Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 32)
1
What kind of an account is the ‘Accrued Salaries Account’?
2
If a company purchases land for $20,000 cash and a $30,000 mortgage, what will be the effect on the balance sheet?
Answer(A)
Assets Increase, Liabilities increase, Equity remains same
3
If a company buys equipment on credit, what accounts are affected?
Answer(B)
Equipment and Accounts Payable
4
Where are the totals from the sales journal posted to?
5
Which error will not be revealed by a trial balance?
Answer(D)
A debit entry has been posted to the wrong account, but on the correct side.
6
Which of the following is an example of a non-current asset?
7
A company issued a check for $100, but the bank statement shows it cleared for $1,000. What is the impact of the error on a bank reconciliation?
Answer(D)
Subtract $900 from the book balance.
8
What is the purpose of the 'matching principle' in accounting?
Answer(B)
To match revenues with expenses in the same accounting period.
9
When preparing a bank reconciliation, what happens to outstanding checks?
Answer(D)
They are subtracted from the bank balance.
10
What is the main purpose of a petty cash fund?
Answer(B)
To pay for small, everyday expenses.
11
When a company pays wages to its employees, what will be recorded?
Answer(A)
Debit Wages Expense, Credit Cash
12
What is the normal balance of an expense account?
13
Which financial statement reports revenues and expenses?
14
How does a credit to the sales account affect the inventory?
15
What is the result of a company borrowing money from the bank?
Answer(A)
Debit the bank, credit the loan account.
16
When would a supplier issue a credit note?
17
Which of the following accounts would be closed at the end of the accounting period?
18
What account is credited when recording accrued interest revenue?
19
What is the purpose of preparing a trial balance?
Answer(B)
To verify the equality of debits and credits.
20
Which of the following represents a 'contra-asset' account?
21
Which of the following is true regarding the matching principle in accounting?
Answer(B)
Revenues and expenses are recognized in the same period.
22
Which of the following statements is true regarding the accrual basis of accounting?
23
What is the accounting principle that guides the timing of revenue and expense recognition?
24
Which financial statement reports a company's financial performance over a period of time?
25
Which of the following statements is true regarding the 'Income Statement'?
Answer(B)
Summarizes a company's financial performance over a period.
26
In accounting, what is a 'trade receivable'?
Answer(B)
Money owed to the business by its customers.
27
Which of the following accounts are directly involved in the sales return transaction?
28
What type of account is 'Sales Returns and Allowances'?
29
Which journal entry records the purchase of inventory for cash?
Answer(B)
Debit Inventory, Credit Cash
30
What is the impact of an NSF check on the company's cash balance in the cash book?
Answer(B)
Decreases the cash balance
31
Which of the following is true regarding the Imprest System of petty cash?
Answer(B)
The fund is replenished periodically.
32
What is the effect of an error of complete reversal on the trial balance?
Answer(B)
The trial balance will balance, but the error will still be present.
33
If a company owes salaries to its employees at the end of the accounting period, but has not yet paid them, what type of entry is required?
Answer(B)
An adjusting entry for accrued expenses.
34
What does posting from a book of prime entry involve?
Answer(C)
Transferring information to the ledger accounts.
35
In a sales returns scenario, what is the effect on the seller's cost of goods sold (COGS)?
36
What is the primary purpose of the general ledger?
Answer(C)
To consolidate all financial transactions.
37
What happens to the Capital account if the owner invests more money into the business?
38
A business receives a utility bill. Which book of prime entry would this be recorded in?
39
What is the impact on a company's net income and assets if a debt is written off under the direct write-off method?
Answer(A)
Net income decreases, assets decrease.
40
What is the general purpose of the 'Income Statement' in the accounting year?
Answer(C)
To summarize the company's financial performance over a period.
41
What does the 'Income Statement' report?
Answer(C)
Revenues, expenses, and profit or loss.
42
What happens to the 'Sales Returns and Allowances' account when a customer returns merchandise?
43
What is the effect of a return of purchased goods?
Answer(B)
Decreases the Purchases account.
44
Which of the following would increase a company's bank balance?
45
What impact do trade discounts have on a seller's profit margins?
46
What is the correct accounting entry for paying for advertising costs?
Answer(A)
Debit Advertising Expense, Credit Bank
47
If a company sells goods on credit, what is the journal entry?
Answer(B)
Debit Accounts Receivable, Credit Sales Revenue
48
Which of the following items would be recorded on the debit side of the cash column?
49
What is the effect of a cash discount given to a customer on a trade receivable?
Answer(B)
Decrease the trade receivable
50
What is the primary purpose of the purchase ledger?
Answer(C)
To record individual balances owed to each supplier.
