
38
Which financial statement would be most affected by the recognition of a gain or loss on the disposal of an asset?
Answer
(B)
Income Statement
39
What will be the impact if a company has understated the value of the non-current assets?
Answer
(C)
It will create a negative impact on the profit.
40
Which document is used to source information for the entries in the sales ledger?
Answer
(B)
Sales invoice.
41
Which of the following statements is true regarding a 'loss' on the disposal of a non-current asset?
Answer
(C)
It decreases profit for the period.
42
Which of the following is an example of a tangible asset?
Answer
(C)
Equipment
43
When an asset is sold, which account is credited to recognize the proceeds from the sale?
Answer
(B)
Gain on Disposal
44
What is the effect on the financial statements when drawings of £6,000 were not recorded?
Answer
(B)
Cash is understated by £6,000. Capital is understated by £6,000
45
What is the impact of a cash sale on the customer's account in the sales ledger?
Answer
(C)
No effect on the balance.
46
What is the impact on the statement of financial position for excluding an irrecoverable debt?
Answer
(A)
Reduce draft profit by $300
47
Which of the following is an advantage of the reducing balance method?
Answer
(B)
It reflects the higher usage in the early years.
48
A purchases ledger control account is prepared from which of the following books of prime entry?
Answer
B
D
49
What is the formula for calculating depreciation expense using the reducing balance method?
Answer
(D)
Book Value x Depreciation Rate
50
When would the owner's perception of the business be altered?
