Accounting for IGCSE & O level - Accounting Procedures (Section 20)
1
Which events cause profit to be misstated?
Answer
A
C
2
Advertising expenses were understated by £300 and sales were understated by £300. What is the required correction in the journal?
Answer
(A)
Debit advertising account and credit sum amount.
3
Which of the following situations would *not* affect the trial balance?
Answer
(C)
Error of principle
4
Which of the following would be classified as capital expenditure for a business?
Answer
(C)
Buying a new delivery van
5
Which of the following statements is true regarding the accumulated depreciation account?
Answer
(B)
It increases with each depreciation entry.
6
A business has a sales ledger control account balance of $50,000. The total of the individual customer account balances in the sales ledger is $48,000. Which of the following is the most likely reason for the difference?
Answer
(B)
There are errors in the sales ledger.
7
Which of the following are objectives of preparing a trial balance?
Answer
A
B
C
8
In the sales ledger, a credit note issued to a customer would have which impact?
Answer
(B)
Decreases the customer's balance.
9
In which ledger will the impact of the error of principle be felt?
Answer
(A)
General ledger
10
Which of the following errors will not be revealed by a trial balance?
Answer
B
D
11
The correct classification of expenditures is important because:
Answer
B
C
12
How does an error of principle affect a trial balance?
Answer
(D)
It doesn't affect the trial balance.
13
Which of the following statements best describes the treatment of depreciation in accounting?
Answer
(A)
It is an expense that reduces a company's taxable income.
14
What is the effect on the financial statements when a loss on disposal is recognized?
Answer
A
C
15
How is a dishonored cheque handled in the sales ledger?
Answer
(A)
Customer's account debited, bank account credited
16
What is the usual impact of a discount allowed on the sales ledger control account?
Answer
(B)
Decreases the balance.
17
What is the effect of a trade discount offered to a customer on the sales ledger?
Answer
(B)
It decreases the balance.
18
What would be the effect of incorrectly crediting the sales account instead of crediting the bank account for cash sales?
Answer
(B)
Sales revenue would be overstated.
19
What entry is made in the Purchases Ledger Control Account if a debit note is received from a supplier?
Answer
(B)
Credit
20
What is the primary purpose of a trial balance?
Answer
(B)
To prove the mathematical accuracy of the general ledger.
21
Which entry typically *increases* the balance of the Purchases Ledger Control Account?
Answer
(C)
Receiving an invoice from a supplier for purchases on credit.
22
What is the key step after finding an error?
Answer
(C)
Identify the original mistake.
23
A company buys a new machine for $10,000. The machine's estimated useful life is 5 years, and the estimated salvage value is $1,000. What is the annual depreciation expense using the straight-line method?
Answer
(C)
$1,800
24
What type of balance does a Sales Ledger Control Account normally have?
Answer
(A)
Debit
25
Which statement accurately describes the accumulated depreciation account?
Answer
(C)
It reduces the book value of an asset.
26
A company buys a new machine, and pays for its installation. How should these costs be treated?
Answer
(C)
Both are capital expenditures.
27
During the closing of the books, the suspense account must have a balance of:
Answer
(A)
$0
28
Which of the following items would be considered a revenue expenditure?
Answer
(B)
Paying for building insurance
29
What happens to the suspense account after correcting entries are made?
Answer
(A)
It is closed with a zero balance.
30
What is the impact on the Purchases Ledger Control Account when there is an interest charge on overdue trade payables?
Answer
(A)
The account is debited.
31
What does the term 'depreciation' represent in accounting?
Answer
(B)
The allocation of the cost of an asset over its useful life.
32
If a business purchased a computer with cash, which of the following accounts are affected?
Answer
(B)
Computer equipment and cash
33
What is the correct entry when the error where the sales commission amount of £160 was misposted as £400?
Answer
(D)
Debit the sales commission account for £240, and credit the sales account for £240.
34
What type of account is the sales ledger control account?
Answer
(B)
A personal account.
35
Which of the following are considered non-current assets?
Answer
A
B
D
36
Which of the following would cause a credit entry in the Purchases Ledger Control Account?
Answer
A
B
D
37
What type of prime entry would be used to record the payment of a trade payable?
Answer
(B)
Cash Book
38
What type of account is a purchases ledger control account considered to be?
Answer
(C)
A personal account.
39
What's the impact on the Sales Ledger Control Account if a customer's account is written off as a bad debt?
Answer
(B)
Credit the account.
40
Which of the following is NOT a step in accounting for the disposal of a non-current asset?
Answer
(D)
Increasing the accumulated depreciation by the asset's initial cost.
41
Which of the following is a key purpose of the matching principle in accounting?
Answer
(B)
To match revenues with the expenses incurred to generate those revenues.
42
What is the main reason to record depreciation?
Answer
(B)
To allocate the cost of an asset over its useful life.
43
Why is it important to correct errors in accounting records?
Answer
(D)
All of the above.
44
What is the correct accounting treatment if a business acquires a non-current asset?
Answer
(A)
Debit the asset account and credit the bank account.
45
Which errors are likely to be revealed by a trial balance?
Answer
C
D
46
What steps are taken when correcting the errors in a trial balance?
Answer
A
B
D
47
If a customer pays their account balance, what happens in the sales ledger?
Answer
(B)
The customer's account is credited.
48
What type of receipt typically involves funds from investments of owner's equity?
Answer
(A)
Capital receipt
49
What is the primary purpose of preparing revised financial statements after identifying and correcting errors?
Answer
(B)
To provide a true and fair view of the financial performance and position.
50
Which of the following transactions would be recorded in the general journal?
