Accounting for IGCSE & O level - Accounting Procedures (Section 16)
1
In the context of error correction, if an expense has been omitted, what is the effect on the profit and financial position?
Answer
(C)
Profit is overstated and total liabilities are unaffected.
2
Which of the following is *least* likely to be considered a capital receipt?
Answer
(C)
Cash received from a customer for future services.
3
Which of the following is a key advantage of preparing control accounts?
Answer
(C)
They help to check the arithmetical accuracy of the entries.
4
Which of the following is directly impacted by a gain on disposal?
Answer
(B)
Retained earnings.
5
A purchase of $200 worth of goods on credit was entered in the cash book as a cash payment. How will this affect the trial balance?
Answer
(B)
The trial balance will be out of balance.
6
In the context of the disposal of an asset, what does the term 'proceeds' refer to?
Answer
(C)
The selling price of the asset.
7
If a business sells goods on credit, how does this affect the Sales Ledger Control Account?
Answer
(A)
The account is debited.
8
Which book of prime entry is used to record a purchase return?
Answer
(D)
Purchases Returns Journal
9
When preparing the control accounts, the sales ledger control account balance does NOT include which of the following?
Answer
(C)
Purchases on credit
10
A cash purchase of £45 has been omitted. What type of error is this?
Answer
(B)
Error of Omission
11
What effect does incorrectly classifying a revenue expenditure as a capital expenditure have on the financial position of a business in the current period?
Answer
(B)
Assets are overstated, and equity is overstated.
12
When a business returns goods to a supplier, what entry is recorded in the purchases journal?
Answer
(A)
No entry is made in the purchases journal.
13
What are some factors affecting the total of trade payables in the purchases ledger?
Answer
A
B
C
14
Which of the following actions increases a company's liabilities?
Answer
(C)
The business takes out a loan from the bank.
15
The purchase of goods for resale is an example of:
Answer
(B)
Revenue expenditure
16
Which of these situations can trigger a revaluation of an asset?
Answer
A
D
17
In the sales ledger, what is the accounting entry for a sale on credit?
Answer
(B)
Debit Customer, Credit Sales Revenue
18
If an incorrect sales entry impacts the profit, which of the following is affected?
Answer
A
B
19
Which financial statement reports a company's assets, liabilities, and owner's equity at a specific point in time?
Answer
(B)
Balance sheet
20
What is the purpose of calculating the gain or loss on disposal?
Answer
(C)
To reflect the difference between the asset's book value and the proceeds from the sale.
21
If a company decides to change the estimated useful life of an asset, what will that do?
Answer
(A)
Impact future depreciation expense.
22
Which of the following would reduce the balance of the sales ledger control account?
Answer
B
C
D
23
What is the impact on the statement of financial position for not including prepaid expenses?
Answer
(C)
Increase prepaid expenses by $1,000
24
When recording a sale of goods on credit, which accounting entry is made?
Answer
(A)
Debit the customer's account, credit sales.
25
Which of the following is an advantage of using control accounts?
Answer
(B)
They allow quick identification of errors.
26
If a business sold goods for $5,000 on credit, but the sale was incorrectly recorded in the cash account, how would this error affect the trial balance?
Answer
(B)
The trial balance would be out of balance.
27
When should depreciation expense be calculated up to when disposing of an asset?
Answer
(C)
The date of disposal.
28
When a transaction is recorded in the wrong account but for the correct amount, which type of error has occurred?
Answer
(A)
Error of Principle
29
What happens to the Depreciation Expense when an asset is disposed of?
Answer
(D)
Depreciation Expense is updated up to the date of disposal.
30
Which method of depreciation generally results in higher depreciation expense in the earlier years of an asset's life?
Answer
(B)
Reducing balance method
31
What is the effect on profit when depreciation expense is recorded?
Answer
(B)
Decreases Profit
32
Which actions increase the balance of the Purchases Ledger Control Account?
Answer
(A)
Purchasing inventory on credit.
33
In accounting, what does capitalization mean?
Answer
(A)
To record an expenditure as an asset rather than an expense.
34
What is the effect of incorrectly calculating and overstating total sales on the profit?
Answer
(C)
Profit is overstated.
35
When is a suspense account closed?
Answer
(B)
When correcting entries are made.
36
What type of entry is a dishonored cheque in the sales ledger?
Answer
(C)
General journal
37
If a sale on credit of $1,000 was recorded in the cash book, how would this error affect the trial balance?
Answer
(D)
The trial balance will be out of balance.
38
What type of entry is made in the Purchases Ledger Control Account if a company uses the bank to pay a supplier?
Answer
(B)
Credit entry
39
Which of the following statements is true about revenue receipts?
Answer
(C)
They are related to the ordinary operations of the business.
40
What action will reduce the balance on the Purchases Ledger Control Account?
Answer
(C)
Returning goods to a supplier.
41
What would be the result if the total balance for the electricity expenses was overstated?
Answer
(C)
The profit will be overstated.
42
What is the impact of a refund on a trade receivable account?
Answer
(B)
Decreases the balance.
43
If a company uses the units-of-production method, what factors are needed to calculate depreciation expense?
Answer
A
B
D
44
If drawings were not recorded, which will be the result in the journal?
Answer
(D)
No entry will be required.
45
In the purchases ledger, which type of transaction would typically result in a debit to a supplier's account?
Answer
(C)
A return of goods to the supplier.
46
In a sales ledger, what is the impact of receiving a payment from a customer?
Answer
(B)
Credit the customer's account.
47
What does a credit balance in the Purchases Ledger Control Account represent?
Answer
(A)
The business owes money to suppliers.
48
What is the book value of an asset?
Answer
(C)
The cost of the asset less accumulated depreciation.
49
Which of the following actions will increase the balance in a supplier's account within the purchases ledger?
Answer
(D)
Making a credit purchase from the supplier.
50
If a company uses the straight-line method and an asset's cost is $10,000, with a salvage value of $1,000 and a useful life of 5 years, what is the annual depreciation expense?
