Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 9)
1
What is the primary focus of the Receipts and Payments Account?
Answer
(B)
Cash movements.
2
If total income is less than total expenses, the result is a:
Answer
(C)
Deficit.
3
What adjustments are made to the statement of financial position?
Answer
(A)
Accumulated depreciation
4
What is the journal entry for the interest income account?
Answer
(D)
Debit bank, Credit interest
5
What account is debited when recording depreciation expense?
Answer
(B)
Depreciation Expense
6
Which of the following accounts is NOT involved in calculating gross profit?
Answer
(C)
Operating Expenses
7
What are the ___ principal statements a not-for-profit club and societies or to report their financial affairs? What information is included and given by those statements.
Answer
(A)
a)
8
What are the main components of a balance sheet?
Answer
(B)
Assets, Liabilities, and Equity
9
On the statement of financial position, where are the provision for doubtful debts recorded?
Answer
(C)
As a deduction from accounts receivable.
10
Preference shares have a:
Answer
(D)
All of the above
11
Where would you find the share of profit or loss for each partner?
Answer
(C)
Appropriation Account
12
What are the elements of the prime cost?
Answer
(A)
Direct materials and direct labor
13
What is the primary difference between mark-up and margin?
Answer
(B)
Mark-up is based on cost of sales, while margin is based on sales revenue.
14
What happens to a company's net profit if the closing inventory is overstated?
Answer
(B)
Net profit is overstated
15
What was left was distributed to:
Answer
(A)
Ordinary shareholders
16
Which of the following items will impact the profit for the year?
Answer
A
B
D
17
What does a manufacturing business need to do to calculate the cost of production?
Answer
(A)
Prepare a separate manufacturing account
18
What effect does depreciation have on the income statement?
Answer
(C)
It decreases net profit
19
What is the role of the accumulated fund?
Answer
(C)
To represent the club's net worth.
20
What is the main purpose of preparing financial statements for a club or society?
Answer
(C)
To provide information to members and stakeholders.
21
What is a common aspect in a partnership agreement?
Answer
(A)
The allocation of profits
22
What is the formula for calculating gross profit?
Answer
(B)
Revenue - Cost of Goods Sold
23
Where are partner's drawings often found?
Answer
(C)
Appropriation Account
24
What are the potential disadvantages of a partnership?
Answer
A
C
25
What are the most common methods for valuing a new partner's contribution?
Answer
(D)
All of the above
26
Which item is directly reduced when a company recognizes drawings made by the owner?
Answer
(C)
Owner's Equity
27
What impact does depreciation have on the Income and Expenditure Account?
Answer
(C)
It is an expense that decreases the surplus (or increases the deficit).
28
Which of the following is often a characteristic of general partners?
Answer
(C)
They have unlimited liability.
29
If a club's income is greater than its expenditure, this results in a:
Answer
(C)
Surplus.
30
In an income and expenditure account, income is:
Answer
A
C
31
What is the key difference between a receipts and payments account and an income and expenditure account?
Answer
(A)
The receipts and payments account only includes cash transactions, while the income and expenditure account includes both cash and non-cash transactions.
32
In a club or society, what does 'arrears' of subscriptions refer to?
Answer
(B)
Subscriptions owed by members but not yet paid
33
What is the main goal of the appropriation account?
Answer
(B)
To distribute the profit or loss.
34
What is a 'margin'?
Answer
(C)
The profit expressed as a percentage of the sales value.
35
In a simplified accounting equation, what does 'Assets = Liabilities + Equity' represent?
Answer
(B)
The company's financial position.
36
What is the purpose of the trial balance?
Answer
(A)
To ensure the total value of debits equals the total value of credits.
37
If a company has a mark-up of 25% on the cost of goods, and the cost of goods sold is $10,000, what is the sales revenue?
Answer
(D)
$12,500
38
What is the impact of the depreciation expense on the statement of financial position?
Answer
(C)
Decreases owner's equity
39
Which of the following is typically considered a current liability?
Answer
(B)
Accounts payable
40
What impact does a 'provision for doubtful debts' have on net profit and the statement of financial position?
Answer
A
C
41
Which financial statement shows the profit or loss of a company over a specific period?
Answer
(C)
Income Statement
42
Which of these is a contra-asset account?
Answer
(C)
Accumulated Depreciation
43
If a business's accounting period is the year ended 31 December, when is the accounting year ended?
Answer
(A)
31st December
44
Which statement correctly summarizes the impact of prepaid expenses?
Answer
(A)
Debit prepaid expenses; credit cash.
45
What type of share can be publicly traded on the stock exchange?
Answer
A
B
46
What is a key disadvantage of a partnership?
Answer
(C)
Decision-making is often very difficult
47
What is the formula to calculate the average inventory?
Answer
(A)
Average inventory = (Opening inventory + Closing inventory) / 2
48
Which of the following best describes a trading business?
Answer
(B)
Sells goods purchased for resale
49
What is shown in the statement of financial position?
