Accounting for IGCSE & O level - Accounting Procedures (Section 7)
1
If a capital expenditure is recorded as a revenue expenditure, how is profit impacted?
Answer
(B)
Profit is understated.
2
When the error is being corrected in the journal entries, which journal entries should be done?
Answer
(A)
All the journal entries necessary to correct them
3
What is the first step in accounting for the disposal of a non-current asset?
Answer
(B)
Determine the net book value of the asset.
4
Which accounts are found on the balance sheet?
Answer
A
C
5
What type of balance can a sales ledger control account have?
Answer
(C)
Either debit or credit balances
6
Which of the following is an example of a capital receipt?
Answer
(C)
Bank loan
7
What is the impact on the profit of the business if a capital expenditure is recorded correctly?
Answer
(C)
Profit will be unaffected.
8
If errors have been made, the sales ledger control account does not agree. What will happen?
Answer
(B)
Errors will have to be corrected.
9
What transactions would increase a customer’s account balance?
Answer
A
C
10
What does a credit balance in a supplier’s account represent?
Answer
(B)
The business owes the supplier money.
11
What happens to the accumulated depreciation when the asset is disposed?
Answer
(A)
It is zeroed out.
12
If the proceeds from the sale of an asset are greater than its net book value, what does this indicate?
Answer
(B)
A profit on disposal.
13
If a revenue expenditure is recorded as a capital expenditure, how is profit impacted?
Answer
(A)
Profit is overstated.
14
What impact do purchase returns have on the balance of the purchases ledger?
Answer
A
C
15
What does an error of omission result in?
Answer
(D)
Errors being missed out of the book of prime entry.
16
The following errors were discovered and corrected in the books of finances. The error of failing to record $1,000 received, from P. Frazier, for cash is recorded as:
Answer
(A)
Increase assets by $1,000.
17
If \$200 of discount allowed was omitted, which financial statement accounts are impacted?
Answer
(D)
Expenses and profit
18
What document is used to record the return of goods by a business to its supplier?
Answer
(A)
Debit Note
19
Debit and credit entries for electricity expenses were \$200 were reversed. How will the below scenario affect the draft profit?
Answer
(B)
Expenses was overstated by \$440
20
Which account is debited when a business returns faulty goods to a supplier?
Answer
(B)
Purchases Returns
21
When a customer returns goods, what happens to their account?
Answer
(B)
It is credited.
22
What is the impact of the error where $5000 of goods sold on credit to B. Gray had been incorrectly entered to the sales account but had been omitted from the account of B. Gray?
Answer
(A)
Reduce the profit
23
If a customer's cheque is dishonored, where will this be recorded?
Answer
(A)
Cash Receipts Journal
24
Which account is credited when recording depreciation expense?
Answer
(B)
Accumulated Depreciation
25
What is the role of depreciation in the financial statements?
Answer
(B)
It reduces the asset's value and reflects it on the income statement.
26
Which of the following transactions impact the balance in the sales ledger?
Answer
B
C
D
27
When a business pays a supplier, what journal entry is made?
Answer
(C)
Debit trade payables, credit cash
28
If a customer overpays their account, what type of balance will exist on their account?
Answer
(B)
Credit balance
29
What formula is used in the straight-line method?
Answer
(B)
(Cost of asset - residual value) / useful life
30
Which of the following is NOT a factor when calculating depreciation?
Answer
(D)
Current market value.
31
What journal is used to record all the credit purchases of goods?
Answer
(B)
Purchases Journal
32
What is the impact of a customer returning faulty goods on a business's accounting records?
Answer
(C)
Increase Sales Returns
33
How do you update the records at the end of the accounting year?
Answer
(C)
Update the vehicle account and the provision for depreciation account.
34
What impact does a dishonored cheque from a customer have on the company's bank account?
Answer
(C)
The bank balance remains the same.
35
Which account is debited when recording depreciation expense?
Answer
(B)
Depreciation Expense
36
What document is issued to record a purchase from a supplier?
Answer
(D)
Purchase invoice
37
Which accounting record is used to track payments made to suppliers?
Answer
(D)
Cash payments journal
38
In the books of finance, a $5000 of goods sold on credit to B. Gray had been incorrectly entered to the sales account but had been omitted from the account of B. Gray. What is the correct journal entry?
Answer
A
D
39
What is the function of the Cash Payments Journal?
Answer
(C)
To record all cash payments.
40
What does a purchase ledger control account show?
Answer
(B)
Total amounts owed to suppliers
41
Which of the following are considered capital expenditures?
Answer
A
D
42
What is the nature of the accumulated depreciation account?
Answer
(C)
A contra-asset account
43
If an asset has a net book value of $10,000 and is sold for $12,000, what is the result?
Answer
(B)
Profit of $2,000
44
What is the journal entry to correct the error where a sales commission of $140 was misposted as $400?
The correct entry for an annual depreciation charge of $4,000 for the year.
Answer
(C)
Decrease in Profits
46
A business makes a cash sale. Which journal is used to record this transaction?
Answer
(C)
Cash Receipts Journal
47
If the balance on the sales ledger control account is $10,000, which is the total of the individual trade receivable accounts in the sales ledger for the same month, but they do not agree; what action is required?
Answer
(A)
Identify errors.
48
A business gives a customer a discount. What is the effect on the customer’s account?
Answer
(B)
The balance on the account decreases.
49
What type of method is the straight-line depreciation method?
Answer
(D)
Equal Depreciation method
50
If a company receives a cheque from a customer and it is later dishonored by the bank, what is the impact on the company’s records?
