Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 26)
1
What does the term 'drawing' refer to in a partnership?
Answer
(B)
Money withdrawn by a partner for personal use.
2
What is the accounting method for managing and anticipating partnership activities?
Answer
(D)
Partnership agreement
3
Which of the following factors may cause the total number of shares in a business to change?
Answer
B
C
4
When is goodwill written off in a new partnership formation?
Answer
(A)
Immediately in the year of the formation.
5
If a partnership incurs a loss, how is that loss typically allocated among the partners?
Answer
(C)
According to the profit/loss sharing ratio outlined in the partnership agreement.
6
Which of the following expenses is not recorded on the manufacturing account?
Answer
(D)
Selling expenses
7
What does the balance in the 'Drawings' account represent?
Answer
(C)
Assets the owner has taken from the business for personal use.
8
What is the formula for calculating gross profit?
Answer
(A)
Sales Revenue - Cost of Goods Sold
9
What accounts are impacted when recording the adjustment for accrued salaries expense?
Answer
(A)
Salaries Expense and Salaries Payable
10
The partnership is a legal agreement so:
Answer
(D)
The partners must agree on how to avoid any future disagreements.
11
Which financial statement reports a company's financial performance over a period of time?
Answer
(B)
Income Statement
12
What aspect of financial accounting primarily focuses on the allocation of profits and losses among partners?
Answer
(C)
The Appropriation Account
13
In a partnership, what typically happens to interest paid on a partner's loan?
Answer
(B)
It is a deduction from the partnership's profit before profit sharing.
14
If a partnership agreement specifies that profits and losses are to be shared equally, but the partnership incurs a loss, how is this loss distributed?
Answer
(C)
The loss is shared equally among all partners.
15
What are the components of the manufacturing overhead?
Answer
A
B
D
16
Which of the following describes the purpose of 'provision' in accounting?
Answer
(C)
To estimate a future expense or liability.
17
What does 'depreciation' represent in a non-profit organization's accounts?
Answer
(B)
The allocation of an asset's cost over its useful life
18
What financial statement is primarily used to report a partnership's financial performance over a specific period?
Answer
(C)
Income Statement
19
Which of the following is an example of income in a club or society?
Answer
(A)
Donations
20
Which account is credited when a business records the use of supplies?
Answer
(B)
Supplies
21
What are the main functions of an income statement?
Answer
A
C
22
How are donations typically treated in the financial statements of a non-profit organization?
Answer
(C)
As income
23
In the income and expenditure account, what does the debit side generally represent?
Answer
(B)
Expenses.
24
When preparing a statement of affairs, which of the following are important considerations?
Answer
A
C
25
What is the formula for calculating conversion costs?
Answer
(B)
Direct Labor + Factory Overhead
26
What are examples of direct materials costs?
Answer
A
C
27
In a partnership, how can decisions get easier?
Answer
(B)
By partners having different areas of responsibility.
28
Which of the following best defines 'retained earnings'?
Answer
(C)
Profits that have not been distributed to shareholders.
29
In a partnership, which of the following is/are considered in the calculation of each partner's share of profit?
Answer
A
B
D
30
Which of the following statements is true regarding the 'going concern' assumption in accounting?
Answer
(B)
It assumes the company will continue to operate for the foreseeable future.
31
When a business receives cash from a customer in advance for a product it will deliver later, what account is affected?
Answer
(C)
Unearned Revenue
32
In a simple accrual accounting system, which of the following are reasons to make adjustments to financial statements? (Select all that apply)
Answer
A
B
C
33
Which of the following are recorded on the balance sheet?
Answer
A
B
D
34
What do you call the costs of converting raw materials into finished products?
Answer
(B)
Conversion cost
35
The main objective in a partnership is:
Answer
(B)
To earn profit.
36
In the income and expenditure account, what is the treatment of revenue expenditure?
Answer
(B)
It is deducted from income to arrive at a surplus or deficit.
37
What is the purpose of the Cost of Goods Sold (COGS) on the income statement?
Answer
(B)
To calculate gross profit
38
What are some advantages of a partnership?
Answer
A
B
C
39
What is the formula used to calculate gross profit?
Answer
(A)
Sales Revenue - Cost of Goods Sold
40
What is the accounting equation?
Answer
(C)
Assets = Liabilities + Equity
41
What is the purpose of the 'Allowance for Doubtful Accounts'?
Answer
(B)
To estimate the amount of uncollectible receivables.
42
What are some of the factors that constitute manufacturing overhead?
Answer
A
B
D
43
Which of the following is NOT a responsibility of company directors?
Answer
(D)
Determine dividend payments to creditors.
44
What is the purpose of an 'appropriation' account in a partnership?
Answer
(B)
To show the distribution of profits or losses among the partners.
45
If the partners don't follow the legal framework, what could be the end result?
Answer
(C)
The partnership is dissolved.
46
What are the three primary activities on the Statement of Cash Flows?
Answer
(A)
Operating, Investing, and Financing
47
What is the accounting equation?
Answer
(B)
Assets = Liabilities + Equity
48
What does the rate of inventory turnover represent, in simpler terms?
Answer
(B)
How quickly inventory is sold and replaced.
49
Which costs are part of the total cost of production?
Answer
A
B
C
50
Which of the following adjustments are commonly required when preparing financial statements?
