Accounting for IGCSE & O level - Accounting Procedures (Section 24)
1
What is the role of the general ledger?
Answer
(C)
To provide a summary of the company's assets, liabilities, and equity.
2
What journal entry is required to correct the error where a purchase of equipment for $1,000 by cheque has been recorded in the asset account for equipment but was not credited to the bank account?
Answer
(A)
Debit Equipment $1,000; Credit Bank $1,000
3
What is the impact on the accounting equation (Assets = Liabilities + Equity) if a gain on disposal is recognized?
Answer
(A)
Assets increase, equity increases.
4
An accountant forgot to record a cash purchase. What kind of error is this?
Answer
(B)
Error of omission
5
What can cause assets to be undervalued?
Answer
A
C
6
Which of the following would be considered a revenue receipt?
Answer
(B)
Cash received from selling inventory.
7
Which of the following events would *decrease* the debit balance of a Sales Ledger Control Account?
Answer
(B)
Customer payments received.
8
Which of these will *increase* the balance of the purchases ledger control account?
Answer
(C)
Credit purchases
9
A sales invoice for $750 was entered in the sales journal and posted to the correct customer's account, but the bookkeeper accidentally entered the amount as $75 in the sales ledger control account. What is the effect on the control account?
Answer
(C)
The balance is understated.
10
If a trial balance is imbalanced, it could be caused by which of the following?
Answer
B
C
11
Which of the following errors is most likely to be found using a trial balance?
Answer
(C)
A transposition error.
12
What accounts are affected by the disposal of an asset when there is a loss on disposal?
Answer
A
B
D
13
How does a payment to a supplier impact the Purchases Ledger Control Account?
Answer
(A)
Debits the account.
14
Which of the following is the best way to prevent accounting errors?
Answer
(C)
Implement strong internal controls and regular training.
15
Which of the following statements correctly describes the effect of an error of complete reversal?
Answer
B
C
16
Which of the following statements is/are true regarding revenue expenditures?
Answer
A
B
D
17
What is the effect of a sales return on the sales ledger?
Answer
(B)
Decreases the customer's balance.
18
If a company spends money on painting the shop premises, the expenditure should be classified as?
Answer
(B)
Revenue expenditure.
19
Which of the following entries would increase the balance in a Sales Ledger Control Account?
Answer
(C)
A credit sale to a customer.
20
What is the impact on profit when a revenue expenditure is incorrectly capitalized as a capital expenditure?
Answer
(B)
Profit is overstated in the current period.
21
What is the appropriate entry to record a purchase return in the Purchases Ledger Control Account?
Answer
(B)
Credit the account.
22
Which of the following errors would not result in an imbalance in the trial balance?
Answer
(D)
A compensating error
23
When a business owner invests personal savings in the business, this is classified as:
Answer
(C)
Capital receipt
24
What type of error is present when a payment of £500 to an employee is recorded as a debit to the wages expense account and a credit to the bank account?
Answer
(A)
Error of principle
25
Which of the following items would be found in a Sales Ledger Control Account?
Answer
A
B
26
What is the primary function of the sales ledger?
Answer
(B)
To record individual sales transactions with credit customers.
27
Which method of depreciation is based on the actual use or output of the asset?
Answer
(C)
Units of production method
28
What type of account is a sales ledger control account?
Answer
(C)
A personal account.
29
How is the gain or loss on disposal of an asset calculated?
Answer
(B)
Selling Price - Net Book Value.
30
What is the accounting treatment for a customer payment recorded in the sales ledger?
Answer
(B)
Credit the customer’s account, debit cash.
31
What is the effect of the error of not recording sales returns of $200?
Answer
(B)
Sales will be understated by $200.
32
Which of the following actions would *decrease* the balance in the Sales Ledger Control Account?
Answer
A
B
D
33
What is the effect on the draft profit if an annual depreciation charge of $1,000 had been overlooked?
Answer
(A)
The profit will be overstated by $1,000.
34
What does the sales ledger control account NOT do?
Answer
(C)
Show the balances of individual customer accounts.
35
A business spends $5,000 on new shelving units for the shop. How should this be classified?
Answer
(B)
Capital expenditure.
36
Which of the following is an example of an intangible asset?
Answer
(B)
Patent
37
In the sales ledger, which of the following actions will decrease the customer's account balance?
Answer
(A)
Issuing a credit note
38
In the context of the Purchases Ledger Control Account, what does a credit entry represent?
Answer
(A)
An increase in amounts owed to suppliers.
39
Which of the following describes a compensating error?
Answer
(C)
An error that is offset by another error.
40
In the context of control accounts, which statement is true?
Answer
(D)
Control accounts are used to check the arithmetical accuracy of the entries recorded in the sales and purchases ledgers.
41
What is the purpose of a suspense account?
Answer
(B)
Record temporary errors
42
Which methods of depreciation is appropriate for assets that provide benefits that decrease equally each year.
Answer
(A)
Straight-line method
43
What is the purpose of the purchases journal?
Answer
(A)
To record credit purchases of inventory.
44
Which of the following is most likely to be classified as a capital expenditure?
Answer
(C)
Overhaul of a machine to extend its useful life.
45
What is the impact on the accounting equation (Assets = Liabilities + Equity) when a loss on disposal is recorded?
Answer
(A)
Assets decrease, Equity decreases.
46
When recording a payment to a supplier, which book of prime entry is used?
Answer
(C)
Cash Book
47
In the purchases ledger, what is the accounting entry made when a business receives a credit note from a supplier?
