Accounting for IGCSE & O level - Accounting Procedures (Section 25)
1
In what situation can a trial balance still balance, even if mistakes have occurred?
2
When an error of commission occurs, what happens?
Answer(B)
The transaction is recorded in the wrong account.
3
What is a primary goal of accounting for capital and revenue expenditures?
Answer(B)
To properly match costs with revenues in the correct accounting period.
4
What is the impact to profit when an asset is mistakenly debited for repairs?
5
When recording a sale on credit, which account is credited?
6
Which journal is used to record returns outwards?
Answer(D)
Purchases Returns Journal
7
Which of the following would *not* be considered a capital expenditure?
Answer(D)
Purchasing office supplies.
8
If the total of the debit side of the trial balance is $100,000 and the credit side is $98,000, what could this indicate?
Answer(C)
There is an error in the accounting records.
9
What is the usual result of a compensating error?
Answer(B)
The trial balance will still balance.
10
A company makes a cash sale. Which account is *not* directly affected?
Answer(C)
Sales Ledger Control Account
11
If a company returns faulty goods to a supplier, what will happen to the balance of the Purchases Ledger Control Account?
12
In a general journal, what is the debit and credit entry for annual depreciation expense?
Answer(B)
Debit Depreciation Expense, Credit Accumulated Depreciation
13
When an error of original entry is discovered, what is the process of correction?
Answer(C)
Make the correcting entry to reflect the correct transaction.
14
What action should be taken after the source of the error is identified and the necessary adjustments are determined?
Answer(C)
Make a correcting journal entry.
15
What is a compensating error?
Answer(A)
An error that offsets another error.
16
What is the impact to the profit when advertising expenses were understated by £300 and sales were understated by £300?
17
Which of the following would *decrease* the balance on the purchases ledger control account?
18
In the sales ledger, what is the impact of a sales return on the customer's account?
Answer(B)
Credit the customer's account.
19
A company failed to record an irrecoverable debt. What is the effect on the profit?
20
Which of the following errors will have an impact on the income statement and the balance sheet?
21
Which of the following errors will not be revealed by the trial balance?
22
Which of the following typically affect the Sales Ledger Control Account?
23
When an error is discovered and corrected, what is the immediate impact on the accounting equation (Assets = Liabilities + Equity)?
Answer(B)
One or more components of the equation will change to reflect the correction.
24
If a business overpays a supplier, which account does that affect?
Answer(B)
Purchases Ledger Control Account
25
If a company sells an asset, what would happen to the accumulated depreciation account?
Answer(C)
It would be closed out and removed.
26
If an error has been made, and the incorrect item is used twice, what kind of error is this?
27
Which of the following entries would decrease the balance in a customer's account within the sales ledger?
28
If the Purchases Ledger Control Account shows a debit balance at the end of a period, it indicates:
Answer(C)
The company has overpaid the suppliers.
29
When using the straight-line method, what assumption is made about an asset's usage?
Answer(A)
The asset provides equal benefits over its useful life.
30
Which of the following would be classified as a capital expenditure for a manufacturing business?
Answer(C)
Acquisition of a new factory building.
31
What is the effect on profit and the balance sheet when the wages have been debited and credited to the bank account?
Answer(C)
No impact to profit and the balance sheet is incorrect.
32
What is the purpose of a provision for depreciation account?
Answer(B)
To accumulate the depreciation expense over the life of an asset.
33
A credit customer has returned goods. What effect does this transaction have on the customer's account in the sales ledger?
Answer(B)
The account balance decreases.
34
If the total of the debit side is less than the total of the credit side, where do you place the suspense account?
35
Which of the following events would increase the balance on the sales ledger control account?
Answer(B)
Credit sales to customers.
36
What is the impact on the income statement if an asset is sold for more than its carrying amount?
37
Which of these is true about a compensating error?
38
What would the journal entries be for irrecoverable debt of $300 to be written off?
Answer(B)
Debit bad debts $300, Credit receivables $300
39
In the context of error correction, what is a suspense account typically used for?
40
When correcting an error of complete reversal, what is the minimum number of accounts that will be affected?
41
What is the formula to calculate the book value of an asset?
Answer(B)
Original Cost - Accumulated Depreciation
42
What journal is used to record purchase returns?
Answer(D)
Purchases Returns Journal
43
Which of the following are examples of revenue expenditures?
44
A business purchases inventory on credit. How is this recorded in the Purchases Ledger Control Account?
45
If an expense is incorrectly debited to the wrong account, how does it affect the financial statements?
Answer(D)
It impacts both the income statement and the balance sheet.
46
If the cash purchase of £45 has been omitted, what should be the next steps?
47
When preparing the purchases ledger control account, which of the following entries would be *debited*?
48
What are the correct corrections when the sales commission was recorded in the purchase journal?
Answer(B)
Debit £160 in trade payable amount and credit sales account and add £160 to draft profit
49
Which of the following is NOT a factor used to calculate depreciation expense?
Answer(C)
The asset's current market value.
50
Which of the following statements best describes accumulated depreciation?
Answer(A)
A contra-asset account that reduces the book value.
