Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 26)
1
Which of the following is true about a corporation?
Answer
(B)
It is a separate legal entity.
2
What type of account is 'Accounts Receivable'?
Answer
(A)
An asset account.
3
What are the main resources that a business needs to function?
Answer
(A)
Cash, land, and labor
4
Which of the following statements is true about the 'Going Concern' assumption?
Answer
A
D
5
What financial statement would you find 'Profit for the year'?
Answer
(B)
Income Statement
6
Which of the following are examples of accrued expenses?
Answer
A
B
7
What is the effect of recording an allowance for doubtful accounts on the balance sheet?
Answer
(B)
Decreases total assets.
8
What is the effect on the balance sheet when a company makes a cash payment to its supplier?
Answer
(B)
Assets decrease, liabilities decrease.
9
Which of the following is true about the impact of adjusting entries?
Answer
A
B
C
10
Which of the following are considered methods of making and receiving payments for a business with a bank account?
Answer
B
C
D
11
What effect does the direct write-off method have on the financial statements compared to the allowance method, in terms of accounting for uncollectible debts?
Answer
A
C
12
What steps are involved in the accounting cycle?
Answer
A
B
C
D
13
Which of the following is NOT a reason why a trial balance may not balance?
Answer
(A)
The omission of a transaction.
14
Which type of error would cause a trial balance to not balance?
Answer
(D)
An error of original entry, where the amount is incorrect.
15
What is the correct journal entry for the owner's personal drawings?
Answer
(C)
Debit Drawings, Credit Cash
16
What is the effect on the accounting equation when a company pays its employees' salaries?
Answer
(D)
Assets decrease, Liabilities decrease
17
What is the ultimate goal of the Income Statement?
Answer
(B)
To show the company's financial performance.
18
Which of the following would *decrease* a company's cash balance as a result of bank reconciliation?
Answer
(C)
Bank service fees
19
What is the purpose of an 'income statement'?
Answer
(B)
To report the revenues, expenses, and profit or loss of a company over a period.
20
How does a standing order impact the cash book?
Answer
(C)
Decreases the bank column balance.
21
What is the primary goal of financial accounting?
Answer
(B)
To provide information to external users.
22
Which accounts are involved when an owner takes goods from inventory for personal use?
Answer
A
C
23
Which of the following is a key advantage of using the Imprest System for petty cash?
Answer
(B)
It simplifies reconciliation of petty cash expenditures.
24
What is the impact of a sale on credit on the financial statements?
Answer
A
C
25
When a company purchases equipment for cash, what is the effect on the accounting equation?
Answer
(D)
Assets decrease, Equity stays the same
26
What is the effect of recording depreciation on an asset?
Answer
(B)
Decreases assets.
27
What does 'Final debit balances for cost of goods sold and expenses' represent?
Answer
A
B
28
Which of the following is an example of a contra revenue account?
Answer
(B)
Sales Returns and Allowances
29
What is the impact on assets when a company buys supplies on credit?
Answer
(A)
Increase
30
What is the meaning of 'double-entry' in double-entry bookkeeping?
Answer
(A)
Every transaction affects two accounts.
31
What will *increase* owner's equity?
Answer
(C)
Earning revenue
32
What is the effect on the accounting equation when a company receives cash from a customer for services to be performed in the future?
Answer
(B)
Assets increase, Liabilities increase
33
Which of the following is an example of a transaction that would result in a debit entry to the cash account?
Answer
A
C
34
Which of the following best describes the purpose of closing entries?
Answer
A
C
35
What is the correct journal entry to record the purchase of inventory for cash?
Answer
(A)
Debit Inventory, Credit Cash
36
Which of the following increase the owner's equity?
Answer
A
D
37
What are the typical components of a bank reconciliation?
Answer
A
B
C
38
In which section of the income statement would you find depreciation expense?
Answer
(C)
Operating Expenses section.
39
If the total debits exceed the total credits, what does the balance show in the cash book?
Answer
(B)
A debit balance
40
How would the sale of goods on credit be recorded?
Answer
(B)
Debit Accounts Receivable, Credit Sales
41
What does a 'debit' entry represent in double-entry bookkeeping?
Answer
(B)
An increase in assets or a decrease in liabilities and equity.
42
What is the purpose of a post-closing trial balance?
Answer
(B)
To check that debits equal credits after closing entries are posted.
43
Which of the following best describes the purpose of a journal?
Answer
(B)
To record transactions in chronological order.
44
In a cash book, what do entries in the cash column represent?
Answer
(B)
All cash transactions (receipts and payments).
45
Which financial statement is used to evaluate the financial position of a company at a specific point in time?
Answer
(C)
Balance Sheet
46
What is the primary impact of cash sales on a company's accounts?
Answer
A
B
47
Which type of transaction would be recorded in the credit side of the cash column?
Answer
(C)
Payment for office supplies in cash
48
If a business receives cash from a customer in advance for services to be provided later, which account is credited?
Answer
(B)
Unearned Revenue
49
What are the different sections of the statement of cash flows?
Answer
A
B
C
50
What is the effect of an interest expense on the statement of cash flows?
Answer
(B)
It appears as an outflow under the operating activities section.
