In a purchases ledger, what is the effect of a cash payment made to a supplier?
Answer
(B)
Decreases the balance.
15
How does incorrectly classifying a capital expenditure as a revenue expenditure affect profit in the current period?
Answer
(C)
Profit is understated.
16
Which of the following would *decrease* the balance in the Purchases Ledger Control Account?
Answer
(D)
Returning goods to a supplier.
17
What is the effect of depreciation on a company's taxable income?
Answer
(B)
Decreases taxable income
18
Which of the following is a purpose of the Purchases Ledger Control Account?
Answer
(C)
To summarize transactions with suppliers.
19
What does the salvage value represent?
Answer
(B)
The estimated value of an asset at the end of its useful life
20
Which of the following errors would affect the net profit calculated for the period?
Answer
A
B
21
If a business's profit is understated due to incorrect accounting procedures, what impact would that have on owner's perception of the business?
Answer
(A)
The owner may take less risk in an attempt to reduce losses.
22
If a building was debited instead of repairs and the expenses are understated. What will be the outcome for the profit?
Answer
(A)
The profit will increase.
23
Which of the following entries decreases a customer's balance in the sales ledger?
Answer
A
C
24
What is the impact on the profit and owner's equity if a capital receipt is incorrectly recorded as a revenue receipt?
Answer
(B)
Profit is overstated, owner's equity is understated.
25
In the case of an error of commission, which components are impacted?
Answer
B
C
26
Which of the following is the journal entry to record an asset revaluation that increases the value of the asset?
Answer
(D)
Debit Asset, Credit Revaluation Surplus
27
A business has a credit balance of $10,000 in its Purchases Ledger Control Account. The company then makes a credit purchase of $2,000. What is the new balance?
Answer
(D)
$12,000 (Credit)
28
Which of the following errors affect net profit calculations?
Answer
A
B
D
29
How would you classify an account with a credit balance in the Sales Ledger Control Account?
Answer
(B)
The business owes the customers.
30
A machine cost $25,000 has an estimated life of 5 years. The estimated salvage value is $5,000. Using the straight-line method, what is the annual depreciation expense?
Answer
(A)
$4,000
31
What is the general approach when correcting an error?
Answer
(A)
Make the entry that reflects what *should* have been done.
32
In a sales ledger, which entry will decrease the balance of a customer's account?
Answer
(B)
A sales return
33
What is the correct order to correct an accounting error?
Answer
(B)
Find the error, analyze the error, prepare the correcting entry.
34
What is the impact of the error of complete reversal?
Answer
(D)
Impact to the income statement and balance sheet
35
What is the effect on the financial statement if a building cost was debited instead of repairs?
Answer
A
B
D
36
Which of the following accounts is debited when closing out an asset’s cost upon disposal?
Answer
(D)
Asset Account
37
What is the appropriate journal entry for a purchase return?
Answer
(C)
Debit supplier, credit purchases returns
38
What would be the accounting impact of a debit note sent to a supplier?
Answer
(B)
Credits the supplier's account.
39
If a customer pays a portion of their outstanding balance, how does this affect the Sales Ledger Control Account?
Answer
(B)
The account is credited.
40
When a payment to an employee has been debited to wages and credited to the bank account, which two financial statements will be affected?
Answer
(C)
The income statement and the balance sheet
41
Which of the following entries represent a capital receipt?
Answer
B
C
42
Which of the following errors would *not* be revealed by preparing a trial balance?
Answer
(B)
A sale of goods recorded only in the sales account (no corresponding entry).
43
What is the impact of depreciation on a company's profit?
Answer
(B)
Decreases profit
44
An undercast in the purchases journal means:
Answer
(C)
The trial balance will be off.
45
In the context of accounting, what does 'accumulated depreciation' represent?
Answer
(B)
The total depreciation expense recognized for an asset over its life.
46
What is the purpose of a Provision for Depreciation account?
Answer
(C)
To record the total depreciation expense recognized for an asset over its life.
47
What is the primary purpose of accounting for depreciation?
Answer
(D)
All of the above
48
A company receives a discount from a supplier. How does this impact the Purchases Ledger Control Account?
Answer
(B)
The account is credited.
49
If a business receives cash from a customer for services to be provided in the future, how should this transaction be initially recorded?
Answer
(C)
Debit cash, credit unearned revenue.
50
How does a sales return affect the Sales Ledger Control Account?
