Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 4)
1
Which of the following would be found in the Income and Expenditure Account?
Answer
(B)
Subscriptions.
2
Which of the following items would be found in the Appropriation Account?
Answer
A
B
C
3
What is a primary purpose of recording depreciation?
Answer
(B)
To allocate the cost of an asset over its useful life.
4
Which of the following is an example of a non-cash expense?
Answer
(C)
Depreciation.
5
In accounting, what is the purpose of depreciation?
Answer
(B)
To reflect the decline in value of an asset over time.
6
In a company get bigger and the number of shareholders increases, it becomes impossible for all the shareholders to participate in the management of the business. The shareholders appoint directors to run the business on their behalf. Directors are regularly elected or re-elected at the:
Answer
(A)
AGM
7
What does 'net income' represent on the income statement?
Answer
(C)
The profit a company makes after deducting all expenses.
8
Which of the following is an example of an accrual?
Answer
(C)
Wages owed to employees but not yet paid.
9
From the informative balance sheet, what is able to be produced?
Answer
(C)
Both
10
What is the formula to calculate the cost of sales, given the rate of inventory turnover and the average inventory?
Answer
(A)
Cost of sales = Average inventory * Rate of inventory turnover
11
What is the effect of accrued income on the income statement?
Answer
(A)
Increase in income and increase in profits
12
What is included in the direct costs?
Answer
B
C
13
If assets, liabilities, and all cash and bank transactions are known then it needs to complete statements of income and financial position.
Answer
(A)
a)
14
Which of the following is a typical feature of a partnership agreement?
Answer
A
B
15
Which section of the financial statements is the provision for doubtful debts presented in?
Answer
(B)
Statement of Financial Position
16
What is the purpose of recognizing depreciation expense?
Answer
(B)
To spread the cost of an asset over its useful life
17
What information is typically found in the 'Appropriation Account'?
Answer
A
B
D
18
If a company's sales revenue is $100,000, cost of goods sold is $60,000, and operating expenses are $20,000, what is the company's gross profit?
Answer
(B)
$40,000
19
Which of the following is a characteristic of a limited liability partnership (LLP)?
Answer
(B)
Partners have limited liability for the debts of the partnership.
20
What is the main point of "interest on capital"?
Answer
(C)
It is to compensate for the difference in capital contributions
21
What is the purpose of the income statement?
Answer
(B)
To report a company's financial performance over a specific period.
22
Which of these is an example of an 'asset'?
Answer
(B)
Prepaid insurance.
23
Which of the following accounts are needed for determining profit or loss?
Answer
A
B
24
What account increases when a company makes a provision for doubtful debts?
Answer
(C)
Bad debt expense
25
What type of account is 'drawings' in a partnership?
Answer
(C)
Capital
26
How is the 'provision for doubtful debts' accounted for on the statement of financial position?
Answer
(B)
Subtracted from Trade Receivables
27
Which of the following is an example of an item that would appear in the income and expenditure account?
Answer
(C)
Depreciation
28
Which adjustments should be made to the income statement to arrive at adjusted net profit?
Answer
A
B
D
29
Which statement focuses on a company's financial performance over a period of time?
Answer
(B)
Income Statement
30
What is the purpose of depreciation in accounting?
Answer
(C)
To allocate the cost of an asset over its useful life.
31
What is the purpose of the income statement?
Answer
(C)
To show a company's financial performance over a period.
32
Which accounts are prepared by the treasurer of a club?
Answer
A
B
C
33
For what are the provision for doubtful debts made?
Answer
(D)
All the options
34
What are the key objectives of a limited company?
Answer
A
C
D
35
The financial statements are:
Answer
(C)
Private to the owners and there is no legal requirement to produce "public" statements
36
Which of these is an adjustment on the income statement?
Answer
(C)
Bad debt expense
37
In the context of a limited company, what is the role of a director?
Answer
(D)
All of the above.
38
Which of the following can the treasurer make?
Answer
(D)
All of the above.
39
Which of the following statements about preference shares is true?
Answer
A
B
C
40
What happens to profit or loss at the end of the year?
Answer
(B)
They are distributed among the partners.
41
Which costs are directly associated with the production process?
Answer
(B)
Direct costs
42
What is the accounting equation?
Answer
(A)
Assets = Liabilities + Equity
43
In earlier versions, we have included how profit is distributed to sole traders and partnerships. In sections:
Answer
(A)
5.1 & 5.2
44
What effect does the sale of goods to the owner for personal use have on the purchases account?
Answer
(B)
Decreases the balance of purchases
45
Which of the following statements is true about a private company?
Answer
(C)
It is often more difficult to transfer ownership
46
What is the role of income statements?
Answer
(A)
To show a company's profit or loss over a period.
47
What account(s) is/are affected when writing off an irrecoverable debt?
Answer
(D)
Trade receivables & Provision for doubtful debt account
48
What is the formula for profit or loss from the opening and closing equity?
Answer
(A)
Closing equity - opening equity = profit or loss
49
Which of these statements is about financial position?
Answer
(A)
Balance Sheet
50
What kind of account shows only cash inflows and outflows?
