Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 5)
1
Which of the following would be an example of a 'prepayment'?
Answer
(A)
Rent paid for the next month.
2
Which of the following best describes accrued expenses?
Answer
(B)
Expenses that have been incurred but not yet paid
3
What should the appropriation account include?
Answer
A
B
D
4
Which of the following would be debited when accounting for depreciation?
Answer
(B)
Depreciation Expense
5
What does the term "accrued expenses" mean?
Answer
(B)
Expenses that have been incurred but not yet paid.
6
Which financial statement would you use to determine a company's net income?
Answer
(B)
Income Statement
7
The income and expenditure account relates to the:
Answer
(B)
Period.
8
What are the components of factory overhead?
Answer
A
B
C
9
What is the impact of accruing expenses on the financial statements?
Answer
(C)
Increase expenses and increase liabilities.
10
What describes various types of borrowings, although these may differ in some of their characteristics, they all share features in common. This being part of the company’s:
Answer
(B)
Liabilities
11
What is meant by 'mark-up'?
Answer
(B)
The percentage applied to the cost of goods or services to arrive at the selling price.
12
In a partnership, the legal agreement is between:
Answer
(B)
The partners themselves
13
What is the main difference between a trading and a service business in terms of financial statements?
Answer
(A)
Trading businesses have a cost of goods sold
14
The matching principle requires that:
Answer
(B)
Expenses should be matched with the income earned in the same period.
15
What is the role of a sleeping partner?
Answer
(B)
They will not participate in the business' management, but they will share in the profit.
16
What is the formula for calculating prime cost?
Answer
(A)
Direct materials + direct expenses
17
What would cause the profit margin to decrease?
Answer
(A)
Increase in cost of goods sold
18
What type of business is a manufacturing business?
Answer
(C)
A business that buys raw materials, components, and other unfinished products.
19
If a company's cost of goods sold is $50,000 and its average inventory is $10,000, what is the inventory turnover rate?
Answer
(B)
5
20
Which one of these is used for the individual funds?
Answer
(A)
Income and expenditure account
21
Which is the best way to describe what is in the Receipts and Payments Account?
Answer
(C)
A summary of the cash coming in and going out during the year.
22
What is the definition of 'depreciation'?
Answer
(B)
The allocation of the cost of a tangible asset over its useful life.
23
What type of account is depreciation expense?
Answer
(D)
Expense
24
What does interest on capital represent in the context of a partnership?
Answer
(B)
A method of distributing profits
25
What is meant by residual profit?
Answer
(C)
The profit distributed among the partners.
26
Which accounting principle is most important when preparing an Income and Expenditure account?
Answer
(B)
Matching principle.
27
What does an opening statement of affairs show?
Answer
(B)
Assets and liabilities at the beginning of the year
28
Which adjustments might be made to determine a company's adjusted net profit?
Answer
B
D
29
What is 'Cost of Goods Sold' (COGS)?
Answer
(B)
The total cost of goods sold during the period.
30
Which financial statement shows the financial position of a company?
Answer
(D)
Statement of Financial Position
31
From the following additional information at 31 October 2013, what the receipts and payments account from question 7 shows; draw up an income and expenditure account for the Hockey 13th Walking Club for the year ended 31 December 2013.
Answer
(A)
a)
32
What does the income and expenditure account determine?
Answer
(A)
Profit or loss
33
What does the term "going concern" mean in relation to a company?
Answer
(C)
That the company is expected to continue operating in the foreseeable future
34
Which items are not included when preparing the income and expenditure account?
Answer
(C)
Purchase of equipment.
35
When adjusting for the provision for doubtful debts, which of the following statements are true?
Answer
A
B
C
36
What financial statement summarizes a company's revenues and expenses?
Answer
(C)
Income Statement
37
What is the impact of the 'provision for doubtful debts' on the income statement?
Answer
(B)
It decreases net profit
38
In a limited company, who is primarily responsible for the company's day-to-day operations?
Answer
(B)
Directors
39
What is depreciation?
Answer
(B)
The allocation of the cost of an asset over its useful life
40
What is the effect on owner's equity when the owner takes goods for personal use?
Answer
(B)
Owner's equity decreases
41
In which financial statement does the 'Provision for Doubtful Debts' appear?
Answer
(C)
Statement of Financial Position
42
For the year ended 31 December 2012, the remainder of the profits which were paid were:
Answer
(A)
Ordinary shares were paid
43
Which financial statement is used to analyze a company's cash inflows and outflows?
Answer
(C)
Statement of Cash Flows
44
What is the first step when preparing the statement of financial position?
Answer
(D)
Listing all assets and liabilities
45
What financial statement would you use to see how well a business performed during the year?
Answer
(B)
Income Statement
46
What is the main purpose of the statement of financial position?
Answer
(B)
To show the financial position of the organization at a point in time.
47
Which accounting concept is most relevant when preparing an income and expenditure account?
Answer
(B)
Matching principle.
48
Which of these costs are considered to be included in indirect labor?
Answer
(B)
Factory foreman
49
Which financial statement reports the assets, liabilities, and equity of a company?
Answer
(C)
Balance Sheet
50
What do trading businesses and service businesses prepare?
