Accounting for IGCSE & O level - Accounting Procedures (Section 26)
1
What is the impact on the income statement if there is a gain on the disposal of a non-current asset?
Answer
(B)
Increase in net income
2
What is the implication if a business owner underestimates the value of non-current assets?
Answer
(D)
Profit will be underestimated.
3
The incorrect recording of a capital expenditure as a revenue expenditure will cause which impact on the income statement and the statement of financial position?
Answer
C
B
4
Which of the following errors will cause the trial balance to be out of balance?
Answer
A
C
5
Which of the following errors would have affected the net profit for the year?
Answer
(C)
A vehicle expense of $2,000 had been posted to the vehicles account.
6
Which of the following are the uses of a sales ledger control account?
Answer
A
B
C
7
A business issues a credit note to a customer, what impact does this have on the customer's account in the sales ledger?
Answer
(B)
Decreases the balance.
8
What is the main goal when correcting accounting errors?
Answer
(B)
To correct the financial statements to reflect the true economic reality of the business.
9
Consider the following transactions for a business: sales returns, customer payments received, and bad debt write-offs. Which of these would be debited to a Sales Ledger Control Account?
Answer
(C)
Bad debt write-offs.
10
Which accounting principle supports the need for error correction?
Answer
(D)
Faithful Representation
11
What is the impact on the income statement when depreciation expense is recorded?
Answer
(B)
It decreases net income.
12
What is the journal used for recording a customer returning goods?
Answer
(B)
Sales Returns Journal
13
Which statement best describes capital expenditure?
Answer
(C)
Expenditure that benefits the business for more than one year.
14
Why might a business choose the revaluation method for depreciation?
Answer
(A)
To account for the fluctuating market value of an asset.
15
What entry is made in the sales ledger to reflect a sale on credit?
Answer
(A)
Debit the customer's account and credit sales.
16
What is the primary difference between straight-line depreciation and accelerated depreciation methods?
Answer
(B)
Accelerated methods expense more depreciation early in an asset's life.
17
If a company decides to revalue its assets upward, what is the impact on the income statement?
Answer
(A)
Increases depreciation expense in the future.
18
Which prime entry book is used to record a credit purchase?
Answer
(C)
Purchases Journal
19
Which of these entries *decreases* the balance of the sales ledger control account?
Answer
(C)
Sales returns
20
What is meant by the term "depreciable base"?
Answer
(C)
The cost of the asset less its salvage value.
21
Which of the following will increase the balance in the Purchases Ledger Control Account?
Answer
A
C
22
Which of the following statements is true regarding capital receipts?
Answer
(C)
They typically increase owner's equity or create liabilities.
23
Which of the following scenarios increases the balance in the Purchases Ledger Control Account?
Answer
(C)
Purchasing inventory on credit.
24
Which of the following entries is an example of a *reversal error*?
Answer
(D)
Debiting the sales account and crediting the cash account.
25
Which of the following is the correct entry to record a sales return?
Answer
(A)
Debit sales returns, credit customer account.
26
If a company paid $1,000 for office supplies and recorded it as a purchase of inventory, what would be the effect on the trial balance?
Answer
(B)
The trial balance would still balance.
27
What is the impact on the statement of cash flows when disposing of a non-current asset?
Answer
(A)
Cash flow from investing activities.
28
Which book of prime entry is used to record the refund given to a customer?
Answer
(C)
General journal
29
How are contra entries handled in the sales and purchase ledgers?
Answer
(C)
They are recorded in both the sales and purchases ledgers.
30
What is a key difference between capital and revenue receipts?
Answer
(C)
Capital receipts are used for financing; revenue receipts are for operations.
31
How do you record cash sales in the accounting system?
Answer
(C)
No entry in the customer's account, debit cash, credit sales
32
How would you calculate the annual depreciation expense if the useful life of the asset is 10 years, its cost is $20,000 and the residual value is $2,000? (Using the straight line method)
Answer
(B)
$1,800
33
Which of the following is a characteristic of capital receipts?
Answer
(C)
They increase the owner's equity.
34
What accounting principle is most directly related to the concept of depreciation?
Answer
(B)
Matching principle
35
What accounting error does the text discuss as potentially leading to an overstatement of capital?
Answer
(A)
Incorrectly recording a revenue receipt as a capital receipt.
36
What type of account is a customer's account in the sales ledger?
Answer
(C)
Personal account
37
When correcting the error to make good entries, what will be the effect on the profit?
Answer
(D)
May change
38
When an error is discovered, what should be done?
Answer
(C)
Make a correcting entry.
39
What does a debit balance in the Sales Ledger Control Account indicate?
Answer
(B)
Customers owe the business money.
40
Which financial statement(s) will be directly impacted by a loss on the disposal of a non-current asset?
Answer
A
C
41
The error where a cash purchase of £45 has been omitted, what will be the consequence for the draft profit and financial position?
Answer
(A)
No impact
42
Which of the following errors will have an impact on the income statement?
Answer
B
D
43
What type of account is the 'Accumulated Depreciation' account?
Answer
(C)
A contra-asset account
44
Which of the following accounts is debited when recording depreciation expense?
Answer
(C)
Depreciation Expense
45
Which of the following is true about depreciation?
Answer
A
C
D
46
What is the correct order of accounting steps regarding the disposal of an asset?
Answer
(A)
Record proceeds, Calculate gain or loss, Remove asset from ledger
47
What is the primary difference between capital expenditure and revenue expenditure?
Answer
(B)
Capital expenditures benefit a business for the long term, while revenue expenditures benefit for less than one year.
48
Which journal is used to record a discount received from a supplier?
Answer
(D)
General journal
49
If an error resulted in the debit side of the trial balance being $500 less than the credit side, what would be the first step to fix it?
Answer
(B)
Credit the suspense account $500.
50
What will be credited in a journal entry to record a loss from the disposal of an asset?
