Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 14)
1
Which item reduces profit?
Answer
(A)
Irrecoverable debt
2
In a trial balance, the total amount for the debit side is _______ the total amount for the credit side.
Answer
(C)
The same as
3
Which document provides proof of payment?
Answer
(D)
Receipt
4
Which of the following is an example of a receipt?
Answer
(B)
A cheque
5
A business offers a customer a trade discount of 20%. If the list price of a product is $100, what is the net price?
Answer
(B)
$80
6
Which of the following is true about an under-honored or unauthorized payment?
Answer
(C)
A cheque payment returned as unpaid
7
Personal drawings by business owners will reduce assets and therefore the owner's equity. A drawing will _______ the part of assets available to the business.
Answer
(B)
Decrease
8
What are the differences between the cost of goods sold and total income?
Answer
(D)
Gross profit
9
Which of the following is NOT a characteristic of business documents?
Answer
(C)
They are only used for sales.
10
An income receivable is an income that has not been received by the end of the accounting year in which is incurred.
Answer
(A)
True
11
Which of the following is an example of an accrued income?
Answer
(A)
Interest
12
If a business receives cash from a customer as an advance payment for future services, which of the following accounts is debited?
Answer
(A)
Cash
13
Why are ledgers balanced off?
Answer
(D)
All of the above
14
What is a trade payable?
Answer
(B)
Money owed to suppliers
15
What are the components of a General Ledger?
Answer
B
C
16
1. What is the general journal and what is it used for?
Answer
(C)
A record of all transactions in a business, used to record transactions in chronological order
17
What accounts are affected when a business purchases supplies for cash?
Answer
(A)
Supplies (Dr), Cash (Cr)
18
Which of the following is a benefit of preparing a trial balance?
Answer
A
B
C
19
1.2 A discount received is treated as income received because it _____
Answer
(B)
Reduces cash paid out by the business
20
A trial balance should be drawn up:
Answer
(C)
At regular intervals
21
When a business pays for insurance in advance, what type of account is debited?
Answer
(B)
Prepaid Insurance
22
What is the impact of trade discounts on the profit made on sales?
Answer
(D)
They reduce profit.
23
Which of the following accounts would typically have a credit balance?
Answer
(B)
Sales Revenue
24
What is the main effect of writing off an irrecoverable debt on the income statement?
Answer
(C)
A decrease in net income.
25
What is the purpose of a sales journal?
Answer
(B)
To record all credit sales.
26
Which of the following actions is NOT a characteristic of a good credit control system?
Answer
(D)
Ignoring legal actions to recover debts.
27
What is the primary goal of the accounting process?
Answer
(B)
To provide financial information to stakeholders.
28
What is the nature of an 'unearned revenue' account?
Answer
(B)
A liability.
29
What is the result of recording an adjusting entry to recognize revenue that has been earned but not yet billed?
Answer
(B)
An increase in assets and an increase in equity.
30
Which of the following are limitations of a trial balance?
Answer
A
C
31
What is the impact of a bank charge on the cash book?
Answer
(D)
Decreases the bank column.
32
What is the definition of 'equity' in the accounting equation?
Answer
(C)
The owner's stake in the business.
33
What is the formula for calculating gross profit?
Answer
(C)
Sales Revenue - Cost of Goods Sold
34
What is the normal balance of the Purchases account?
Answer
(A)
Debit
35
Which of the following scenarios would result in an entry in both the cash and bank columns of the cash book?
Answer
A
D
36
What is the impact on the accounts when there is a sale of goods for cash?
Answer
(A)
Increase cash, increase revenue.
37
A customer pays a business by using a debit card. Where will this transaction first be recorded?
Answer
(B)
Bank column.
38
Which of the following is a benefit of using a separate sales journal?
Answer
(D)
All of the above.
39
What is the purpose of a trade discount?
Answer
(B)
To reduce the price of goods
40
If a company receives a cash discount from a supplier, which accounts are affected?
Answer
(C)
Cash and Accounts Payable
41
Which of the following transactions would affect the owner's capital account directly?
Answer
A
B
42
What is the impact on the accounting equation of a drawing (withdrawal) by the owner?
Answer
(B)
Assets decrease, equity decreases
43
Which of these is an example of a contra-asset account?
Answer
(B)
Accumulated Depreciation
44
What effect does a credit sale have on the 'Accounts Receivable' account?
Answer
(A)
Increases it.
45
What kind of transactions are recorded in the purchases journal?
Answer
(C)
Purchases of goods on credit.
46
Which statement is correct regarding the debit and credit in the general journal?
Answer
(C)
The total debits must equal the total credits.
47
What documents are typically issued to customers who return goods?
Answer
(B)
Credit notes
48
What is the correct journal entry when a company receives cash for services to be performed in the future?
Answer
(C)
Debit Cash; Credit Unearned Revenue
49
When a company provides services to a client and bills them, what account is debited?
Answer
(B)
Accounts Receivable
50
Which of these actions will decrease a company's assets?
