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Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 13)

1
Which side of the account is greater to arrive at a debit balance?
Answer
(B)
Debit
2
If a company overstates its beginning inventory, what is the effect on the cost of goods sold (COGS) and net income?
Answer
(D)
d) COGS is overstated, net income is overstated.
3
What does the cash discount encourage?
Answer
B
C
4
If a business purchases equipment by paying a portion in cash and borrowing the rest, what is the effect on the accounting equation?
Answer
(B)
Assets increase, liabilities increase.
5
How do business documents help in the process of financial transaction recording?
Answer
(C)
They serve as the source
6
3. Which ledger entries will you need to debit and which ledger entries will you need to credit for each transaction?
Answer
(C)
Debit the bank account and credit the revenue account
7
Which of the following is the key point about recognizing the amount from sales commission?
Answer
(D)
The revenue should be recognized when the service has been provided.
8
What type of account is the purchase account?
Answer
(C)
Expense
9
If a business writes off an irrecoverable debt, what is the journal entry?
Answer
(A)
Debit the irrecoverable debt expense account, credit the trade receivable account.
10
What is owner's equity?
Answer
(D)
Owner's investments
11
What are the benefits of using a general journal?
Answer
A
B
C
12
Which of the following is a benefit of using a general journal?
Answer
(C)
c) Provides a chronological record of all transactions.
13
Which of the following is a non-current asset?
Answer
(D)
Equipment
14
Which accounts will typically have a credit balance?
Answer
B
C
D
15
If a company has unearned revenue, how is this typically recorded?
Answer
(A)
Debit Cash, Credit Unearned Revenue.
16
What is the effect on the accounting equation when a business pays its suppliers in cash?
Answer
(B)
Assets decrease, liabilities decrease.
17
The total debits and credits in the cash and bank columns for the month were ascertained as follows.
Answer
(A)
True
18
Which of the following statements accurately describes the impact of expenses on the accounting equation?
Answer
(C)
Expenses decrease owner's equity.
19
In which scenario would a supplier issue a credit note?
Answer
B
D
20
Which business document is used to request payment for goods sold?
Answer
(C)
Invoice
21
What does the balance sheet show?
Answer
(B)
Assets, liabilities, and equity.
22
What is the function of a statement of account?
Answer
(A)
To list all transactions over a period.
23
What does it mean to 'credit' an account?
Answer
(C)
Record an entry on the right side of an account
24
Payments made by cheque or bank transfer are recorded in the bank column on the credit side of the cash book.
Answer
(B)
False
25
1.12. What is the main difference between the imprest system and other petty cash systems?
Answer
(A)
The frequency of replenishing the petty cash fund
26
What is the correct journal entry to record a debit for electricity expense?
Answer
(C)
Debit Electricity expense, Credit Accrued Electricity Payable
27
What effect does a discount *allowed* have on a business's financial statements?
Answer
(D)
It decreases profit.
28
Why do businesses prepare a trial balance?
Answer
(C)
To ensure the accounting equation (Assets = Liabilities + Equity) is balanced.
29
Which of the following accounts are considered temporary accounts?
Answer
A
C
30
1.11. What is the primary purpose of petty cash vouchers?
Answer
(B)
To record every small business expenditure
31
An account has a debit balance of $10,000. The allowance for doubtful accounts also has a debit balance of $200. To record the estimate for doubtful debts will ____
Answer
(B)
Credit the bad debts account.
32
What does the term 'error of omission' describe?
Answer
(B)
A failure to record double entries for a transaction in the ledger accounts.
33
Which statement is correct about adjusting entries?
Answer
(B)
Adjusting entries are made at the end of the accounting period.
34
Which of the following represents a business's income?
Answer
(C)
An increase in owner's equity.
35
What is the correct journal entry for a cash sale?
Answer
(B)
Debit Cash, Credit Sales
36
What is the main reason to write off irrecoverable debts?
Answer
(D)
To recognize that a debt will not be repaid.
37
What should a supplier do if they made an error on an invoice?
Answer
(C)
Send a new invoice.
38
What will the balance sheet show?
Answer
(D)
The balance of an item in an account
39
What are some of the elements included in an Income Statement?
Answer
A
B
40
What is the purpose of the general journal?
Answer
(B)
To record transactions that do not fit into special journals
41
What is a trial balance?
Answer
(C)
A summary of the balances of all general ledger accounts.
42
Which side of the cash book is cash sales recorded on?
Answer
(B)
Debit
43
What are the advantages of maintaining journals for sales and sales returns?
Answer
A
B
C
44
Which of the following adjustments is an accrued expense?
Answer
(D)
All of the above
45
A company has written off an irrecoverable debt. What is the immediate impact on the statement of financial position?
Answer
(D)
No impact.
46
What should the business do when the goods/activities are purchased on credit?
Answer
(D)
All of the above
47
What type of account is affected when you record a sales return?
Answer
(C)
A Revenue Account
48
Which of the following is an example of a real account?
Answer
(C)
Cash
49
8. What is the impact of a bank loan received into the bank account?
Answer
(A)
Cash increases.
50
What would the debit and credit entries be for a cash sale?
Answer
(A)
Debit: Cash, Credit: Sales Revenue