Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 14)
1
If a club's income is less than its expenditure, what would the result be?
Answer
(B)
Deficit
2
Which of the following are characteristics of a manufacturing account?
Answer
(C)
It's used to determine the cost of production
3
Which of the following is an example of a direct labor cost?
Answer
(B)
Wages of workers on the assembly line
4
Which financial statement shows the assets, liabilities, and owner's equity of a company at a specific point in time?
Answer
(C)
Balance Sheet
5
What is the role of the income statement?
Answer
(B)
To report a company's financial performance over a period of time.
6
Which document summarises the assets, liabilities, and accumulated funds?
Answer
(C)
Statement of Financial Position
7
In a partnership, how can the partners improve management capabilities?
Answer
(B)
By assigning different duties and responsibilities.
8
Where is the interest on capital shown in the financial statement of the partnership?
Answer
(D)
Appropriation Account
9
Why is it important for businesses to be able to produce and use information on profitability and financial position even when using incomplete records?
Answer
A
C
D
10
Which of the following best describes the liability of partners in a general partnership?
Answer
(B)
Unlimited and joint and several.
11
What is the effect of accrued expenses on the financial statements?
Answer
A
C
12
What is the most appropriate term for describing the money received from members or from any source, which is received by the club or organization?
Answer
(D)
Income
13
Which of the following best describes the main purpose of an audit of a company's financial statements?
Answer
(A)
To provide assurance that the financial statements are free from material misstatement.
14
Which of the following items is most likely to be classified as a selling expense?
Answer
(D)
Advertising and promotion
15
What is 'Revenue'?
Answer
(C)
The inflow of cash or other assets.
16
Which of the following is NOT a usual item in the appropriation account of a partnership?
Answer
(D)
Interest on partner's loan.
17
Which of the following are advantages of limited companies?
Answer
A
B
C
18
What comes after operating expenses?
Answer
(C)
Net profit
19
When a business makes a provision for irrecoverable debts, what is the impact on the statement of financial position?
Answer
(C)
Decreases assets.
20
Which type of account represents the owner's investment in the partnership?
Answer
(B)
Capital account
21
What is the term used for the total amount of share capital for which the cash has actually been received?
Answer
(D)
Paid-up share capital
22
Which of the following costs are included in calculating the prime cost?
Answer
(A)
Direct materials and direct labor
23
Which of the following statements is true regarding the Receipts and Payments Account?
Answer
(B)
It is a record of cash transactions.
24
Which of the following is a characteristic of a manufacturing business?
Answer
(C)
It transforms raw materials into finished products.
25
When might a club or society need to make adjustments to its income and expenditure account?
Answer
B
C
D
26
Which of the following is the most appropriate description of the item that would be shown on the statement of changes in equity?
Answer
(B)
Movement in share capital and reserves.
27
What impact do partners' drawings have on the partnership's net income?
Answer
(C)
They have no impact on net income.
28
What is the meaning of 'profit appropriation' in a partnership?
Answer
A
B
29
In a partnership, where is the profit or loss for the year initially determined?
Answer
(A)
Income statement
30
How are profits and losses of a partnership typically allocated to the partners?
Answer
(B)
Equally, unless otherwise stated in the partnership agreement.
31
What type of account is used to record the bank transactions of the club?
Answer
(B)
Receipts and Payments Account
32
Which of the following are considered in the Income Statement?
Answer
A
B
C
33
What is a Statement of Financial Position's other common name?
Answer
(B)
Balance Sheet.
34
What is the main difference between mark-up and gross profit margin?
Answer
(B)
Mark-up is based on cost price, while gross profit margin is based on sales price.
35
Which of the following accounts are found on the balance sheet?
Answer
A
C
36
If a company receives cash in advance for services to be performed, what will happen?
Answer
A
C
37
What is the primary goal of the statement of cash flows?
Answer
(B)
To summarize the cash inflows and outflows.
38
What effect does depreciation have on a company's balance sheet?
Answer
(C)
Decreases the book value of the asset.
39
For a club, how do you determine subscriptions to be shown in the income and expenditure account?
Answer
(D)
Cash receipts plus or minus the changes in accrued amounts.
40
What accounting principle dictates that all expenses must be recorded in the same period as the revenues they help generate?
Answer
(B)
Matching principle
41
What is the purpose of a manufacturing business?
Answer
(B)
To transform raw materials into finished goods.
42
Which of the following is a long-term asset?
Answer
(D)
Equipment
43
Which of the following items is shown on the credit side of an income and expenditure account?
Answer
(B)
Bar Sales.
44
What type of account is 'accumulated depreciation'?
Answer
(C)
A contra-asset account
45
In the context of preparing financial statements for a club or society, which of the following adjustments are typically made?
Answer
A
C
D
46
Which of the following is NOT a production cost?
Answer
(C)
Selling expense
47
What does 'WIP' stand for, in the context of manufacturing?
Answer
(A)
Work in Progress
48
What is the treatment of the subscriptions paid in advance?
Answer
(B)
Deduct from subscriptions received.
49
What components are considered to be included in factory overhead?
Answer
(B)
Indirect labor, indirect materials, and factory rent
50
What is the impact on the financial statements when a business receives cash in advance for services that will be provided in the future?
