Accounting for IGCSE & O level - Accounting Procedures (Section 13)
1
Which of the following items would likely not be depreciated?
Answer
(B)
Land
2
What is the effect of a dishonored cheque on the customer's account in the sales ledger?
Answer
(B)
The balance increases.
3
What is the effect on profit and the statement of financial position if irrecoverable debts are *not* written off?
Answer
(A)
Profit is overstated and total assets are overstated.
4
An accountant recorded a $200 purchase of supplies as a $2000 purchase. This error would best be classified as:
Answer
(D)
An error of original entry
5
What does the term 'book value' represent on the date of disposal of the asset?
Answer
(B)
Original Cost - Accumulated Depreciation
6
What happens to the Sales Ledger Control Account if a credit note is issued?
Answer
(B)
The account is credited.
7
What type of account is accumulated depreciation?
Answer
(C)
A contra-asset account
8
Which event would *decrease* the balance of the Purchases Ledger Control Account?
Answer
(C)
A payment made to the supplier.
9
A payment of £500 to an employee was credited to the wages account and debited to the bank account. What kind of error occurred?
Answer
(A)
Error of Principle
10
Which of the following is considered an advantage of the straight-line method of depreciation?
Answer
(A)
It is simple to calculate
11
In the sales ledger, how is a customer's account impacted when they are given a discount for early payment?
Answer
(B)
The account is credited.
12
When a transaction is recorded with the correct amount, but in the wrong account, what type of error has occurred?
Answer
(A)
Error of principle
13
Which of the following statements about the straight-line depreciation method is correct?
Answer
(C)
It allocates an equal amount of depreciation expense over the asset's useful life.
14
Which of the following describes the 'carrying amount' of a non-current asset?
Answer
(C)
The cost of the asset less accumulated depreciation and impairment losses.
15
What is the effect on the trial balance when there is an error of transposition of numbers?
Answer
(B)
The trial balance is unbalanced.
16
Which of the following would result in an imbalanced trial balance?
Answer
(C)
An error of transposition.
17
Which of the following statements is true regarding the purchases returns journal?
Answer
(B)
It records all returns of goods to suppliers.
18
Which of the following errors will *not* be revealed by the trial balance?
Answer
(B)
An omission of an entire transaction.
19
Which of the following are examples of revenue expenditures?
Answer
A
B
20
What is the accounting treatment if the value of an asset goes down?
Answer
(D)
Debit Impairment Loss, Credit the Asset account
21
What is the accounting term for the decrease in the value of an intangible asset?
Answer
(B)
Amortization
22
Which statement best describes a debit balance in the Purchases Ledger Control Account?
Answer
(A)
The business has overpaid a supplier.
23
If an asset has a cost of $20,000, accumulated depreciation of $15,000, and is sold for $6,000, what is the gain or loss on the sale?
Answer
(A)
$1,000 gain
24
What is accumulated depreciation?
Answer
(B)
The total depreciation expense recorded for an asset since its purchase.
25
Which journal would be used to record returns outwards?
Answer
(D)
Purchases returns journal
26
What happens to the balance of a customer's account in the sales ledger if the customer returns the goods that were sold to them on credit?
Answer
(B)
The balance decreases.
27
Which of the following would most likely be considered a revenue expenditure?
Answer
(C)
Paying for office utilities.
28
If the debit side of a trial balance is $500 less than the credit side, which is the correct first step?
Answer
(C)
Credit the suspense account for $500.
29
Which of the following items would typically be found in the sales ledger control account?
Answer
A
B
D
30
What type of entry is typically made to record cash received from a customer in the Sales Ledger Control Account?
Answer
(B)
Credit
31
Which of the following events would *not* affect the Purchases Ledger Control Account?
Answer
(C)
Selling inventory for cash.
32
What effect does depreciation have on a company's net income?
Answer
(B)
Decreases net income
33
A piece of equipment costs $10,000. The estimated useful life is 4 years, and the salvage value is $2,000. Using the straight-line method, what is the depreciation expense for year 1?
Answer
(B)
$2,500
34
When would a suspense account *not* be used?
Answer
(D)
When recording a transaction.
35
An expenditure is incorrectly recorded as a revenue expenditure instead of a capital expenditure. What effect will this error have on the company's current year's profit and financial position?
Answer
(C)
Profit is understated and non-current assets are understated.
36
Which of the following is NOT a capital expenditure?
Answer
(D)
Paying for employee salaries
37
What is the primary goal of depreciation in financial accounting?
Answer
(B)
To allocate the cost of an asset over its useful life.
38
What is the impact on the financial statements when an asset is revalued upwards?
Answer
A
B
39
Which item is used to cross-check the accuracy of the sales ledger?
Answer
(C)
The sales ledger control account.
40
What items are involved with a sales return?
Answer
B
C
41
In a journal entry related to the disposal of an asset, which account is debited if a loss is recognized?
Answer
(C)
Loss on Disposal
42
Which of the following typically increases the balance of the Sales Ledger Control Account?
Answer
(B)
Credit Sales.
43
How is the draft profit affected if a building was debited instead of Repairs?
Answer
(A)
Expenses understated by £240, Profit overstated by £240
44
In the context of a Purchases Ledger Control Account, what does a credit balance mean?
Answer
(C)
The business has overpaid the supplier.
45
If the proceeds from the sale of an asset exceed its net book value, what is recognized?
Answer
(C)
A gain on disposal
46
Which method of depreciation is most suitable for assets that provide benefits that are higher in the initial years?
Answer
(B)
Reducing balance method
47
If expenses are understated, what is the impact?
Answer
(B)
The profit is overstated.
48
Which of the following statements accurately describe the balances of the Purchases Ledger Control Account?
Answer
C
D
49
What is the correct accounting treatment for a cash discount received from a supplier?
Answer
(B)
Credit supplier's account, debit discount received
50
In the given context, what does 'salvage value' represent?
Answer
(B)
The estimated value of an asset at the end of its useful life.
