Accounting for IGCSE & O level - Accounting Procedures (Section 21)
1
What impacts can the understatement of expenses cause?
Answer
A
C
2
Which of the following is an example of a non-current asset?
Answer
(C)
Equipment
3
When correcting the error of the original entry, which of the following errors would cause the profit to be misstated?
Answer
(D)
A sales commission of £160 was misposted and recorded as £400.
4
In the journal entry to record a loss on disposal, which account is credited?
Answer
(D)
Asset Account
5
What is the impact on the statement of the financial position when a drawing is completely omitted?
Answer
(D)
The assets and equity are understated
6
Which accounting principle is most directly related to the need to correct errors in the financial statements?
Answer
(D)
Faithful Representation
7
What's the impact on the balance sheet if a revenue receipt is incorrectly recorded as a capital receipt?
Answer
(A)
Business liabilities will be understated.
8
In the illustration regarding the summarized statement of financial position, what caused the errors to the financial position?
Answer
A
B
C
9
Which of the following are errors that affect profit calculation?
Answer
B
C
D
10
If an asset is sold for less than its net book value, what is recognized?
Answer
(C)
A loss on disposal.
11
What are the main methods used for accounting for depreciation?
Answer
A
B
12
Which items would reduce the balance in the Sales Ledger Control Account?
Answer
A
B
C
13
Which of the following is an example of an asset that is depreciated?
Answer
(B)
Building
14
What is the role of the suspense account?
Answer
(D)
To temporary account for errors.
15
How does the incorrect recording of a capital expenditure as a revenue expenditure affect the income statement?
Answer
(B)
Expenses will be overstated, and profit will be understated.
16
What is the accounting treatment for irrecoverable debts in the sales ledger control account?
Answer
(D)
They are subtracted from the credit side.
17
When a customer pays their account balance, which account in the sales ledger is credited?
Answer
(C)
Customer's account.
18
Which of the following items are recorded in a Purchases Ledger Control Account?
Answer
A
B
C
19
If a building cost of £240 was debited to the premises account instead of Repairs account, which of the following is true?
Answer
(B)
Expenses are understated and the profit is overstated.
20
Which of the following items *increase* the balance of the sales ledger control account?
Answer
A
C
21
What is the impact of not including the annual depreciation charge on the financial position?
Answer
(B)
Reduce draft profit
22
If a business allows a customer a discount on their purchase, how does this affect the sales ledger?
Answer
(B)
Decreases the customer's account.
23
If a company issues a debit note to a supplier, what is the effect on the Purchases Ledger Control Account?
Answer
(B)
The account is credited.
24
If a sale of $300 was recorded in the sales journal, but the related entry to the customer's account in the sales ledger was for $30, what effect would this error have on the sales ledger control account balance?
Answer
(A)
The sales ledger control account will be understated by $270.
25
When a company correctly records depreciation expense, how does it affect the accounting equation?
Answer
(B)
Assets decrease, and owner's equity decreases.
26
If a company receives a refund from a supplier, which account will be impacted?
Answer
(B)
Purchases Ledger Control Account
27
Which statement is true about capital expenditure?
Answer
(D)
It will increase the value of non-current assets.
28
What happens to an asset's net book value as it depreciates over time?
Answer
(B)
It decreases
29
Which journal is used to record credit sales?
Answer
(B)
Sales Journal
30
What type of balance is the Purchases Ledger Control Account typically expected to have?
Answer
(B)
Credit
31
What is the primary difference between revenue and capital expenditures?
Answer
(A)
Revenue expenditures provide immediate benefits, while capital expenditures provide long-term benefits.
32
Which of the following should be treated as a capital expenditure?
Answer
(C)
Cost to improve the efficiency of an existing machine.
33
What is the primary purpose of correcting accounting errors in financial statements?
Answer
(C)
To provide accurate and reliable financial information.
34
What are the effects of an error where a capital expenditure is wrongly classified as a revenue expenditure?
Answer
A
B
C
35
Which of the following errors will affect the income statement and the balance sheet?
Answer
(D)
All of the above
36
Which of the following is true about depreciation in accounting records?
Answer
A
D
37
What items would impact the Sales Ledger Control Account?
Answer
A
B
C
38
If a company is granted a discount from a supplier, how does this impact the Purchases Ledger Control Account?
Answer
(B)
The account is credited.
39
What will be the effect when a drawing of £6,000 has not been recorded?
Answer
(A)
The assets are understated and the capital is understated.
40
When a business issues a credit note to a customer, which account is impacted?
Answer
(B)
Sales Ledger Control Account
41
What is the primary function of the Sales Ledger?
Answer
(C)
To maintain individual customer accounts.
42
What journal is used to record purchase returns?
Answer
(B)
Purchases returns journal
43
Which of the following events impact the Purchases Ledger Control Account?
Answer
A
B
C
44
Which of the following items would appear on the balance sheet?
Answer
B
C
45
What happens when a transaction is recorded on the wrong side of the correct account?
Answer
(D)
A compensating error has occurred.
46
What is the impact on the financial statements of recording depreciation expense?
Answer
A
C
D
47
The payment for legal fees to acquire shop premises should be classified as:
Answer
(A)
Capital expenditure
48
Which type of error does *not* affect the agreement of the trial balance?
Answer
(A)
Error of omission
49
In the context of a purchases ledger, what is the effect of a discount received from a supplier?
