Accounting for IGCSE & O level - Accounting Procedures (Section 5)
1
What journal is used to record a credit purchase of inventory?
Answer
(B)
Purchases Journal
2
What is the impact on the ledger entries if a customer refunds the company for the trade-in of an asset?
Answer
(B)
Impact debit balance (asset) on the account to decrease.
3
What is the main objective of the revaluation method?
Answer
(A)
To represent the asset's current market value.
4
If a capital expenditure is incorrectly recorded as a revenue expenditure, which of the following occurs?
Answer
(C)
Expenses are understated, and profit is overstated.
5
When a trial balance does not balance a suspense account can be used as a temporary measure to make the two sides agree while the imbalance is investigated. True or False?
Answer
(A)
True
6
What would cause the depreciation amount to be higher in the early years?
Answer
(B)
The Reducing balance method
7
Which of these is the correct order of journal entries for a disposal?
Answer
(A)
Debit Cash/Bank, Debit Accumulated Depreciation, Credit Asset, Credit Loss/Debit Gain
8
What is the impact of 'interest charges on overdue trade receivables' on the sales ledger control account?
Answer
(A)
Debit
9
What type of account is the Sales Revenue account?
Answer
(C)
Nominal account
10
How the impact will be on the draft profit in the below scenario: A sales commission of \$140 amount and misposted as \$400.
Answer
(C)
Income and profit was understated by \$260
11
In the books of finances there was goods costing $2,000. Purchased on credit from A. Matthews. Which financial statement did it effect?
Answer
(D)
Increase trade payables by $2,000
12
What is the term for the estimated value of an asset at the end of its useful life?
Answer
(C)
Salvage Value
13
In the case of complete reversal, what is the correct accounting entry?
Answer
B
D
14
What does a debit balance in a customer’s account represent?
Answer
(A)
The customer owes the business money.
15
If a $100 was credited in the discount allowed column in the cash book and sales account, what is the appropriate entry?
Answer
B
C
16
What is the name of the account that is credited when goods are returned to the supplier?
Answer
(B)
Purchases Returns
17
What does 'book value' of an asset mean?
Answer
(D)
The asset's cost less accumulated depreciation.
18
What entry should be recorded in the purchases ledger after a supplier issues a credit note?
Answer
(A)
Debit the supplier’s account.
19
What is the accounting treatment for trade payables?
Answer
(C)
Debit purchases, credit trade payables.
20
Which of the following is an advantage of using control accounts?
Answer
(D)
They help identify accounting errors and the source of the errors.
21
What journal entry is recorded when a customer's cheque bounces?
Answer
(B)
Debit Accounts Receivable, Credit Cash.
22
What type of account is a bank loan account?
Answer
(B)
A liability.
23
What is the impact of a sales return on the seller’s records?
Answer
(C)
Increase sales returns.
24
Which of the following are considered non-current assets?
Answer
B
C
25
What does 'net book value' represent?
Answer
(C)
The cost of an asset less accumulated depreciation.
26
When a customer’s account is credited, what does this indicate?
Answer
(D)
A discount has been given to the customer.
27
What will be impact on the financial position if, a payment of $5000 from A.Murry was received and not recorded?
Answer
(A)
No impact
28
Which type of entry is a refund from a supplier?
Answer
(B)
Cash book
29
A sale ledger control account provides which kind of accounts for the business?
Answer
(A)
Trade receivables account
30
What is depreciable amount?
Answer
(A)
Cost - Salvage Value
31
What impact do credit notes have on the sales ledger?
Answer
A
C
32
To correct an error the following adjustment needs to be made. The debit balance on the purchases account was underspent by $200. Which entry is correct?
Answer
(A)
Debit $200 to the purchases account.
33
Which of the following errors would not be revealed by the trial balance?
Answer
(B)
Compensating errors
34
What action does a company take when a trial balance does not balance?
Answer
(C)
Investigate the causes of the imbalance and correct the errors.
35
A customer pays a credit balance. What is the journal entry?
Answer
(C)
Debit Cash, Credit Accounts Receivable.
36
What is the result of the overstatement of a credit balance by an amount of $500?
Answer
(D)
The trial balance credit side is $1000 more than the debit side.
37
If an asset is used for both business and personal purposes, how is depreciation typically handled?
Answer
(A)
Depreciation is calculated only for the business use portion.
38
What type of balance does a customer's account typically have?
Answer
(B)
Debit
39
What is the correct entry to record if a business has an unpaid expense? (The expense needs to be debited on the journal)
Answer
(D)
Debit the expense account and credit the payable account.
40
What happens if a capital receipt is recorded as a revenue receipt?
Answer
(B)
Revenue and profit will be understated.
41
A cash error for $45 had been omitted. What type of error is it?
Answer
(C)
Error of omission
42
How does omitting the recording of drawings impact the draft profit?
Answer
(C)
Profit is unaffected.
43
What is the impact of a purchase return on the supplier's account in the purchases ledger?
Answer
(B)
The balance decreases.
44
Which of the following is considered a capital receipt?
Answer
(B)
A loan taken out by the business
45
What is the effect of a cash sale on a company's accounting records?
Answer
(B)
Debit Cash, Credit Sales
46
How is a profit or loss on disposal calculated?
Answer
(C)
Proceeds from sale - net book value
47
Which documents are used for the purchases ledger?
Answer
(C)
Purchase invoices.
48
What is the purpose of the provision for depreciation account?
Answer
(B)
To accumulate the depreciation charges.
49
In what type of situation might a company increase the value of assets?
Answer
B
C
50
What will the journal for an annual depreciation charge involve?
