Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 22)
1
If a business buys goods on credit, which two accounts are affected?
Answer(B)
Purchases and Trade Payables
2
What kind of account is 'Cost of Goods Sold'?
3
If a company sells goods on credit, the accounts affected are:
Answer(B)
Accounts Receivable and Sales Revenue
4
In a journal entry, what does the term "description" typically refer to?
Answer(B)
A brief explanation of the transaction
5
Which of the following accounts is credited when a company receives cash in advance for services not yet performed?
6
Which of the following is an example of a 'receipt document'?
7
Which of the following best describes the Income Summary account?
Answer(B)
A temporary account used to summarize revenues and expenses before transferring to retained earnings.
8
Which of the following is NOT considered a type of payment recorded by a bank?
9
What is a primary advantage of using a sales journal?
Answer(C)
It speeds up the process of data recording.
10
What is the impact of a company purchasing its own stock (treasury stock)?
Answer(B)
Decreases assets and decreases equity.
11
Which side of the cash book is used to record cash receipts?
12
If a company's assets are $200,000, and its liabilities are $80,000, what is the value of the owner's equity?
13
Which of the following is an example of a current asset?
14
What is the final stage in the process of accounting after transactions have been entered into the books of prime entry?
Answer(B)
Posting the information to the ledgers.
15
What is the purpose of the 'Statement of Cash Flows'?
Answer(B)
To show how cash moves into and out of a company.
16
What is the effect on the accounting equation when a company pays rent via cheque?
Answer(C)
Assets decrease, owner's equity decreases.
17
If a business is behind in paying its suppliers, what is this called?
18
In an accounting system, what is the purpose of a ledger?
Answer(B)
To summarize and classify the information from the books of original entry.
19
What is an example of an expense that might be prepaid?
20
How is the purchase of office supplies on credit recorded?
Answer(D)
Debit office supplies, credit accounts payable.
21
Which of the following events would reduce a company's bank balance?
22
What does the term 'irrecoverable debt' refer to?
Answer(B)
A debt that is unlikely to be collected.
23
Which financial statement is most directly impacted by an adjusting entry to record depreciation?
24
When a company receives cash for services to be performed in the future, how is the accounting equation impacted?
Answer(A)
Assets increase and liabilities increase.
25
What must a supplier do if a customer returns goods?
26
The income for the year is equal to:
Answer(D)
Total income - total costs
27
If a company pays rent for the next three months, which account is debited?
28
Which transactions will decrease the balance of the Cash account?
29
Which account is credited when adjusting for unearned revenue?
30
Which of the following will decrease a company's assets?
31
Which of the following would appear on the debit side of a cash book?
32
What type of accounts is 'Drawings' considered to be?
Answer(C)
An owner's equity account
33
Which of the following is an example of a cash outflow?
Answer(C)
Payment of wages in cash.
34
Which of the following accounts are usually impacted by a credit sale?
35
Which of the following statements is true about the relationship between accrued revenue and accounts receivable?
Answer(A)
Accrued revenue increases Accounts Receivable.
36
Which of the following actions would increase the cash balance as recorded in a cash book?
Answer(B)
Receiving cash from customers.
37
What documents should a supplier check when issuing a statement of account?
38
How are credit sales summarized at the end of a month?
Answer(B)
The total amount of credit sales
39
Which of the following is a purpose of the 'Statement of Retained Earnings'?
Answer(B)
To reconcile the beginning and ending balance of retained earnings.
40
What does 'Accounts Receivable' represent on a company's balance sheet?
Answer(B)
Amounts others owe to the company.
41
What is the relationship between trade receivables and the provision for doubtful debts on the balance sheet?
Answer(C)
They are subtracted; the provision reduces the carrying value of trade receivables.
42
If a company sells a product on credit, and the customer doesn't pay, which accounts will be affected after writing off the debt?
Answer(D)
Allowance for Doubtful Accounts and Accounts Receivable.
43
Which of these is *not* a typical reason for a customer to return goods?
44
What type of accounts have credit balances?
Answer(B)
Liabilities, equity and revenue
45
What is the effect of a credit sale on the income statement and the balance sheet?
46
Which of the following entries may involve the use of cash book?
47
What type of system is typically used to record small business expenses?
48
What type of transactions are recorded in the cash book?
Answer(C)
Cash receipts and payments.
49
If a company purchases equipment with a cash down payment and a note payable, what is the correct journal entry?
Answer(B)
Debit Equipment, Credit Cash; Credit Notes Payable
50
Which book of prime entry is used to record returns of goods purchased on credit?
Answer(D)
Purchases Returns Journal
