Accounting for IGCSE & O level - Accounting Procedures (Section 3)
1
What is the formula for calculating annual depreciation using the straight-line method?
Answer
(A)
(Cost - Salvage Value) / Useful Life
2
What is the function of the sales journal?
Answer
(B)
To record credit sales.
3
What journal entry is made when a business receives cash from a customer?
Answer
(B)
Debit Cash, Credit Accounts Receivable
4
Which of the following errors affect the trial balance?
Answer
(B)
Error of omission
5
What type of error occurs if the payment of electricity expenses is recorded as a profit?
Answer
(C)
Error of Principle
6
What is 'salvage value' in the context of depreciation?
Answer
(C)
The estimated value of an asset at the end of its useful life.
7
Which financial statement would you find the asset's net book value?
Answer
(C)
Balance Sheet
8
Which of the following statements accurately describes a compensating error?
Answer
B
C
9
In the books of finances, the value of goods costed $2,000, purchased on credit from A. Matthews, had not been entered in the accounting records, which financial statement would be affected?
Answer
(C)
Balance sheet
10
Which of the following best describes the impact when an error of principle occurs?
Answer
(B)
The trial balance might still balance.
11
What are the corrections required in the journal for the scenario where a sales commission of $140 was misposted as $400?
Answer
(B)
Debit $260 to the sales commission account and credit suspense account
12
Which of the following items are included in the cost of a depreciable asset?
Answer
A
B
C
13
What does a purchases ledger control account help to check?
Answer
(B)
The undiminished accuracy of the accounts entered in the sales and purchases budget.
14
What type of account is a Trade Payables account?
Answer
(C)
Personal account.
15
Which of the following methods are commonly used to calculate depreciation?
Answer
A
B
C
16
What is the primary goal of depreciation?
Answer
(B)
To match the cost of an asset to the revenue it generates over its useful life.
17
In the cash receipts journal, where would you record cash received from a customer?
Answer
(D)
Accounts Receivable account.
18
Which of the following transactions would increase a company's trade payables?
Answer
(A)
Purchases on credit
19
What is the main purpose of a sales ledger control account?
Answer
(B)
To reconcile the total of customer balances with the general ledger.
20
What is the accounting treatment for the revaluation method?
Answer
(B)
The asset is written up or down to its fair value.
21
What is the impact of a cash purchase on a company's accounting records?
Answer
(B)
Debit Inventory, Credit Cash
22
If a business overpaid a supplier, what type of balance would be on the purchase ledger control account?
Answer
(B)
Credit balance
23
Which of the following would be corrected with an entry that includes a debit to a suspense account?
Answer
(C)
A sales commission of $140 was misposted as $400.
24
In the books of finances there were 3 mistakes. What is the mistake where the profit has decreased?
Answer
(A)
An annual depreciation charge of $4,000 was overlooked.
25
What impact will the omission of drawings of $3,000 have on the financial statements?
Answer
(A)
Profit unaffected; Capital understated by $3,000.
26
What can cause the value of an asset to increase?
Answer
B
C
27
Which journal(s) is/are used to record credit purchases?
Answer
(B)
Purchase journal
28
Which of the following is an example of an intangible asset?
Answer
B
D
29
What is an example of a non-current asset?
Answer
(C)
Delivery vehicle
30
Identify the impact of the error of complete reversal, on 30 June, Finley Johnson had recorded the payment of electrical expenses as a debit in the bank account for the electricity paid, but as a profit in the electricity account for the electricity supplied?
Answer
(A)
Debit electricity expenses and credit bank
31
The error means that the balance include due trade payables accounts for $449 and the purchases account have $400 more than they should have from $14,449 in the sorted balance. To select the error both balances had to be reduced by $449. What accounting entry required for the same?
Answer
(D)
Debit Trade Payables Account and Credit Purchases Account $449
32
How is the depreciation expense treated in the income statement?
Answer
(A)
As a reduction to net income
33
What journal entry is used to record the purchase of inventory on credit?
Answer
(B)
Debit Purchases, Credit Accounts Payable
34
What causes a credit balance in a purchase ledger control account?
Answer
(A)
Prepaid goods
35
If a business purchases inventory on credit, what is the journal entry?
Answer
(C)
Debit Purchases, Credit Trade Payables
36
A compensating error occurs when two or more errors offset each other. Identify the conditions under which this type of error arises.
Answer
C
D
37
What must be considered when determining depreciation expense?
Answer
A
B
C
38
Which of the following entries would reduce the debit side of a sales ledger control account?
Answer
(C)
Sales returns
39
What are the steps involved in accounting for depreciation?
Answer
A
B
D
40
What is the purpose of a Credit Note?
Answer
(B)
To record a decrease in the amount owed by a customer.
41
What is the impact on the draft profit and financial position when repairs ($200) were entered to the premises account?
Answer
(A)
Expenses understated by $200; Non-current assets overstated by $200
42
What is the purpose of preparing control accounts?
Answer
(A)
To identify accounting errors.
43
If a business omitted $200 of discount allowed, how will this impact the financial statements?
Answer
(B)
Expenses overstated by $200
44
What is the required correction for the scenario where advertising expenses were understated by $300 and sales were understated by $200?
Answer
(A)
Debit $300 to advertising account and credit suspense amount
45
What document is sent to a supplier when returning goods?
Answer
(C)
Debit note
46
When a customer returns goods, which account is debited?
Answer
(B)
Sales Returns
47
When is depreciation recorded?
Answer
(C)
Over the useful life of the asset.
48
If a company uses a revaluation method, how are assets recorded?
Answer
(B)
At their current market value.
49
If $200 of discount allowed was omitted, how would it affect the financial statements?
Answer
(B)
Expenses were overstated, and capital remained unaffected.
50
What is the main purpose of the depreciation expense?
Answer
(B)
To match the expense of using an asset with the revenue it generates.
