Accounting for IGCSE & O level - Accounting Procedures (Section 2)
1
What entry should be made in the sales ledger if a customer returns goods to the business?
Answer
(C)
Debit Sales Returns, Credit Customer's account.
2
How does the omission of drawings of $3,000 affect the draft profit and capital?
Answer
(A)
Profit is unaffected; Capital is understated by $3,000.
3
What is the depreciation charge for the non-current asset shown on the income statement?
Answer
(C)
The annual depreciation for the current year
4
A company receives a refund from a supplier. How does this affect the company’s accounting records?
Answer
(C)
Debit Trade Payables, Credit Purchases Returns.
5
What do the entries involve to make a journal for annual depreciation charge for the non-current asset?
Answer
(B)
Debit the income statement with the depreciation charge, credit the provision for depreciation account.
6
What type of account is the Sales Returns account?
Answer
(C)
Nominal account
7
How can depreciation be accounted for in accounting?
Answer
A
B
D
8
Which of the following is an example of a non-current asset that would be depreciated?
Answer
(C)
A delivery truck
9
What is the impact of a customer paying their account by check (which does not bounce) on the sales ledger?
Answer
B
C
10
What is the correct accounting treatment for an error where $200 of discount allowed was omitted?
Answer
(B)
Debit Expenses, Credit Suspense Account
11
Which document is used to show how much a customer owes?
Answer
(B)
Statement of account
12
What is a key characteristic of a compensating error?
Answer
(C)
Two or more errors cancel each other out.
13
Which of the following is an advantage of the reducing balance method?
Answer
(D)
It is suitable when the asset loses more value early in its useful life.
14
What is the result of a customer returning faulty goods to the seller?
Answer
(C)
Debit Customer, Credit Sales Returns
15
What is the effect of depreciation on the statement of cash flows?
Answer
(A)
It is added back to net income in the operating activities section.
16
Which of the following statements is correct about a compensating error?
Answer
B
C
17
Which of the following statements are true about a sales ledger control account?
Answer
A
B
D
18
In what area is a posting error made?
Answer
(C)
When the figures in the ledger are not posted correctly.
19
How does a misposting of a sales commission ($140 actual, $400 recorded) affect the draft profit?
Answer
(B)
Profit is understated by $260.
20
A business makes a credit sale. Which journal would be used to record this transaction?
Answer
(C)
Sales Journal
21
Which of these is not a type of prime entry?
Answer
(D)
Purchase ledger control account
22
What is the impact on the financial statements when drawings of \$3,000 are not recorded?
Answer
(B)
Profit is unaffected; Capital is understated.
23
If non-current assets are understated, which of the following could happen?
Answer
(A)
The business's financial position looks less strong than it is.
24
Which accounting record is used to track individual transactions with customers?
Answer
(D)
Sales Ledger
25
What will the correct accounting entry be if an expenditure is mistakenly recorded in the bank account rather than the correct expenses account? (The expense account has to be debited and the bank account has to be credited.)
Answer
(D)
Credit the bank account and debit the expense account.
26
What is the impact of depreciation on profitability?
Answer
(C)
Depreciation decreases profits.
27
Which of the following is an example of a revenue expenditure?
Answer
(C)
Payments for office supplies
28
What is the impact of a sales return on the customer's account?
Answer
(B)
Decreases the balance.
29
If a customer pays an invoice using a credit card, which journal is updated?
Answer
(C)
Cash Receipts Journal
30
What journal is used to record payments received from credit customers?
Answer
(C)
Cash Receipts Journal
31
In the reducing balance method, assuming the same percentage of depreciation and same asset cost, which accounting year will be the highest expense?
Answer
(A)
Year 1
32
What is the effect of granting a discount to a credit customer on the sales ledger?
Answer
A
B
33
What causes a non-current asset to lose value?
Answer
(D)
All of the above
34
What impact does a dishonored check from a customer have on the customer's account?
Answer
(A)
The customer’s debit balance increases.
35
What is the term for the value of an asset at the end of its useful life?
Answer
(B)
Salvage Value
36
What is the impact on the draft profit and financial position in the scenario where drawings of $3,000 were not recorded?
Answer
(D)
No impact on draft profit; Capital understated by $3,000
37
What does the general journal record?
Answer
(C)
Transactions that do not fit in other journals
38
Which document is issued by a supplier to correct an error on a previous invoice?
Answer
(D)
Debit Note
39
Which document is issued by a business when a customer returns goods?
Answer
(B)
Credit note
40
Which journals will be affected by the recording of a credit sale?
Answer
A
D
41
What is the effect of a purchase return on the purchases ledger control account?
Answer
(B)
It decreases the account balance.
42
Which of the following is NOT an example of a revenue receipt?
Answer
(D)
Loan from the bank
43
Which type of error is not revealed by the trial balance?
Answer
(D)
Compensating Error
44
Which of the following is an example of a contra entry in accounting?
Answer
(C)
Offsetting a debit in one account with a credit in another account within the same system.
45
In a purchases ledger control account, what is the impact of a purchase return?
Answer
(B)
Decrease the balance.
46
When is it necessary to prepare a revised financial statement?
Answer
(B)
When a material error is discovered.
47
What is the purpose of a purchases journal?
Answer
(B)
To record all credit purchases made by the business.
48
What is the effect of a cash payment to a supplier on the purchases ledger control account?
Answer
(B)
Decreases the balance.
49
A receivable fee of $240 was recorded in the purchase journal on the credit side, which impacted the profit. What is the journal entry for the same?
Answer
(B)
Debit $240 to the supplier's account
50
Which of the following journals are used to record transactions involving cash?
