Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 17)
1
When a company buys supplies for cash, what journal entry should be made?
Answer
(A)
Debit Supplies, Credit Cash
2
What is the journal entry to record the earning of revenue when the cash was received in advance?
Answer
(B)
Debit Unearned Revenue, Credit Revenue.
3
Which of the following accounts would be debited when closing out an account?
Answer
(B)
Utilities Expense
4
When goods are returned to a supplier, which of the following are impacted?
Answer
A
B
5
Which items are subtracted from the bank balance on a bank reconciliation?
Answer
(A)
Outstanding checks
6
What is the result if the debits and credits are not equal in a trial balance?
Answer
(C)
There is an error in the records.
7
What is the immediate impact on a business when inventory is purchased on credit?
Answer
A
B
8
How are errors in the cash book or bank statement corrected in the bank reconciliation process?
Answer
(C)
By correcting the appropriate balance (bank or book).
9
What is the impact of paying cash for new lighting fittings?
Answer
(B)
Debit lighting fittings, Credit cash
10
What is the main purpose of the balance sheet?
Answer
(B)
To report a company's financial position at a specific point in time.
11
What is considered a cash inflow?
Answer
(C)
Receiving cash from a customer.
12
Which of the following will DECREASE in the accounting equation when a customer returns goods purchased on credit?
Answer
(C)
Equity
13
Which of the following would likely be debited when a customer returns goods that were purchased on credit?
Answer
(C)
Sales Returns
14
What is the effect on the accounting equation when a company declares and pays dividends to its shareholders?
Answer
(C)
Assets decrease, Equity decreases
15
What is the journal entry to record a debt recovered which was previously written off using the direct write-off method?
Answer
(A)
Debit Cash, Credit Accounts Receivable.
16
Which items will be recorded on the debit side of the cash book?
Answer
A
B
17
What is a receipt used for?
Answer
(B)
To provide proof of purchase and payment
18
A company has a debit balance in its cash book. What does this indicate?
Answer
(C)
The business has cash available.
19
What is the purpose of the 'general journal'?
Answer
(A)
To record transactions that cannot be entered in other journals.
20
What are the two main sides of a ledger account?
Answer
(A)
Debit and Credit
21
When paying for supplies by cash, which accounts are affected?
Answer
A
D
22
What is the effect on the accounting equation when a business receives cash from a customer on account?
Answer
(D)
The composition of assets changes; no net effect.
23
When a company determines a specific customer's account receivable is uncollectible, the entry to write off this debt would be:
Answer
(B)
Debit Allowance for Doubtful Accounts; Credit Accounts Receivable.
24
What effect does recording an accrued expense have on the balance sheet?
Answer
(D)
It increases liabilities and has no effect on assets.
25
Which source document is used for credit purchases of goods?
Answer
(B)
A supplier's invoice.
26
What effect does a sale of goods have on the components of the accounting equation?
Answer
A
C
27
What should be done before a payment is made?
Answer
(C)
Receive an invoice
28
If the bank balance in a company's cash book shows total credits greater than total debits, what does this mean?
Answer
(B)
The business has an overdraft.
29
What is an advantage of using an imprest system?
Answer
(B)
It allows for better control over petty cash.
30
Which events would increase a company's liabilities?
Answer
A
B
31
What is the relationship between debits and credits in a trial balance?
Answer
(C)
Debits and credits must be equal.
32
What is a key advantage of using separate journals in the accounting system?
Answer
(B)
It allows the task of bookkeeping to be divided between different people.
33
Which of the following best describes the purpose of a trial balance?
Answer
(A)
To prove the mathematical accuracy of the accounting equation
34
Which of the following statements is true regarding the accrual accounting method?
Answer
(B)
Revenues are recorded when earned, and expenses are recorded when incurred.
35
What is the normal balance for the 'Service Revenue' account?
Answer
(B)
Credit
36
If a company uses the allowance method and estimates that $1000 of accounts receivable are uncollectible, what is the effect on the financial statements?
Answer
(C)
No effect on assets, net income decreases.
37
Which of the following accounts would most likely have a debit balance?
Answer
(C)
Rent Expense
38
If a company buys a building and pays in cash, what is the journal entry?
Answer
(A)
Debit Building, Credit Cash
39
What information is usually included on a statement of account?
Answer
A
B
C
40
What is the effect on the accounting equation when a company borrows money from a bank?
Answer
(B)
Assets increase, Liabilities increase
41
If an irrecoverable debt is written off, what is the impact on net working capital?
Answer
(C)
No impact.
42
What is the effect on owner's equity when the owner withdraws cash from the business for personal use?
Answer
(B)
It decreases.
43
What will be the entry for a direct debit for electricity payment?
Answer
(A)
Debit Electricity, Credit Bank
44
What type of accounts does the "Tanya fruit & vegetable supplier" represent?
Answer
(A)
Liability
45
What is the main benefit of a trial balance?
Answer
(B)
It aids in the preparation of financial statements.
46
Who is issuing the debit note for returned goods to the customer?
Answer
(B)
The supplier
47
When a customer returns faulty goods, which of the following is typically credited?
Answer
(C)
Accounts Receivable
48
What is the effect of a bank overdraft on the bank statement?
Answer
(A)
The bank statement will show a credit balance.
49
Which of the following is an example of unearned revenue?
Answer
(B)
Cash received from a customer for services to be performed in the future.
50
What should the business do when it receives cash?
