Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 10)
1
15. What will be on the debit side of the cash book?
Answer
A
B
2
The process of transferring information from the journal to the ledger is called:
Answer
(B)
Posting
3
What do business documents record?
Answer
A
B
C
4
At the end of the accounting year on 31 December, the following list of balances was extracted from the books of a small business.
Answer
(A)
Capital
5
1.3 The following are impact entries made as a result of a payment made to a trade payable for a cash discount received, what is the impact on the trade payable amount?
Answer
(A)
Debit the account with the amount paid to the trade payable
6
What types of accounts are generally listed in the general ledger?
Answer
A
B
C
D
7
Why are adjusting entries important for accrual accounting?
Answer
A
B
C
8
If a business's assets increase, and its liabilities remain the same, what happens to owner's equity?
Answer
(B)
It increases.
9
What happens to the accounting equation as the business evolves?
Answer
(C)
The equation always remains in balance.
10
When would a cash deposit be recorded?
Answer
(C)
When the business transfers cash to the bank
11
What does it mean, if the total debits are less than the total credits in the cash book?
Answer
(C)
The business is overdrawn.
12
What should be done to correct errors in the cash book?
Answer
(B)
Correct the errors in the cash book
13
How does the purchases journal help in accounting?
Answer
(A)
It simplifies the accounting system.
14
Which documents are typically used as part of the cycle of prime entry?
Answer
A
B
15
Who typically issues an invoice?
Answer
(B)
The supplier.
16
A credit for $2400 ____. What is this entry?
Answer
(A)
To recognize the income earned but not yet received by the end of the accounting year. It is blocked even if 'accrual bill' profit increases the future of income earned to the accounting year from $1300 to $3700.
17
Where is the total value of sales returns for the month posted?
Answer
(C)
The general ledger.
18
Which items are needed to complete the income statement at the end of the year?
Answer
A
C
19
What is the relationship between debit and credit entries?
Answer
(A)
Debit entries should always equal credit entries.
20
A trial balance can be used to detect errors such as:
Answer
(D)
Errors in arithmetic
21
What does a supplier use to identify the customer of goods/services supplied?
Answer
(B)
An invoice
22
What type of account typically has a normal credit balance?
Answer
(B)
Liability
23
Which financial statement reports a company's financial performance over a period of time?
Answer
(C)
Income Statement
24
What is the effect of drawings on owner's equity?
Answer
(B)
Decreases
25
An accrued income should be recognized as accrued income in the accounts and included in profit before tax. If it is taxed, then it will be a current asset of the business.
Answer
(B)
False
26
What is the main objective of business documents?
Answer
(B)
To record financial transactions.
27
What is the main purpose of the general journal in the accounting cycle?
Answer
(C)
c) To initially record all transactions.
28
What does a debit entry in a liability account represent?
Answer
(B)
A decrease in the liability.
29
Which of the following entries would decrease both assets and equity?
Answer
(D)
Providing allowance for doubtful accounts
30
The debit entry for the prepayment is then carried down to the debit side of the account to record the ____ or supply goods or services to return it to the same accounting year.
Answer
(B)
Liability
31
Why might a company choose to use the allowance method instead of the direct write-off method for bad debts?
Answer
(B)
The allowance method better matches expenses with revenues.
32
When a business reduces its provision for doubtful debts, what happens to the value of trade receivables and profit recorded in the financial statements?
Answer
(D)
Decreases the value of trade receivables and increases profit.
33
How does the irrecoverable debts impact the balance sheet?
Answer
(A)
Decrease in current assets.
34
What is the accounting equation?
Answer
(C)
c) Assets = Liabilities + Equity
35
In addition, when an inventor for goods purchased on credit was entered in error as $1, 100 instead of $11,100 on the wrong side of the accounts, what should the necessary corrections to the draft trial balance be?
Answer
(A)
Debit: $10,000, Credit: $10,000
36
Which document is used to record cash and bank transactions?
Answer
(B)
Cash Book
37
Which of the following is an example of an accrued expense?
Answer
(C)
c) Salaries payable.
38
What type of transactions are recorded in the general journal?
Answer
(C)
c) Transactions that cannot be recorded in other journals
39
What accounting principle is best exemplified by a provision for doubtful debts?
Answer
(D)
Prudence.
40
What is the opening balance in the capital account?
Answer
(A)
Credit Balance
41
What is the formula for calculating cost of goods sold (COGS)?
Answer
(A)
a) Beginning Inventory + Purchases - Ending Inventory.
42
What is the effect on the accounting equation when a business owner takes money out of the business for personal use?
Answer
(D)
Assets decrease, Equity decreases
43
What is the accounting equation?
Answer
(C)
Assets = Liabilities + Equity
44
In the imprest system, the total amount of cash paid out and the amount remaining to be reimbursed should be equal to the imprest for each period. This is a step in what process?
Answer
(B)
b) Balancing the petty cash book.
45
1.8 What is the first stage to preparing a bank reconciliation statement?
Answer
(A)
Correcting any errors
46
What is the role of the purchases returns journal?
Answer
(A)
Record credit notes received by a business from suppliers.
47
What information is typically included in the sales return journal?
Answer
A
B
C
48
A discount allowed __________ encourages prompt payment by trade receivables but the loss of cash is an expense.
Answer
(C)
always
49
Which of the following adjustments related to electricity costs would be applied at year-end?
