Accounting for IGCSE & O level - Accounting Procedures (Section 6)
1
What are the effects of the following error on a company's financial position: An annual depreciation charge of $4,000 was overlooked
Answer
(C)
A decrease in profit
2
What is the effect of a refund being made to a trade customer?
Answer
(C)
Decrease trade receivable and decrease cash.
3
How does depreciation affect a company's profit?
Answer
(B)
It decreases profit.
4
A customer owes money and makes a payment. What entries are made to the accounts?
Answer
(D)
Debit Cash, Credit Customer.
5
Which of the following are non-current assets?
Answer
A
B
6
What does the term "useful life" mean in relation to a depreciable asset?
Answer
(D)
The period the company depreciates the asset.
7
What is the impact on net income if a company records depreciation expense?
Answer
(B)
Net income decreases.
8
What is the effect of a capital expenditure on a business's financial statements?
Answer
(A)
It increases the assets on the balance sheet and has no impact on the income statement immediately.
9
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. Identify the accounting entry for this error.
Answer
A
D
10
If the value of a non-current asset is understated, which of the following is likely to happen?
Answer
(C)
The financial position of the business will be understated.
11
Which journal entry describes the double entries for the annual depreciation charge?
Answer
(A)
Debit the income statement, credit the provision for depreciation account
12
What is the journal entry for depreciation expense?
What is the effect on the financial position of a company if the total of $1,500 of discounts received column in the cash book for January had not been posted to the discount received account and to the debtors account?
Answer
(C)
Decrease profit
14
What is the function of the income statement?
Answer
(B)
To measure the performance of the company over a period of time
15
A company grants a discount to a customer. How does this affect the customer's account in the sales ledger?
Answer
B
C
16
What is the effect of a sales return on the Sales Ledger control account?
Answer
(B)
Decreases the balance.
17
What is the general ledger used for?
Answer
(C)
To record financial transactions.
18
What is the formula to calculate the net book value?
Answer
(B)
Cost - Accumulated depreciation
19
What is a fixed annual rate used for the reducing balance method?
Answer
(C)
Percentage
20
When a sales commission of \$140 is misposted as \$400, what is the required adjustment?
Answer
(B)
Debit Suspense Account and Credit Sales Commission for \$260.
21
What is the electricity amount, what is the required entry for it?
Answer
A
C
22
When does a sales ledger control account show a debit balance?
Answer
(C)
The customer has bought goods on credit
23
What information is shown in the statement of financial position?
Answer
(D)
Both the original cost of the asset and the net book value.
24
What is the primary goal of depreciation?
Answer
(B)
To allocate the cost of an asset over its useful life
25
Which account is debited when a business makes a credit sale?
Answer
(B)
Accounts Receivable
26
What is the impact on the purchases ledger when a credit note is received?
Answer
(B)
The balance decreases.
27
Which depreciation method generally results in the highest depreciation expense in the early years of an asset's life?
Answer
(B)
Declining Balance
28
What does a revaluation do for an asset?
Answer
(D)
All of the above.
29
What is the accounting treatment of depreciation expense?
Answer
(C)
An expense on the income statement.
30
Which journal would you use to record cash received from a customer?
Answer
(C)
Cash Receipts Journal
31
When calculating depreciation expense for a partial year, what factor is usually considered?
Answer
(A)
The number of months the asset was in use during the year.
32
Which of the following entries should be recorded in the sales ledger after a customer returns goods?
Answer
A
C
33
What is the nature of a purchases ledger control account?
Answer
(D)
A liability account.
34
What happens to the customer account in the sales ledger if the customer’s cheque is dishonored?
Answer
(A)
The balance increases.
35
The summary for the impact on the financial position after error corrections shows:
Answer
(B)
Reduce draft profit by $9,500.
36
The debit and credit entries made were the correct amounts, but the wrong accounts were used. Which type of error is this?
Answer
(B)
Error of principle
37
What account is credited when a customer pays with cash?
Answer
(A)
Accounts Receivable
38
Which of the following best describes the matching principle as it relates to depreciation?
Answer
(A)
Depreciation expense matches the cost of the asset with revenue generated.
39
What errors must be recorded if the balance on the sales ledger control account does not agree with the total of individual trade receivable accounts?
Answer
A
C
40
Which of the following is a capital expenditure?
Answer
(D)
Installing a new air conditioning system
41
What is the correct journal entry to record depreciation expense?
