Accounting for IGCSE & O level - Accounting Procedures (Section 15)
1
What does depreciation expense represent?
Answer
(B)
The systematic allocation of the cost of an asset over its useful life.
2
Under the reducing balance method, what factor is used to calculate depreciation?
Answer
(A)
Cost of the asset minus accumulated depreciation.
3
Which prime entry book is used to record payments made to suppliers?
Answer
(C)
Cash book
4
If a company sells goods for cash, what is the correct entry in the sales ledger?
Answer
(C)
No entry in the customer's account.
5
What is the impact on a company's financial position if a revenue expenditure is incorrectly recorded as a capital expenditure?
Answer
(B)
Non-current assets are overstated.
6
If the company received a discount from a supplier, how will it be recorded?
Answer
(B)
Credit the Purchases Ledger Control Account
7
Which accounting principle is most relevant when recognizing depreciation?
Answer
(A)
The matching principle.
8
What is the primary function of the Sales Ledger control account?
Answer
(C)
To act as a summary of the individual customer accounts in the Sales Ledger.
9
What is the consequence of completely reversing the entry for electricity expenses (£220)?
Answer
(B)
Expenses are overstated by £440
10
Which accounting document is primarily used to record individual transactions between a business and its customers?
Answer
(B)
Sales Ledger
11
What type of account is 'Retained Earnings'?
Answer
(C)
An owner's equity account.
12
Which of these would affect the depreciation expense calculation?
Answer
A
B
C
13
Where would you find the accumulated depreciation for a particular asset?
Answer
(B)
Balance Sheet
14
Which entry will *decrease* the Sales Ledger Control Account balance?
Answer
(D)
Granting of a discount to a customer.
15
How is the balance of a customer's account affected by a dishonored check?
Answer
(A)
It increases.
16
A sales commission of £160 amount was misposted as £400. What impact did it make to the draft profit?
Answer
(A)
Income and profits are understated by £240
17
What effect does the revaluation of an asset have on the financial statements?
Answer
A
B
C
18
If a customer is also a supplier (i.e., a contra account), which accounts are affected?
Answer
(C)
Both the sales and purchases ledgers.
19
What effect does incorrectly classifying a revenue expenditure as a capital expenditure have on the value of non-current assets?
Answer
(B)
Decreases the value.
20
Which situation describes an error of complete reversal?
Answer
(A)
Both the debit and credit entries are reversed.
21
What is the primary function of a purchases ledger control account?
Answer
(B)
To provide a summary of the total amount owing to suppliers
22
Which of the following will impact the financial statements?
Answer
(D)
Compensating error
23
Which scenario would lead to an overstatement of profit?
Answer
(B)
Revenue expenditure incorrectly classified as capital expenditure.
24
What will the business do if the non-current assets are understated?
Answer
(B)
Assets will be less than the original price.
25
The cost to paint the outside of a building should be classified as:
Answer
(B)
Revenue expenditure
26
What would be the normal balance for a Sales Ledger Control Account?
Answer
(A)
Debit
27
Which of these is usually associated with a credit balance in the Sales Ledger Control Account?
Answer
(B)
The business owing money to its customers.
28
What is the impact on a company's assets when depreciation expense is recorded?
Answer
(B)
Assets decrease
29
What must be considered when determining the gain or loss on the disposal of an asset?
Answer
A
B
C
30
What is the impact of a discount allowed to a customer in the sales ledger?
Answer
(B)
Decreases the balance.
31
What is the effect of a credit note issued to a customer on their account balance?
Answer
(B)
Decreases the balance.
32
Which type of error will NOT be revealed by the trial balance?
Answer
(A)
Error of omission.
33
What book of prime entry is primarily used to record cash payments?
Answer
(C)
Cash Book
34
What are the typical steps for correcting an error?
Answer
A
B
D
35
What is the effect on the purchases ledger control account when a business receives a credit note from a supplier?
Answer
(B)
Decreases the balance.
36
If a business incorrectly debited the purchases account instead of debiting a non-current asset account, how would this affect the trial balance?
Answer
(B)
The debit and credit totals would still agree, but the financial statements would be incorrect.
37
How does the sale of goods on credit impact the accounting equation?
Answer
(A)
Increases assets and increases owner's equity.
38
A business has a debit balance of $15,000 in its Sales Ledger Control Account. They then write off a bad debt of $1,000. What is the new balance?
Answer
(A)
$14,000 (Debit)
39
Which of the following is an advantage of using the revaluation method?
Answer
(B)
It reflects the asset's current market value
40
If advertising expenses were understated by £300 and sales were understated by £300. Which of the following is the impact to the draft profit and the statement of financial position?
Answer
A
D
41
If a purchase of goods was correctly recorded in the purchases account but was omitted from the supplier's account in the purchase ledger, what will happen?
Answer
(B)
The trial balance will balance.
42
What is the purpose of a disposal account?
Answer
(C)
To determine the gain or loss on the disposal of an asset.
43
What is the effect on the financial statements when the purchases journal has been understated?
Answer
(A)
Profit is overstated.
44
What is the correct entry in the purchases ledger for a purchase return?
Answer
(A)
Debit supplier's account, Credit purchase returns
45
If a customer returns goods previously sold on credit, which of the following is true?
Answer
(D)
The customer's account is credited.
46
What is the appropriate entry to record a cash payment made to a supplier?
Answer
(A)
Debit the supplier's account, credit cash.
47
What is the primary purpose of the purchases journal?
Answer
(B)
To record credit purchases of goods and services.
48
How does a sales ledger control account assist in detecting fraud?
Answer
(C)
By independently verifying the accuracy of the individual customer accounts.
49
Which of the following items will affect the balance of the sales ledger control account?
Answer
B
C
D
50
When a business initially discovers that its trial balance does not balance, which account is often used as a temporary measure to make the two sides agree?
