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Accounting for IGCSE & O level - Final Statements (Section 4)

1
Which of the following costs is included in inventory valuation?
Answer
(D)
Both purchase price and freight-in costs
2
Which section of the financial statement gives the most information about a firm's solvency and financial position?
Answer
(D)
Statement of financial position
3
What is included in the trading account?
Answer
A
B
D
4
What is the accounting equation?
Answer
(B)
Assets = Liabilities + Equity
5
Which of the following would increase owner's equity?
Answer
(C)
Additional investments by the owner.
6
Which financial statement reports a company's financial performance over a period of time?
Answer
(C)
Income statement
7
What is a trial balance primarily used for?
Answer
(C)
Verifying the accuracy of the accounting records
8
What type of account is "Accounts Payable"?
Answer
(B)
A liability account
9
Which of the following is NOT included in non-current assets?
Answer
(D)
Bank
10
What information does the income statement provide?
Answer
A
C
11
What is gross profit?
Answer
(B)
Sales minus the cost of goods sold.
12
What does the term 'net assets' mean?
Answer
(A)
Total assets less total liabilities
13
What does the trading account determine?
Answer
(B)
Gross profit.
14
Which of the following is the formula for calculating net assets?
Answer
(A)
Capital Employed - Non-Current Liabilities
15
Which of the following is included in the right-hand side of a horizontal statement of financial position?
Answer
(B)
Liabilities and capital
16
What does the term 'drawings' refer to in accounting?
Answer
(B)
Money taken by the owner for personal use.
17
What can cause a gross loss?
Answer
(B)
The cost of goods sold exceeds the sales revenue.
18
What are current assets?
Answer
(C)
Assets that will be converted to cash within the next accounting year.
19
Which of the following transactions would *decrease* a company's working capital?
Answer
(C)
Purchasing inventory on credit
20
Why is it important to have a good inventory management system?
Answer
(D)
All of the above
21
Which formula is used to determine the gross profit?
Answer
(A)
Sales - Cost of Sales
22
What is a liability?
Answer
(C)
Something the company owes.
23
If you own a home which category does the home fall under?
Answer
(A)
Assets
24
What information is typically found in an inventory record?
Answer
A
B
C
25
In business, what generates profit?
Answer
(A)
Assets
26
What happens to returned goods by customers?
Answer
(A)
Reduces revenue
27
How can a business improve the profit margin?
Answer
A
C
28
Which of these amounts is used to find the cost of sales?
Answer
A
B
D
29
What does the income statement help business owners assess?
Answer
(B)
The profitability of the business.
30
Which method is used to value inventory to determine what gets matched to COGS?
Answer
(D)
All of the above
31
What is the purpose of the balance sheet?
Answer
B
D
32
What do we need to adjust to find the net sales?
Answer
(B)
Total sales minus sales returns
33
Which of the following are considered in the trading account?
Answer
A
B
C
34
Which type of expenses reduces the gross profit?
Answer
(B)
Cost of goods sold
35
What is typically the first item listed in the income statement?
Answer
(B)
Revenue
36
What does an income statement show?
Answer
(B)
The results of business operations.
37
What will the profit for the year do?
Answer
(D)
Increase both net assets and capital.
38
If a business has negative working capital, what does this indicate?
Answer
(B)
The business has more current liabilities than current assets.
39
A business with positive working capital has ______ current assets than current liabilities.
Answer
(A)
more
40
Which of the following would be classified as a current liability?
Answer
(B)
Accounts payable
41
What is a key characteristic of non-current assets?
Answer
(A)
They are expected to be used for more than one accounting period.
42
What is the 'matching principle' in accounting?
Answer
(A)
Matching revenue with the same period's expenses.
43
What is shown in the sales account?
Answer
(A)
All sales figures.
44
Which of the following is the definition of liabilities?
Answer
(B)
The amount of money owed to external creditors
45
What is the main advantage of using a point-of-sale (POS) system for inventory management?
Answer
(B)
It provides real-time inventory tracking and updates.
46
What is closing inventory?
Answer
(C)
Goods which are unsold at the end of the year.
47
What does the term 'liquid assets' refer to?
Answer
(A)
Assets that can be converted to cash quickly.
48
What financial statement summarizes a company's financial performance over a period?
Answer
(B)
Income Statement
49
What will contribute in the cost of sales and gross profit for that year?
Answer
(A)
Goods sold
50
What is another name for net profit?
Answer
(C)
Net income