Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 30)
1
Which of the following are essential in the sales returns journal?
Answer
(A)
Date of return, customer name, credit note number, amount of the credit.
2
What is the journal entry for recognizing the use of supplies that were initially recorded as an asset?
Answer
(A)
Debit Supplies Expense, Credit Supplies.
3
If an accountant finds an invoice for services received in December, but it wasn't paid until January, how is that treated?
Answer
(B)
It's recorded as an expense in December.
4
What is a 'source document' in accounting?
Answer
(B)
A document providing evidence of a financial transaction.
5
What is the effect of the sale on account on the seller's records?
Answer
(A)
Accounts Receivable is debited, Sales Revenue is credited.
6
What is the effect of debiting the Cash account?
Answer
(A)
Increases Cash
7
What is the role of an independent auditor?
Answer
(B)
To provide an opinion on the fairness of a company's financial statements.
8
What type of account is Sales Returns and Allowances?
Answer
(C)
A contra-revenue account
9
If a company pays its employees their salaries, which accounts are affected?
Answer
(B)
Salaries Expense and Cash
10
What type of account is 'Dividends'?
Answer
(C)
Equity
11
What is the accounting equation?
Answer
(D)
Assets = Liabilities + Equity
12
Which financial statement is used to evaluate a company's financial position at a specific point in time?
Answer
(C)
Balance Sheet
13
What document is issued by the buyer to the seller?
Answer
(B)
Purchase order
14
Which of the following are examples of expenses?
Answer
A
B
15
What happens to a customer's receivable account when they pay in cash after a credit sale?
Answer
(B)
Decreases
16
What is the normal balance of the service revenue account?
Answer
(B)
Credit
17
Which of the following are commonly used to make and receive payments?
Answer
A
B
D
18
Which of these represent a 'cash in hand' transaction?
Answer
A
B
C
19
What is the purpose of the books of prime entry?
Answer
(B)
To record transactions chronologically.
20
Which entries would typically appear on the credit side of the cash book's cash column?
Answer
A
C
21
What is the purpose of a trade discount?
Answer
(B)
To encourage customer loyalty
22
Which item is most likely to be categorized as an 'expense'?
Answer
(A)
Salary payments to employees.
23
What type of account is 'Sales Revenue'?
Answer
(D)
Revenue
24
What is the impact of a debit to the 'Sales Returns Account'?
Answer
(B)
Increase in Inventory.
25
What is the normal balance of the Unearned Revenue account?
Answer
(B)
Credit
26
When a business purchases merchandise on credit, what happens to the Inventory account?
Answer
(A)
Increases
27
Which of the following items is recorded in the cash column of a cash book?
Answer
A
C
28
What does the term "balancing off an account" mean in accounting?
Answer
(B)
Finding the difference between the debit and credit sides of a ledger account.
29
Which of the following is an example of an expense account?
Answer
A
B
D
30
What is the impact on the accounting equation when a business purchases inventory on credit?
Answer
(C)
Assets increase, liabilities increase.
31
What is the primary purpose of the 'Accounts Receivable' account?
Answer
(B)
To track money owed to the business by customers.
32
A company purchases a one-year insurance policy in December. How is this treated for the first month?
Answer
(C)
It is recorded as prepaid insurance (an asset).
33
What is the effect on the financial statements when adjusting for accrued expenses?
Answer
(C)
It increases liabilities and decreases retained earnings.
34
What is a key function of the sales returns journal?
Answer
(C)
To record the return of goods by customers.
35
Which of the following is the correct order of steps to account for a previously written-off debt that is subsequently recovered, using the allowance method?
Which of the following is an example of an 'operating expense'?
Answer
(D)
All of the above
39
Which of the following transactions will decrease owner's equity?
Answer
C
D
40
Which of the following is NOT a fundamental accounting principle?
Answer
(C)
Cash Basis of Accounting
41
Which of the following should a business do to minimise the risk of debts becoming irrecoverable?
Answer
A
B
C
42
In Illustration 1.5, which document contains details about the total amount to pay, including discounts and carriage charges?
Answer
(B)
Invoice
43
What is the impact of not recording an accrual of expense?
Answer
(C)
Overstatement of both profits and liabilities.
44
How are the entries in the purchases returns journal eventually reflected in the accounting system?
Answer
(C)
Credited to the purchase returns account.
45
When a business receives a discount, what are the accounting impacts?
Answer
A
D
46
Which accounting principle states that a business should record its transactions based on objective evidence?
Answer
(C)
Objectivity Principle
47
If a company has an uncollectible account receivable and has not used the allowance method, the journal entry to write off the bad debt will include a:
Answer
(B)
Credit to Accounts Receivable.
48
Which of the following is an example of a 'contra-asset' account?
Answer
(C)
Accumulated Depreciation
49
What is the normal balance of an expense account?
Answer
(A)
Debit.
50
What do 'Revenue' and 'Expenses' represent in financial statements?
