Accounting for IGCSE & O level - Accounting Procedures (Section 12)
1
A company allows a customer to take a discount. Which accounts will be impacted?
Answer
B
C
2
If a company purchases equipment for $80,000, the estimated useful life is 5 years, and the residual value is $10,000. Calculate the annual depreciation expense, using the straight-line method.
Answer
(B)
$16,000
3
In a Sales Ledger Control Account, what would a credit balance typically indicate?
Answer
(C)
Customer overpayments.
4
In the context of the Purchases Ledger Control Account, what does a debit balance typically represent?
Answer
(D)
Total amount paid to suppliers for goods on credit.
5
What is a common method for correcting an error in accounting?
Answer
(C)
Creating an adjustment journal entry.
6
What type of error results in debits and credits made on the incorrect side of the account?
Answer
(C)
Error of complete reversal
7
Which prime entry book is used to record credit purchases of goods?
Answer
(C)
Purchases journal
8
Which of the following transactions would be recorded in the general journal?
Answer
(D)
Corrections of errors
9
What is the primary objective of distinguishing between capital and revenue expenditures?
Answer
(B)
To correctly measure the profitability of the business in a given period.
10
A business uses a Sales Ledger Control Account. What should the business do if they find that the debits in their account are greater than the credits?
Answer
(C)
Investigate why the account is out of balance.
11
What type of error will most likely be uncovered by a review of the trial balance?
Answer
(C)
An error in the amount
12
Bradley recorded a $100 expense as a $1000 expense. What kind of error did Bradley make?
Answer
(D)
Error of original entry
13
What could cause profit to be understated?
Answer
A
C
14
Which account is credited to record depreciation expense?
Answer
(B)
Accumulated Depreciation
15
If a company receives cash from a customer, what impact does this have on the Sales Ledger Control Account?
Answer
(B)
The account is credited.
16
If a business records a credit purchase of inventory in the cash payments journal, what is the effect on the trial balance?
Answer
(B)
The trial balance will still balance.
17
In a sales ledger, what is the impact of receiving cash from a customer?
Answer
(B)
Credit the customer's account.
18
If a business purchases plastic sheeting, pipes and moldings to sell, this would be:
Answer
(B)
Revenue expenditure
19
Which of the following actions would cause a credit entry in the Sales Ledger Control Account?
Answer
(C)
Issuing a credit note to a customer.
20
Which depreciation method results in the same amount of depreciation expense being recognized each year?
Answer
(C)
Straight-line method
21
Which of the following will increase owner's equity?
Answer
(B)
Sales
22
Which of the following transactions would likely affect the Purchases Ledger Control Account?
Answer
A
B
D
23
What accounting record is used to keep track of individual amounts owed by customers?
Answer
(C)
Sales ledger
24
What is the primary goal when determining the estimated useful life of an asset?
Answer
(B)
To match the asset's cost to the revenue it helps generate
25
If a payment for advertising was recorded as a debit to the advertising expense and a credit to the bank account, what type of error has occurred?
Answer
(B)
Error of omission
26
How does depreciation impact net income?
Answer
(B)
Decreases net income
27
What is the effect on the financial statements of incorrectly classifying a revenue expenditure as a capital expenditure?
Answer
(D)
Profit is overstated in the income statement.
28
What impact does the error where the payment of £500 to an employee was credited to the wages account and debited to the bank account have on the draft profit?
Answer
(A)
No impact
29
What is the main objective of correcting accounting errors?
Answer
(C)
To present financial statements that are a true and fair reflection of the business's performance and position
30
Which type of prime entry is used to record the entry of a refund issued to a credit customer?
Answer
(D)
General journal
31
Which of the following financial statements are primarily affected by the sales commission which was understated by £240?
Answer
A
B
32
What type of account is debited when recording a capital expenditure?
Answer
(C)
An asset account
33
Which of the following describes an error of principle?
Answer
(B)
The entry is recorded in the wrong type of account.
34
If a building was debited instead of repairs, which entry should be corrected?
Answer
(B)
Debit the repairs account and credit the building account.
35
What happens to the depreciation expense when an asset is disposed of before the end of its useful life?
Answer
(A)
Depreciation stops at the date of disposal.
36
What is the purpose of the sales returns journal?
Answer
(B)
To record goods returned by customers.
37
When using the straight-line method, what impact does the asset's salvage value have on depreciation expense?
Answer
(B)
It decreases depreciation expense.
38
When calculating depreciation using the reducing balance method, which of the following is used?
Answer
(B)
Book value
39
What is the salvage value of an asset?
Answer
(B)
The amount the asset can be sold for at the end of its useful life.
40
The purpose of preparing a trial balance is to:
Answer
(B)
Ensure the accounting equation balances.
41
What effect does recording a capital expenditure as a revenue expenditure have on the balance sheet?
Answer
(B)
Non-current assets are understated.
42
Which of the following best describes revenue expenditure?
Answer
(C)
Costs related to the day-to-day running of the business.
43
In the context of depreciation, what does the term 'useful life' refer to?
Answer
(B)
The period over which an asset is expected to provide economic benefits to the company.
44
What is the impact of a dishonored check on the bank's balance in the sales ledger?
Answer
(B)
The bank balance is decreased by the amount of the check.
45
Which of the following typically causes a credit entry in the Purchases Ledger Control Account?
Answer
B
C
46
What impact does an omission of a cash purchase have on a trial balance?
Answer
(B)
The trial balance will not balance
47
What happens to the balance in trade receivable when an interest is charged?
Answer
(A)
Debit side increases
48
What happens to the asset account when an asset is disposed of?
Answer
(B)
The asset account is credited.
49
What is the impact on the balance sheet when an asset is disposed of?
