Accounting for IGCSE & O level - Accounting Procedures (Section 14)
1
If a payment was made to an employee, what is the implication if it was debited to the wages, and credited to the bank account?
Answer
(B)
Will affect the profit.
2
Which depreciation method usually results in the largest depreciation expense in the final years of an asset's life?
Answer
(A)
Straight-line method
3
If a customer makes a cash payment, which of the following is the correct accounting treatment?
Answer
(B)
Credit customer account, debit cash
4
What is the impact on the financial statements if a non-current asset is debited instead of repairs, and also a sales commission amount is overstated?
Answer
A
C
5
What are some of the entries in the Sales Ledger Control Account related to?
Answer
A
C
D
6
What is the main difference between revenue and capital expenditures regarding accounting treatment?
Answer
(A)
Revenue expenditures are immediately expensed, while capital expenditures are capitalized (recorded as assets) and depreciated.
7
Which of the following would not be included in the cost of an asset?
Answer
(D)
Training Costs
8
Which of the following best describes how the depreciation expense would be treated when disposing of an asset?
Answer
(B)
Recognize depreciation expense up to the date of disposal and then cease.
9
Which of the following best describes the purpose of a Sales Ledger Control Account?
Answer
(C)
To summarize all credit sales transactions.
10
What is a primary function of the Sales Ledger?
Answer
(B)
Record of individual customer transactions on credit.
11
What are the main objectives of accounting for depreciation?
Answer
A
C
12
Which financial statement would be affected if the incorrect entry for a payment to an employee was recorded?
Answer
(B)
Balance Sheet
13
What is the impact of a depreciation expense on the statement of cash flow?
Answer
(B)
Increases cash flow from operating activities.
14
Which of the following would be classified as revenue expenditure?
Answer
(B)
Repairs to equipment.
15
If a customer overpays an invoice, how is this reflected in the Sales Ledger Control Account?
Answer
(B)
The account is credited.
16
What is the impact on the profit if a discount allowed to a customer was not recorded?
Answer
(B)
Profit will be overstated.
17
What is the effect on the financial statements if an asset is sold for an amount that is the same as its book value?
Answer
(D)
All of the above
18
What is the effect of recording a cash purchase of inventory twice?
Answer
(B)
The purchases figure will be overstated.
19
In what situation will the trial balance be imbalanced?
Answer
(C)
An error in the amount.
20
What is the primary difference between the cost and the book value of an asset?
Answer
(C)
Cost is the initial purchase price; book value is reduced by accumulated depreciation.
21
Bradley made an error by debiting the wrong account. What kind of error has he made?
Answer
(A)
Error of commission.
22
Which of the following situations result in a credit entry in the Purchases Ledger Control Account?
Answer
A
B
C
23
What is the impact on net profit if the sale price of an asset is more than its carrying amount?
Answer
(A)
Net profit will increase.
24
A delivery van was purchased for $40,000. It has an estimated useful life of 5 years and a salvage value of $5,000. Using the straight-line method, what is the annual depreciation expense?
Answer
(A)
$7,000
25
What is the purpose of a trial balance?
Answer
(D)
To check the equality of debits and credits.
26
In a purchases ledger control account, what would be the effect of a discount received from a supplier?
Answer
(B)
Decreases the balance.
27
What is the primary function of a Purchases Ledger Control Account?
Answer
(B)
To summarize all transactions with suppliers.
28
How does depreciation expense affect the balance sheet?
Answer
(C)
Decreases the value of assets.
29
What is the correct treatment for the disposal of a fully depreciated asset?
Answer
(B)
Debit accumulated depreciation and credit the asset account.
30
What is the primary impact on a business when a revenue expenditure is incorrectly capitalized (treated as a capital expenditure)?
Answer
(C)
Profit is overstated in the current period.
31
How does a payment made to a supplier affect the Purchases Ledger Control Account?
Answer
(A)
The account is debited.
32
If a business makes a credit purchase, which account is debited?
Answer
(A)
Purchases
33
Why might the balance on the sales ledger control account NOT agree with the total of the individual customer balances?
Answer
A
D
34
What types of errors are likely to cause the trial balance to be imbalanced?
Answer
A
C
D
35
In a compensating error, what happens?
Answer
(A)
Two errors cancel each other out.
36
If a business records a capital expenditure as a revenue expenditure, what is the impact on the income statement?
Answer
A
C
37
If a customer returns goods, which of the following is true in the sales ledger?
Answer
(B)
Decreases the customer's balance.
38
What is the primary effect of depreciation on a business?
Answer
(D)
Reduces profit and increases the cost of the assets.
39
Which of the following is represented by entries in the Purchases Ledger Control Account?
Answer
A
B
C
40
Which of the following statements best describes the purpose of calculating the depreciation expense up to the date of disposal?
Answer
(C)
To determine the asset's net book value.
41
If the drawings of £6,000 were omitted, what is the implication to the financial statements?
Answer
A
D
42
What journal entry would be made to record a cash refund from a supplier in the Purchases Ledger?
Answer
(D)
Debit Cash; Credit Supplier Account.
43
Which of the following errors would *not* cause a trial balance to be imbalanced?
Answer
(B)
Omitting a transaction entirely
44
What effect does offering a cash discount to a customer have on their account in the sales ledger?
Answer
(B)
Decreases the balance.
45
If an item of inventory was counted twice during the year-end inventory count, how would this error affect the financial statements?
Answer
(B)
Cost of Goods Sold (COGS) is overstated, and profit is understated.
46
What is the primary purpose of a suspense account when correcting errors in a trial balance?
Answer
(B)
To temporarily hold the difference until the error is found.
47
When should a company use the units of production method?
Answer
(A)
When the asset's usage varies significantly year to year
48
What kind of entry is made after a mistake is identified?
Answer
(B)
Correcting entry.
49
Which of the following is NOT usually recorded in the sales journal?
Answer
(C)
Sales returns
50
Which of the following entries will *increase* the balance on the purchases ledger control account?
