Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 11)
1
What is 'irrecovable debts'?
Answer
(C)
Debts which a business can not collect, it is unrecoverable.
2
In a partnership, which financial statement provides a summary of the partnership's cash inflows and outflows over a period?
Answer
(C)
Statement of Cash Flows
3
Which of the following can occur when a partnership expands?
Answer
A
B
C
4
When preparing an income statement, what generally comes after the gross profit?
Answer
(C)
Operating expenses
5
When preparing an income and expenditure account, which adjustments should be made?
Answer
(C)
Include prepayments and accruals
6
What is the effect on the accounting equation when recording depreciation expense?
Answer
(B)
Decrease assets and decrease equity.
7
What is the effect of the depreciation of an asset on the financial statements?
Answer
A
B
8
What is a prime cost?
Answer
(C)
Direct Materials + Direct Labor
9
What is the impact of an increase in accrued expenses on the financial statements?
Answer
(C)
Increase in expenses and an increase in liabilities
10
What do 'conversion costs' consist of?
Answer
(B)
Direct Labor and Factory Overhead
11
What is the definition of 'Issued Share Capital'?
Answer
(C)
The number of shares that have been sold to investors.
12
How is the profit after interest on capital and salaries distributed amongst the partners?
Answer
(B)
Based on a predetermined profit-sharing ratio
13
When a partner has to contribute to the business's expenses, where will these be stated?
Answer
(A)
The appropriation account
14
Which term is used to describe the money received from selling goods or services?
Answer
(C)
Revenue
15
Which of the following best describes the purpose of the statement of cash flows?
Answer
(C)
To summarize the cash inflows and outflows of a company over a period.
16
What are some advantages of operating a business as a partnership?
Answer
A
B
C
17
What effect does depreciation expense have on a company's net profit?
Answer
(B)
Decreases Net Profit
18
What are the primary reasons for a partnership to dissolve?
Answer
A
B
D
19
What is the purpose of a cash flow statement?
Answer
(B)
To summarize the changes in a company's cash position over a period.
20
Which of the following is considered an asset in a business?
Answer
(C)
Cash
21
A partnership will usually start with:
Answer
(D)
A balance sheet
22
What are the components that make up the prime cost?
Answer
(C)
Direct Materials and Direct Labor
23
What is the major distinction between a general partnership and a limited partnership?
Answer
(A)
The level of liability of the partners.
24
Which of the following costs would be included in the manufacturing overhead?
Answer
(C)
Depreciation of factory equipment
25
What is the impact of the adjustment for unearned revenue earned on the income statement?
Answer
(B)
Increases revenue.
26
Which of the following statements are correct regarding the statement of financial position? (Select all that apply)
Answer
A
B
27
What are components of a partnership's income statement?
Answer
A
B
28
The accounting process of a partnership usually includes:
Answer
(A)
Income statement, appropriation account, statement of financial position
29
What does the income statement usually start with?
Answer
(C)
Revenue
30
Which of the following is an example of a current liability?
Answer
(B)
Accounts Payable
31
Which of the following are elements of manufacturing overhead?
Answer
A
B
D
32
The term "capital" in the context of a non-profit organization is most similar to which term in a for-profit business?
Answer
(B)
Owner's Equity
33
What effect do uncollectible debts written off have on the net profit?
Answer
(C)
No impact.
34
Which of the following represents an expense in a partnership?
Answer
(C)
Rent for office space.
35
What will be deducted to arrive at profit in an income statement?
Answer
(A)
Expenses
36
What is the difference between ordinary shares and preference shares?
Answer
(C)
Preference shares receive dividends before ordinary shareholders.
37
Which of the following are included in the Statement of Changes in Equity?
Answer
A
B
C
38
In preparing financial statements for a partnership, what are partners' salaries typically treated as?
Answer
(B)
A distribution of profits in the appropriation account.
39
What is the primary purpose of preparing a statement of affairs from incomplete records?
Answer
(C)
To provide information for assessing an entity's financial position.
40
What is the first step in calculating the cost of production?
Answer
(B)
Determining the cost of raw materials used
41
What does 'accounts receivable' represent?
Answer
(C)
Money owed to the business by its customers.
42
Which of the following describes the accounting concept of 'going concern'?
Answer
(A)
The business will continue to operate in the foreseeable future.
43
What adjustments should be made to the financial statements before a partnership is formed?
Answer
A
B
D
44
If the opening equity of a business is $10,000, the owner introduces new capital of $2,000, makes drawings of $1,000, and the closing equity is $12,000, what is the profit or loss for the year?
Answer
(B)
$1,000 Profit
45
What is accrued revenue?
Answer
(B)
Revenue earned but not yet received or recorded.
46
What is the effect on the accounting equation when adjusting for unearned revenue that has been earned?
Answer
(D)
Decreases liabilities and increases equity.
47
Which financial statement details the firm's assets and liabilities?
Answer
(C)
The statement of financial position.
48
What is a 'shareholder' in a limited company?
Answer
(B)
A person or entity that owns shares in a company
49
What does a 'provision for doubtful debts' represent?
Answer
(C)
An estimate of uncollectible accounts receivable.
50
Which of the following is an example of an operating expense?
