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Accounting for IGCSE & O level - Final Statements (Section 9)

1
Which of the following is an example of a non-current liability?
Answer
(C)
A mortgage payable
2
What kind of assets can be used within one accounting period?
Answer
(B)
Current assets
3
What is a primary purpose of a departmental trading account?
Answer
(B)
To find the gross profit for each department.
4
Which items are considered when calculating the cost of goods sold (COGS)?
Answer
A
B
D
5
What is the accounting equation?
Answer
(D)
Assets = Liabilities + Equity
6
What is the primary goal of valuing assets in a statement of financial position?
Answer
(B)
To provide a realistic and fair presentation of the company's financial position.
7
In a departmental income statement, what does the gross profit represent?
Answer
(B)
Sales revenue minus the cost of goods sold.
8
What is the primary goal when preparing a departmental income statement?
Answer
(B)
To analyze each department's performance.
9
What are operating expenses?
Answer
(B)
Costs related to running the business.
10
Which method is commonly used to allocate shared expenses?
Answer
(C)
Allocation based on sales or space used.
11
Which of these is considered a long-term liability?
Answer
(C)
A mortgage payable
12
Which of the following best describes the purpose of the income statement?
Answer
(C)
To demonstrate a company's profitability over a period of time.
13
Which financial document is used to assess a company's performance over a period?
Answer
(C)
Income Statement
14
Which of the following are used to calculate gross profit?
Answer
A
C
15
Which of the following is a characteristic of a current liability?
Answer
A
C
16
What is the effect of drawings on the capital account?
Answer
(B)
Decreases the capital
17
What is the impact of purchase returns on the cost of goods sold?
Answer
(B)
Decrease the cost of goods sold.
18
Which items are considered running costs for the business?
Answer
A
B
D
19
What does the trial balance help with?
Answer
(B)
Checking if debits and credits are balanced.
20
If closing inventory is overstated, how does that impact the reported cost of goods sold (COGS) and gross profit?
Answer
(B)
COGS is understated, and gross profit is overstated.
21
What does the term 'provision' mean in accounting?
Answer
(B)
An estimate of a liability.
22
Which items are used to calculate the cost of goods sold (COGS) for a period?
Answer
A
B
D
23
What are the primary factors that impact gross profit?
Answer
A
B
C
24
What will be included in expenses for a business?
Answer
A
B
C
25
What is the normal balance of the carriage outwards account?
Answer
(A)
Debit
26
What is the importance of identifying each department's contribution to profit or loss?
Answer
(B)
To identify the departments that are performing well or poorly.
27
Which of the following are examples of current liabilities?
Answer
A
B
D
28
What can be a consequence of closing a department?
Answer
A
B
C
29
If a company has an opening inventory of $10,000, purchases of $30,000, and a closing inventory of $5,000, what is the cost of goods sold?
Answer
(B)
$35,000
30
What are some ways a business could potentially improve profits?
Answer
A
B
C
31
What are some reasons for a business to prepare departmental accounts?
Answer
A
B
C
32
What is the purpose of depreciation?
Answer
(B)
To allocate the cost of a long-term asset over its useful life.
33
What is the main objective for business owners?
Answer
(B)
To create profit and obtain capital gains.
34
What does an income statement show?
Answer
A
B
D
35
It is important to match expenses with what?
Answer
(C)
Revenue
36
Which of the following does NOT directly reduce the value of trade receivables?
Answer
(D)
Cash received from customers
37
What does the term 'Net Assets' represent?
Answer
(C)
Total assets minus total liabilities.
38
If a business purchases equipment and uses it for several years, how is this purchase treated in the statement of financial position?
Answer
(B)
It's recorded as an asset (equipment) and depreciated over time.
39
Which of the following actions might a business take to improve profit?
Answer
A
B
C
40
Which of the following is a current liability?
Answer
A
B
D
41
What does the gross profit represent?
Answer
(B)
Profit after deducting the cost of goods sold.
42
What is the role of departmental accounts?
Answer
(B)
To provide a detailed profit analysis for individual departments.
43
What accounts will be used to calculate the gross profit?
Answer
A
B
44
What is the correct formula for calculating the net profit or loss?
Answer
(B)
Gross Profit - Operating Expenses
45
Which of the following items would be classified as current liabilities?
Answer
A
B
D
46
Which factors are considered when determining the net realisable value (NRV) of inventory?
Answer
A
C
47
Which of the following would *not* be considered when making decisions about poor-performing departments?
Answer
(D)
Employee salaries
48
In a vertical income statement, what item follows sales revenue?
Answer
(B)
Cost of Goods Sold
49
What does 'Net Realizable Value (NRV)' represent for trade receivables?
Answer
(B)
The estimated amount of receivables that a company expects to collect.
50
What does a departmental trading account primarily show?
Answer
(C)
Gross profit for each department