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Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 2)

1
How are transactions initially recorded in the accounting cycle?
Answer
(C)
Journal
2
How should trade discounts be handled in the customer's record?
Answer
(C)
The final net price after the trade discount.
3
What does a direct debit payment usually involve?
Answer
(D)
All of the above.
4
Which of the following is NOT a non-current asset?
Answer
(C)
Inventory
5
A debit balance in the bank account represents:
Answer
(C)
An asset
6
What is the impact on the accounting equation if a company purchases supplies for cash?
Answer
(D)
d) Assets stay the same.
7
What does a receipt provide?
Answer
(C)
Proof of a purchase and payment.
8
A customer's account is deemed uncollectible. What is the journal entry to write off the debt?
Answer
(A)
Debit Bad Debt Expense, Credit Accounts Receivable.
9
Which of the following is the correct order of the accounting cycle?
Answer
(A)
a) Journalize, post, prepare a trial balance, prepare financial statements.
10
To record the irrecoverable debt in journal entries which account will be debited?
Answer
(B)
Income Statement
11
The trial balance is a basis for:
Answer
(D)
All of the above
12
How is profit for the year calculated?
Answer
(B)
Total income less total costs
13
What is the purpose of debiting the income statement with an expense to record the increase in provision for doubtful debts?
Answer
(D)
To reduce the amount of income from sales for the year.
14
What is a credit note?
Answer
(A)
A document issued by a supplier to notify a customer of a lower amount to be paid.
15
What is the meaning of equity?
Answer
A
D
16
What is the impact on the accounting equation when a business declares and pays a cash dividend?
Answer
(B)
Assets decrease, equity decreases
17
Which of the following items would be listed under the 'liabilities' section of a balance sheet?
Answer
A
C
D
18
Which of the following is NOT a step in preparing financial statements?
Answer
(D)
Analyze the bank statements.
19
What is the result when a cheque payment is un-honored?
Answer
(D)
The business may have to take legal action against the customer
20
What does the term "prepaid expense" refer to?
Answer
(B)
An expense that has already been paid but has not yet been used or incurred.
21
A debit entry increases:
Answer
(C)
Expenses
22
What is the effect of writing off an irrecoverable debt on the balance sheet?
Answer
(B)
Decrease in assets
23
Which of the following statements best describes the matching principle?
Answer
(C)
Expenses are recognized in the same period as the revenues they help generate.
24
It is important to match income earned with the expenses incurred running it in the same accounting year.
Answer
(A)
True
25
Which of the following statements is true regarding accrued expenses?
Answer
(C)
An accrued but unpaid expense should be charged to profit in the accounting year it was used to the benefit of the business.
26
What is the effect on the accounting equation if the owner withdraws cash for personal use?
Answer
(B)
Assets decrease, owner's equity decreases
27
What is the purpose of the trial balance?
Answer
(A)
To check the mathematical accuracy of the accounting records.
28
What method is used in bank reconciliations?
Answer
(C)
Start with the balance on the bank statement and cash book
29
What is a sales receipt primarily used for?
Answer
(B)
To confirm the purchase.
30
What are the typical examples of adjustments made to ledger accounts at the end of an accounting period?
Answer
A
B
C
D
31
Which of the following describes a contra-asset account?
Answer
(A)
It decreases the value of an asset.
32
Who issues an invoice?
Answer
(B)
The supplier.
33
What is the main purpose of a credit note?
Answer
(C)
To reduce a debt.
34
A company provides services to a client but has not yet sent an invoice. This is an example of:
Answer
(B)
Accrued revenue
35
If a business receives cash for goods sold, which of the following is true?
Answer
(B)
Debit Cash, Credit Sales.
36
What information is recorded on petty cash vouchers?
Answer
(D)
All of the above
37
14. What entries will affect cash account?
Answer
B
C
D
38
Which ledger contains all personal accounts of suppliers or trade payables?
Answer
(B)
Purchase ledger
39
Who issues the invoice?
Answer
(B)
The supplier
40
Which of the following situations requires an adjusting entry?
Answer
(C)
Expiration of prepaid rent.
41
What are the advantages of using the imprest system for petty cash?
Answer
(C)
c) A record of all cash transactions is kept, and the process of replenishing cash is simple, as it keeps a set amount.
42
In accordance with the following accounts, which of the following statement is correct?
Answer
(B)
A cash account is debited when cash is received.
43
Which of the following is a characteristic of a credit note?
Answer
(D)
It decreases the amount owed.
44
What will cause the amount to increase in the Income Statement?
Answer
A
C
45
What is the impact of a sales return on the accounting equation?
Answer
(B)
Decreases assets, decreases owner's equity.
46
Which of the following is a debit entry?
Answer
(B)
Decrease in Accounts Payable
47
What is a credit entry used for?
Answer
(A)
Increase a liability
48
What is the impact on the bank account for money paid out from the account?
Answer
(B)
A credit entry
49
When a business pays for an expense by cheque, which of the following occurs?
Answer
(B)
Bank is credited and expense is debited.
50
A company pays rent for the next three months in advance. This is a:
Answer
(B)
Prepaid expense