Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 25)
1
What is 'Depreciation'?
Answer
(B)
The allocation of the cost of a tangible asset over its useful life.
2
How do you record a cheque received from a customer?
Answer
(B)
Debit bank, credit sales
3
Which of the following accounts will appear on the balance sheet?
Answer
A
C
4
What is the general rule about where to record debits and credits?
Answer
(C)
Increases are on the same side, decreases are on the opposite side.
5
When a business sells goods on credit, what journal entry should be made?
Answer
(B)
Debit Accounts Receivable, Credit Sales Revenue
6
What information is typically included in a purchases journal entry?
Answer
A
B
C
7
In which book of prime entry are all credit sales recorded?
Answer
(C)
Sales journal
8
Which of the following items would be subtracted from the company's book balance during a bank reconciliation?
Answer
(C)
Bank service charges.
9
What is the correct journal entry to transfer the balance in purchases to income statement?
Answer
(B)
Debit Income Summary; Credit Purchases
10
What is a common use of the general journal?
Answer
(B)
Recording transactions that can’t be recorded in other journals.
11
What is 'Working Capital'?
Answer
(B)
Current assets minus current liabilities.
12
Which of the following is a reason for using double-entry bookkeeping?
Answer
(A)
To ensure that the accounting equation always balances.
13
What is the effect of an outstanding check on a bank reconciliation?
Answer
(D)
Decreases the bank balance.
14
What information is included on a sales receipt?
Answer
A
B
C
15
What impact does the receipt of a bank loan have on the accounting equation?
Answer
(A)
Assets increase, liabilities increase.
16
What are the main stages in preparing financial information in accounting?
Answer
(A)
Recording transactions, classifying and grouping transactions, summarizing financial information, and reporting and using financial information.
17
Which is an example of a receipt document?
Answer
(C)
Sales receipt
18
What actions will result in an increase in the bank balance?
Answer
A
C
19
In the context of sales returns, what happens to the seller's inventory?
Answer
(A)
Inventory increases.
20
If a company receives cash from a customer for services performed, what is the correct journal entry?
Answer
(C)
Debit Cash, Credit Service Revenue
21
When a business pays cash for supplies, which accounts are affected?
Answer
(A)
Debit Supplies; Credit Cash
22
Which of the following is the correct entry when a company sells goods on credit, using the perpetual inventory method?
Answer
A
C
23
When a company sells goods on credit, which accounts are directly impacted in the sales journal?
Answer
(B)
Accounts Receivable and Sales Revenue
24
What is the fundamental concept behind double-entry bookkeeping?
Answer
(B)
The sum of all debits must equal the sum of all credits.
25
A company has unearned revenue. This unearned revenue will be recognized as revenue when:
Answer
(C)
The services are performed.
26
Which of the following accounts typically has a debit balance?
Answer
(C)
Salary Expense
27
What is a key function of the income statement?
Answer
B
D
28
What could be the effect of providing a trade discount on future sales?
Answer
A
B
C
29
What is the effect on the financial statements of recording depreciation expense?
Answer
(B)
Assets decrease, equity decreases.
30
What is the impact of a sales return on a business's working capital?
Answer
(B)
Working capital decreases
31
If a supplier gives a discount for early payment, what impact does this have on the business?
Answer
(B)
Decrease cash outflow, decrease expenses.
32
Which entry is made for the purchase of goods on credit?
Answer
(B)
Debit Purchases, Credit Accounts Payable
33
What is the purpose of a bank reconciliation?
Answer
(B)
To reconcile the cash balance in the bank statement with the cash balance in the business's records
34
Which financial statement is directly impacted by writing off an irrecoverable debt?
Answer
(B)
The income statement, decreasing net income.
35
An invoice of $1,300 for goods sold was not recorded in the accounting records. What type of error occurred?
Answer
(A)
Error of omission.
36
Which journal would be used to record the return of goods to a supplier?
Answer
(B)
Purchases Returns Journal
37
What is the effect of recording the depreciation expense?
Answer
(B)
Decreases assets and equity.
38
When a customer pays an invoice by cheque, what is the accounting impact?
Answer
(A)
Debit Cash, Credit Accounts Receivable
39
Which of the following accounts typically has a credit balance?
Answer
(C)
Service Revenue
40
Which of the following transactions will affect both the balance sheet and the income statement?
Answer
A
C
41
Which of the following best describes a trial balance?
Answer
(B)
A list of account balances at a specific point in time.
42
A company has accounts receivable of $100,000 and an allowance for doubtful accounts with a credit balance of $2,000. If the company writes off an uncollectible account of $500, what is the balance of the allowance for doubtful accounts after the write-off?
Answer
(B)
$1,500
43
If a business pays cash for insurance, how does it affect the accounting equation?
Answer
(D)
The composition of assets changes; no net effect.
44
Which of the following is an advantage of preparing a trial balance?
Answer
(D)
It provides a check on the accuracy of account balances in the ledger to ensure that errors have been made correctly.
45
What accounting principle requires that all expenses directly related to revenue be recognized in the same period?
Answer
(A)
Matching Principle
46
What is the effect on the accounting equation when a business pays its telephone bill with cash?
Answer
(C)
Assets decrease, equity decreases.
47
If a business takes a loan and deposits the proceeds into its bank account, how will this affect the cash book?
Answer
(C)
Debit the bank column, credit the loan account (in general ledger).
48
What is a key difference between accrued expenses and prepaid expenses?
Answer
A
B
C
D
49
What accounting principle states that a business should be treated as a separate entity from its owners?
Answer
(C)
Economic Entity Assumption
50
What is the normal effect when a customer returns goods?
