Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 24)
1
What type of account is 'Service Revenue'?
Answer
(D)
A revenue account.
2
If a business receives cash from a customer for services already performed, what accounts are affected?
Answer
(C)
Debit Cash, Credit Service Revenue
3
When a business receives cash from a customer and deposits it into the bank, what entries are recorded in the cash book?
Answer
(C)
Debit to bank, credit to cash.
4
Which of the following is NOT a common source of business funds (financing)?
Answer
(D)
Accounts payable.
5
Which of the following is an advantage of using specialized journals?
Answer
(C)
It makes it easier to identify errors.
6
Which of these are reasons to use the general journal?
Answer
A
B
D
7
What is the impact on the accounting equation when a company pays its rent with cash?
Answer
(C)
Assets decrease, equity decreases.
8
What is the effect of a cash sale on the accounting equation?
Answer
(C)
Assets increase, Equity increases.
9
In a double-entry bookkeeping system, what account is credited when cash is received from a customer on account?
Answer
(C)
Accounts Receivable
10
Which accounts are used to calculate net income?
Answer
A
B
11
Which of the following statements is true regarding the debit and credit rules?
Answer
(A)
Debit increases assets, credit decreases assets.
12
In which circumstances will a bank reconciliation statement be prepared?
Answer
(B)
When there are differences between the cash book balance and the bank statement balance.
13
What is the impact on the balance sheet when a customer pays for a credit sale?
Answer
(D)
No net change to assets.
14
What effect does a sales return have on the Accounts Receivable account?
Answer
(B)
Decreases.
15
What is the effect of paying a supplier with cash?
Answer
(D)
Assets decrease, liabilities decrease.
16
When a company pays its employees their salaries, what account is credited?
Answer
(B)
Cash
17
A trial balance primarily helps to identify which of the following?
Answer
(C)
The accuracy of ledger account balances.
18
In a general journal entry, what does the 'Description' column usually contain?
Answer
(D)
A brief explanation of the transaction and the accounts involved.
19
What accounting impact results from a customer returning faulty goods?
Answer
(B)
Decrease in sales revenue, decrease in accounts receivable.
20
What is the normal balance of a liability account?
Answer
(B)
Credit
21
Which of the following describes a situation where a bank account is overdrawn?
Answer
(B)
The business has less money in the bank than it owes.
22
Why are adjusting entries necessary at the end of an accounting period?
Answer
B
C
23
What does the term 'credit' mean in accounting?
Answer
(D)
The right side of an account.
24
What is the correct journal entry for recording the purchase of office supplies on credit?
Answer
(B)
Debit Office Supplies, Credit Accounts Payable
25
Which of the following is increased by a debit entry?
Answer
A
C
26
Which of the following will result in a debit entry?
Answer
A
B
27
What does the term 'going concern' refer to in accounting?
Answer
(A)
The business's ability to continue operating in the foreseeable future.
28
What journal entry is made when a company receives cash for a sale previously recorded on credit?
Answer
(A)
Debit Cash, Credit Accounts Receivable.
29
Which side of the cash book is used to record cash payments?
Answer
(B)
Credit side
30
What are the consequences of omitting adjusting entries?
Answer
A
B
C
31
If a company does not make an adjusting entry for earned but unbilled revenue, what effect does this have?
Answer
(A)
Assets and equity are understated.
32
Which of the following represents a decrease in equity?
Answer
(B)
Paying a dividend
33
What would be the journal entry for a business receiving cash from a customer for goods sold on account?
Answer
(C)
Debit Cash, Credit Accounts Receivable
34
What are examples of irregular transactions that should be recorded in the general journal?
Answer
(B)
Opening a journal for the first time.
35
Which of the following statements best describes the relationship between the debit and credit sides of an accounting equation?
Answer
(C)
The debit and credit sides must always be equal.
36
Which of the following statements are true regarding the accounting equation?
Answer
A
B
C
37
Which of the following is a characteristic of a 'Current Liability'?
Answer
(A)
It is expected to be paid within one year or the operating cycle.
38
When a business uses its bank account to pay a supplier, how is this transaction recorded in the cash book?
Answer
(B)
Credit bank column.
39
What is the effect of declaring and paying dividends on the Statement of Cash Flows?
Answer
(C)
Cash outflow from financing activities
40
A company using the allowance method determines that a $500 account is uncollectible. Which of the following is the journal entry to write off the bad debt?
Answer
(C)
Debit Allowance for Doubtful Accounts $500, Credit Accounts Receivable $500
41
Who prepares the delivery note?
Answer
(B)
The seller
42
Which accounts typically have a normal debit balance?
Answer
(B)
Assets and expenses
43
What is the role of the general ledger?
Answer
(B)
To summarize transactions by account.
44
Which of the following would be considered a credit entry?
Answer
(B)
An increase in a liability.
45
A company receives a bank statement showing $200 interest earned. How should the company record this in its cash book?
Answer
(A)
Debit Cash, Credit Interest Revenue
46
Which items would appear in the liabilities section of the statement of financial position?
Answer
A
C
47
What is the purpose of 'end-of-year adjustments'?
Answer
B
C
48
What does the phrase 'going concern' mean in accounting?
Answer
(A)
The business is likely to continue operating for the foreseeable future.
49
What is the correct journal entry for interest expense incurred on a bank loan?
