Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 16)
1
What type of accounts would a business use to record transactions with its suppliers?
Answer
(A)
Personal accounts
2
Which of the following statements is true regarding the direct write-off method?
Answer
A
C
3
What is the purpose of the statement of retained earnings?
Answer
(C)
To show how the company's retained earnings have changed over a period.
4
Which of these stakeholders might use accounting information?
Answer
A
B
C
5
What is a characteristic of a trial balance?
Answer
(B)
It is a summary of account balances.
6
A business issues a credit note to a customer. In which journal would this transaction be initially recorded?
Answer
(C)
Sales Returns Journal
7
What is the impact on the accounting equation when a company purchases equipment for cash?
Answer
(D)
The composition of assets changes; no net effect.
8
Which of the following items would require an adjusting entry?
Answer
B
C
9
What is the impact of receiving a cash discount on a trade receivable?
Answer
(B)
The cash discount will cause a decrease in the receivable.
10
Which of the following is a likely outcome of offering large trade discounts?
Answer
A
B
11
In which accounting accounts can the opening balance be seen?
Answer
A
B
C
12
What is the advantage of keeping the books of prime entry separated?
Answer
A
C
13
In a balance sheet, an accrued expense is what type of account?
Answer
(C)
A liability account.
14
When a company performs services for a customer on credit, what is the journal entry?
Answer
(B)
Debit Accounts Receivable, Credit Service Revenue
15
What document is issued when a customer has been overcharged on an invoice?
Answer
(B)
Credit Note
16
What does the 'double entry' principle in accounting mean?
Answer
(B)
For every debit entry, there must be an equal credit entry.
17
Which of the following is true about a debit balance in a bank account?
Answer
(A)
The business has more cash than it owes to others.
18
Which of the following accounts would normally have a debit balance?
Answer
(C)
Utilities Expense
19
What are the main advantages of using accounting software or journals?
Answer
A
B
D
20
Which of the following is a characteristic of a 'credit' entry?
Answer
(C)
It increases liabilities.
21
Which of the following are examples of temporary accounts?
Answer
A
C
22
What does a credit balance in a bank account mean?
Answer
(A)
The business has more cash than liabilities.
23
What is the impact on 'Inventory' when goods are sold on credit?
Answer
(B)
Inventory decreases.
24
What is the primary accounting equation?
Answer
(C)
Assets = Liabilities + Equity
25
Which of the following document(s) is/are examples of a document used for the purpose of requesting payment?
Answer
(A)
Invoice
26
What impact does a payment to a supplier for a purchase on credit have on the balance sheet?
Answer
(B)
Assets decrease, liabilities decrease.
27
When a business purchases supplies for cash, how does this affect the accounting equation?
Answer
(D)
The composition of assets changes; no net effect.
28
What does the term 'on account' mean in the context of accounting?
Answer
(C)
On credit, with payment due later.
29
Which of the following is included in an opening entry in the general journal?
Answer
A
B
C
30
Which of the following is a characteristic of the debit side of a ledger account?
Answer
(D)
It is the left-hand side of the account.
31
If a company's assets increase by $10,000 and its liabilities increase by $3,000, how will owner's equity change?
Answer
(A)
Increase by $7,000
32
Which source document would be used as the basis for an entry in the sales journal?
Answer
(D)
A sales invoice.
33
What happens to the owner's equity when a company earns revenue?
Answer
(A)
Increases
34
What is the 'Historical Cost Principle'?
Answer
(B)
Assets are recorded at their original cost.
35
What accounting entry is used to record bank interest earned on a company's current account?
Answer
(A)
Debit Bank, Credit Interest Revenue
36
What is the purpose of an audit?
Answer
(B)
To provide an opinion on the fairness of the financial statements.
37
A company’s cash book balance is $10,000. The bank statement shows a balance of $12,000. Outstanding checks are $2,000, and deposits in transit are $500. What is the adjusted cash balance?
Answer
(B)
$10,000
38
Identify the accounts that are typically used when transferring the balances to an income statement at the end of the accounting period.
Answer
A
B
39
If a company purchases office supplies on credit, what is the correct journal entry?
Answer
(C)
Debit Office Supplies, Credit Accounts Payable
40
What does it mean when the total debits are less than the total credits in the cash book?
Answer
(B)
The company has an overdraft.
41
Which of the following are necessary end of period adjustments?
Answer
A
B
C
42
Which of the following best explains why a business may choose to offer trade discounts?
Answer
(C)
To incentivize customers to purchase goods
43
What is a chart of accounts?
Answer
(B)
A list of all the accounts used by a company.
44
What type of error involves two or more errors that cancel each other out, resulting in a balanced trial balance, even though the underlying transactions are incorrect?
Answer
(B)
Compensating error.
45
What impact does recording depreciation expense have on a company's financial statements?
Answer
A
B
46
Which of the following are examples of the bank making entries?
Answer
B
C
47
How are cash transactions recorded in the cash book initially?
Answer
(D)
In the cash column.
48
Which of the following is a liability?
Answer
(D)
Accounts Payable
49
What is the purpose of a chart of accounts?
Answer
B
C
D
50
What is the purpose of a trial balance?
Answer
(B)
To check the accuracy of the general ledger by ensuring debits equal credits.
