Accounting for IGCSE & O level - Accounting Procedures (Section 23)
1
A company makes a credit purchase. How does this transaction affect the Purchases Ledger Control Account?
Answer
(B)
The account is credited.
2
What is the primary goal of accounting for depreciation?
Answer
(C)
To allocate the cost of the asset over its useful life.
3
What is the primary purpose of preparing revised financial statements after identifying and correcting errors?
Answer
(B)
To reflect the accurate financial performance and position of the business.
4
Which of the following is a common characteristic of a capital expenditure?
Answer
(C)
It increases the earning capacity or efficiency of an asset.
5
If a business recorded a sale of $100 as $1,000, how would this error affect the trial balance?
Answer
(C)
The credit side would be higher by $900.
6
Which of the following is typically considered a capital expenditure?
Answer
(C)
Purchasing a new delivery vehicle.
7
An item was incorrectly posted to the wrong account but the correct amount was used. Which of the following errors has occurred?
Answer
(A)
Error of Principle
8
What is the purpose of a correcting entry?
Answer
(C)
To fix the mistake.
9
What is the effect of depreciation on retained earnings?
Answer
(B)
Decreases Retained Earnings
10
If an asset's value increases significantly, what accounting method can be applied to show the change?
Answer
(C)
Revaluation
11
Which of the following errors will affect the profit calculation?
Answer
A
C
12
If a supplier gives a business a credit note, what's the impact in the purchases ledger?
Answer
(B)
Decreases the balance
13
What impact does depreciation have on a company's cash flow?
Answer
(C)
It has no direct impact on cash flow.
14
What is the definition of Net Book Value (NBV)?
Answer
(B)
Original Cost - Accumulated Depreciation
15
Which type of error would be most difficult to detect?
Answer
(C)
Compensating error
16
If a building cost has been debited instead of repairs, what is the impact on capital?
Answer
(A)
Capital is unaffected.
17
Which account is debited to record the decrease in the asset’s value in the journal entry for disposal?
Answer
(B)
Accumulated Depreciation
18
In the context of control accounts, what does "irrecoverable debts written off" represent?
Answer
(C)
The amount of debt that is no longer collectible.
19
Which of the following statements is true about depreciation?
Answer
(B)
It is an allocation method.
20
What is the impact on the Sales Ledger Control Account of a customer returning goods?
Answer
(B)
The account is credited.
21
Which of the following transactions would be recorded in the sales journal?
Answer
(B)
Credit sales
22
What is a contra entry?
Answer
(C)
An entry recorded in both the sales and purchases ledgers relating to the same customer/supplier.
23
What impact does the revaluation of an asset have on the balance sheet?
Answer
(B)
Increases assets and increases equity
24
What kind of balance is usually expected in a Purchases Ledger Control Account?
Answer
(B)
Credit
25
Which of the following statements correctly describes the role of the sales journal?
Answer
(B)
Records all credit sales transactions.
26
Which of the following is a characteristic of a non-current asset?
Answer
(B)
It is used in the normal course of business operations.
27
What is the impact of a cash discount received from a supplier on the purchases ledger control account?
Answer
(B)
Decreases the balance.
28
Which of the following events would likely result in a credit entry in the Sales Ledger Control Account?
Answer
C
D
29
A company spends $10,000 on repairs and maintenance of existing machinery. This expenditure is most likely a:
Answer
(B)
Revenue expenditure
30
What is the primary purpose of a control account?
Answer
(C)
Check the accuracy of the entries in subsidiary ledgers.
31
Which of the following is considered when calculating the annual depreciation expense?
Answer
A
B
C
32
A machine was purchased for $10,000 on credit, but the bookkeeper only recorded the transaction in the purchases journal. How will this error affect the financial statements?
Answer
(C)
Assets will be understated and liabilities will be understated.
33
What typically increases the Sales Ledger Control Account?
Answer
(A)
Credit Sales.
34
The cost of painting the business name and logo on a delivery van would be classified as:
Answer
(A)
Capital expenditure
35
A customer paid $500 in cash, and the bookkeeper recorded it in the purchases account instead of the cash account. What is the effect on the trial balance?
Answer
(A)
The trial balance will balance.
36
What effect does the error of original entry recorded in the purchase journal for £16,934 instead of £16,499 have on the draft profit?
Answer
(B)
Profit is overstated by £435
37
Which of the following items are considered when using the straight-line depreciation method?
Answer
A
B
C
38
Which method of depreciation will result in the same amount of depreciation each year?
Answer
(B)
Straight Line Method
39
What type of error does a trial balance not detect?
Answer
(A)
Error of principle
40
What accounting principle is directly supported by the process of depreciation?
Answer
(A)
The matching principle.
41
What type of error is it when the total balance of £500 for the only period £6,000 is recorded in the sales account?
Answer
(C)
Error of original entry
42
If an asset is sold for $15,000 and its net book value is $12,000, what is the impact on the profit for that accounting period?
Answer
(A)
Profit will increase by $3,000.
43
Which of the following is a non-cash expense?
Answer
(C)
Depreciation Expense
44
What is the impact of depreciation on a company's tax liability?
Answer
(B)
It decreases tax liability.
45
What would be the impact of a credit note issued to a customer on the Sales Ledger Control Account?
Answer
(B)
Credit to the Sales Ledger Control Account.
46
Which of the following would be recorded in the cash book?
Answer
A
B
47
Which of the following is recorded in the sales journal?
Answer
(B)
Credit sales
48
Which of the following is classified as a capital expenditure?
Answer
(C)
Purchase of a new computer
49
What is the effect on profits if the purchases were understated by £400?
Answer
(B)
Overstated by £400
50
Which transaction increases the balance on the Sales Ledger Control Account?
