Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 19)
1
What is the correct order in the accounting cycle related to books of prime entry?
Answer
(B)
Books of Prime Entry -> Ledger Accounts -> General Ledger
2
What is the primary purpose of the sales journal?
Answer
(C)
To record credit sales.
3
What items are needed in a journal entry?
Answer
A
B
C
D
4
Which of the following accounts would be debited when recording the sale of a non-current asset (e.g., furniture) for cash at a loss?
Answer
(A)
Cash
5
What is the key difference between the accrual and cash basis of accounting?
Answer
(B)
Accrual accounting recognizes revenues and expenses when earned or incurred; cash basis recognizes them when cash changes hands.
6
What is the impact of paying employee wages on the accounting equation?
Answer
(C)
Assets decrease, Equity decreases
7
If a company estimates that 3% of its sales will become uncollectible, and its sales for the year were $500,000, what is the estimated bad debt expense for the year?
Answer
(A)
$15,000
8
When a company pays rent, what is the correct journal entry?
Answer
(A)
Debit Rent Expense, Credit Cash
9
If a company purchases a building for cash, what is the effect on the accounting equation?
Answer
(C)
Assets increase, Assets decrease
10
If a business deposits cash into its bank account, where would this transaction be recorded in the cash book?
Answer
A
D
11
What type of account is "Unearned Revenue"?
Answer
(B)
Liability
12
What is the effect of receiving a discount from a supplier on the business's cash flow?
Answer
(A)
Decreases cash outflow.
13
What will the entry for the prepaid insurance include?
Answer
(B)
Debit Prepaid insurance, Credit Cash.
14
What kind of entries are made in the cash book?
Answer
(B)
All cash receipts and payments.
15
What type of account is a bank current account considered?
Answer
(A)
Asset account.
16
What is the meaning of the term "depreciation"?
Answer
(A)
The decrease in value of an asset over time.
17
What are the two main categories of accounts found in the ledger?
Answer
(B)
Nominal and Real
18
Which entry in the cash book will correspond to the general ledger?
Answer
(C)
Both cash and bank column.
19
What is the impact of the business owner's equity being invested in the business?
Answer
(C)
Increases assets and increases owner's equity.
20
Which of the following is an example of accrued expense?
Answer
(B)
Utilities bill received, but not yet paid.
21
Which accounts are affected when a company pays its suppliers?
Answer
A
B
22
Which accounting principle allows companies to use different methods when making inventory calculations?
Answer
(A)
Consistency principle
23
Which of the following does NOT affect the provision for doubtful debts?
Answer
(C)
A customer paying their outstanding balance.
24
Which items would be included in the debit side of a cash book?
Answer
A
C
25
Who creates the 'statement of account'?
Answer
(B)
The supplier
26
What is the purpose of a general journal?
Answer
(B)
To serve as the primary book of original entry.
27
What is the impact of recording accrued salaries expenses on the balance sheet?
Answer
(D)
Increase liabilities and decrease equity.
28
Which of the following statements is true about a chart of accounts?
Answer
(C)
It organizes accounts for the business.
29
What is the effect of the 'accrued expense' entry in the general ledger?
Answer
(B)
Increase expenses and increase liabilities.
30
What is the correct journal entry when a business receives cash from a customer for a prior service?
Answer
(D)
Debit Cash, Credit Accounts Receivable
31
What is the impact of a customer paying via a bank transfer on the business's accounting records?
Answer
(B)
Increase in the bank balance, increase in sales.
32
Where does the company's 'Profit for the year' appear?
Answer
(C)
Income Statement.
33
Who is the 'supplier' in the provided context?
Answer
(B)
The seller
34
What is the correct order of the double entry for the purchase of goods with cash?
Answer
(B)
Debit purchases, credit cash.
35
Which of the following statements is true about income that has been earned but not received?
Answer
A
B
36
What happens to the financial statements when a company receives cash for services to be performed later?
Answer
A
B
37
What does the term 'credit' represent in accounting?
Answer
(B)
A decrease in liabilities.
38
What will the seller of the goods issue to the buyer after making a credit sale?
Answer
(C)
A sales invoice
39
What is an 'analytical petty cash book' used for?
Answer
(B)
Analyzing and categorizing different types of petty cash expenditures.
40
Which of these events would increase the balance of the company's bank account?
Answer
A
C
41
Which of the following is a contra-asset account?
Answer
(B)
Allowance for Doubtful Accounts
42
What will a debit entry do to the owner's drawings account?
Answer
(A)
Increase it
43
Which of the following is a component of the matching principle?
Answer
B
C
D
44
Which of the following are included in the financial statements?
Answer
A
B
C
45
What is the journal entry for bank interest?
Answer
(B)
Debit Interest Expense, Credit Bank
46
What effect does a direct debit have on the business's cash book?
Answer
(D)
It decreases the bank balance.
47
What does a 'credit' entry do to an asset account?
Answer
(B)
Decreases the balance.
48
How would the payment of telephone expenses via a standing order be recorded?
Answer
(B)
Debit telephone expense; credit bank
49
Which of the following are examples of assets?
Answer
(B)
Inventory
50
Which source documents would a bookkeeper expect to consider for the following transactions?
