Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 20)
1
What is the effect on the accounting equation when a business purchases equipment on credit?
Answer(C)
Assets increase, liabilities increase.
2
Which of the following is NOT a result of adjusting entries?
Answer(D)
Cash balance adjustments.
3
Which of the following is a correct statement about recording an irrecoverable debt recovered?
Answer(A)
Debit cash and credit the irrecoverable debt recovered account.
4
Which of the following items would increase the cash balance in the cash book?
5
When is revenue recognized under the accrual basis of accounting?
Answer(C)
When the product is delivered or the service is performed.
6
Which accounts are temporary accounts?
7
What is the relationship between final debit balances and profit?
Answer(A)
Final debit balances include all expenses, which are subtracted from income to determine profit.
8
Which of the following accounts are impacted by an unrecorded deposit?
9
What is the purpose of the 'Statement of Retained Earnings'?
Answer(B)
To summarize the changes in the retained earnings account over a period.
10
Which of the following scenarios would NOT increase owner's equity?
Answer(C)
The business pays rent expense.
11
What is the effect on the accounting equation when a company buys inventory with cash?
Answer(D)
The composition of assets changes; no net effect.
12
What does a business typically do at the end of an accounting period with the totals from its sales journal?
Answer(B)
Transfer the totals to the general ledger.
13
Where would the purchase of office supplies on credit be recorded initially?
14
Which of these transactions would decrease the balance in the bank column of a cash book?
15
What effect does a debit entry to an expense account have?
Answer(B)
Increases the balance of the expense account.
16
If a company purchases office supplies on credit, which accounts are affected?
Answer(B)
Debit Supplies, Credit Accounts Payable
17
What is 'Double-entry bookkeeping'?
Answer(C)
A system where every transaction is recorded with a debit and a credit.
18
Which of the following are considered liabilities?
19
Which of the following is a key benefit of taking a cash discount offered by a supplier?
20
Which of the following is NOT an adjusting entry?
21
What is the first step that must be taken when creating a trial balance?
Answer(B)
List each ledger account with its balance.
22
Which of the following is a key component of the 'Going Concern' assumption?
Answer(A)
The business will continue operating for the foreseeable future.
23
Which accounting principle emphasizes the recognition of expenses in the same period as related revenues?
24
Which accounting principle is most related to properly recording trade discounts?
25
In relation to 'Adjusting for accrued expenses', which of the following items could be considered?
26
What are some reasons that may lead to writing off a bad debt?
27
What is the normal balance of the Unearned Revenue account?
28
What is the normal balance of the Accounts Receivable account?
29
When a customer pays a bill with a cheque, what is the immediate effect on the accounting equation?
Answer(D)
Assets increase, owner's equity increases.
30
When a business receives cash from a customer for services rendered, what is the typical double-entry accounting treatment?
Answer(B)
Debit Cash, Credit Service Revenue.
31
What is the correct journal entry for the sale of an office chair for $100, which had a written-down value of $100?
Answer(A)
Debit Cash $100; Credit Furniture $100.
32
In the context of accounting, what does 'posting' refer to?
Answer(B)
The process of transferring information from the general journal to the ledger accounts.
33
Which of the following describes an accounting error?
34
What is the difference between book-keeping and accounting?
Answer(B)
Book-keeping involves recording transactions, while accounting involves the preparation and analysis of financial statements.
35
Which of the following is the correct journal entry for an owner investing equipment into the business?
Answer(B)
Debit Equipment, Credit Capital
36
Which type of payment is a payment card?
37
Which of the following items is recorded in the sales journal?
38
Which of the following is considered a contra-revenue account?
Answer(C)
Sales Returns and Allowances
39
What is the effect on the accounting equation when a company pays an employee's salary?
Answer(C)
Assets decrease, equity decreases.
40
What impact does a sale on account have on the seller's balance sheet?
Answer(B)
Assets increase, equity increases.
41
What is the definition of 'owner's equity'?
Answer(C)
The owner's stake in the business, calculated as assets minus liabilities.
42
Which of the following is a contra-asset account?
43
Which of the following statements best describes a bank reconciliation?
Answer(D)
A process that explains differences between the cash balance per the bank and the company's records.
44
What is the first step in the process of bank reconciliation?
Answer(C)
Identifying the reasons for differences between the bank and book balances.
45
What are the two sides of a general journal entry?
46
Which is the correct impact for a business when they receive a direct credit?
Answer(A)
The bank column will increase.
47
What is the role of the general journal?
Answer(B)
To record transactions that do not fit any other specialized journal.
48
What could result in the issuance of a 'debit note'?
49
Which of the following accounts is a temporary account?
50
What is the impact on the balance of a bank account when a company pays a supplier by cheque?
