Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 3)
1
Which of the following is an example of error of complete reversal?
Answer
(A)
Recording a debit as a credit and vice-versa.
2
What is the purpose of closing entries?
Answer
(B)
To transfer temporary account balances to retained earnings.
3
When a new business owner deposits money into a business bank account, what is the correct journal entry?
Answer
(A)
Debit Bank, Credit Capital
4
What does an invoice typically contain?
Answer
(D)
All of the above.
5
For each customer, the sales return journal credits the customer's trade receivable account and sales return to increase the amount of the sales return, what is impact?
Answer
(A)
Impact: Inventory is increased
6
When a bank loan is made in installments. How do you record subsequent loan repayments?
Answer
(B)
Credit bank account, Debit loan payable.
7
Which document comes before the trial balance?
Answer
(C)
Ledger
8
Which of the following is an example of an expense?
Answer
(B)
Rent Expense
9
Which financial statement reports the financial position of a company at a specific point in time?
Answer
(B)
Balance Sheet
10
What is the effect of an irrecoverable debt on the income statement?
Answer
(B)
It decreases profit
11
Which of these are columns of the general journal?
Answer
A
B
C
12
What does a credit entry typically do to an expense account?
Answer
(B)
b) Decreases it
13
If a business receives a check from a customer, where would this be recorded initially?
Answer
(B)
b) Cash Receipts Journal
14
What does a business need money for?
Answer
(B)
To invest in productive assets
15
Which method is used to pay money to a bank account of a named individual or organization?
Answer
(C)
Bank transfer
16
What does it mean if the total debits don't equal the total credits in a trial balance?
Answer
(A)
There may be an error in the ledger.
17
What is a book of prime entry?
Answer
(A)
A journal divided up into specialized books to make record keeping easier.
18
What is the main purpose of making adjustments to the ledger accounts at the end of an accounting period?
Answer
(C)
To apply the matching principle and accurately reflect the financial performance.
19
What does it mean for a business to use a 'direct debit' payment method?
Answer
(A)
The person or organization being paid will specify the amounts to be paid and when each payment is required.
20
A sale on credit increases which two accounts?
Answer
(B)
Accounts Receivable and Sales
21
A sale on credit requires two sets of double entries, one to record the amount owed by the trade receivable and when the amount is settled. In which ledger is this entry recorded?
Answer
(D)
All of the above
22
What type of account is unearned revenue?
Answer
(B)
Liability
23
A provision for doubtful debts assures a proportionate assessment of the money owed until the business will not be collected. It has main effects on the ____.
Answer
(A)
Income Statement
24
What is the impact of making an adjusting entry for unearned revenue?
Answer
B
C
25
If a business pays cash for an expense, what would the debit entry be?
Answer
(B)
Expense account
26
4. What is an opening entry? In what will a business need to record opening entries in the general journal?
Answer
(B)
The first journal entry in a financial record that has been created
27
When preparing a trial balance, the totals of the debit and credit columns must be equal because:
Answer
(B)
It's a requirement of the accounting equation.
28
What is the impact of writing off an irrecoverable debt on the balance sheet?
Answer
(D)
No change in total assets or liabilities.
29
Which of the following would decrease owner's equity?
Answer
(C)
Expenses
30
What is a cheque an example of?
Answer
(D)
Receipt
31
How can errors be revealed in the trial balance?
Answer
(A)
Unequal debits and credits
32
To transfer the credit balance for rent income earned to the income statement for the calculation of profit or loss for the year, then ____
Answer
(B)
You will increase the credit amount in income statement.
33
What is a bank reconciliation?
Answer
(A)
a) Comparing the balance in the cash book with the bank statement to identify the differences
34
Which document is used to record sales on credit?
Answer
(A)
Invoice
35
What adjustments must be made to ledger accounts at the end of the accounting year so income and expenses before they can be balanced?
Answer
(D)
All of the above
36
Which of these may be described as part of the Credit Control Procedure?
Answer
A
C
D
37
Why do businesses maintain records of transactions?
Answer
B
D
38
In which situation is a debit note most likely used?
Answer
(C)
When a supplier has undercharged the customer.
39
Which statement is true regarding the owner's equity?
Answer
(B)
Owner's equity is the amount of capital contributed by the owners.
40
A customer returns damaged goods. Which document should the supplier issue?
Answer
(C)
Credit Note
41
Which of the following statements is TRUE regarding the debit and credit sides of the ledger?
Answer
(A)
The debit side is always on the left; the credit side is always on the right.
42
If a company buys inventory on credit, which accounts are affected?
Answer
(B)
Inventory and accounts payable
43
Which statement is true about a credit balance?
Answer
A
B
C
44
What happens to the opening balance of an account at the end of the month?
Answer
(C)
It is carried forward
45
What is the meaning of 'cash in hand'?
Answer
(B)
Physical cash held by the business.
46
What does the term "debit" represent in a general journal entry?
Answer
(A)
a) An increase in assets or expenses, or a decrease in liabilities, equity, or revenue.
47
Which of the following events would increase the cash account?
Answer
A
C
48
What is the fundamental principle of accounting regarding double-entry bookkeeping?
Answer
(B)
Every transaction affects at least two accounts.
49
What is the normal balance of the Provision for Doubtful Debts account?
