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Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 34)

1
In a cash book, where would you record the receipt of cash from a customer?
Answer
(A)
Debit side of the cash column
2
Which statement best describes how inventory is recorded in the books?
Answer
(A)
At cost.
3
What could be a benefit of having accurate and organized accounting journals?
Answer
A
B
C
4
What should be done at the end of the imprest period?
Answer
(B)
The petty cash fund is replenished to its original amount.
5
What is the role of 'Retained Earnings' in the Statement of Financial Position?
Answer
(B)
A component of equity representing accumulated profits.
6
Which of the following is the accounting equation?
Answer
(C)
Assets = Liabilities + Equity
7
In a typical accounting system, what happens after transactions are recorded in the books of prime entry?
Answer
(C)
The information is posted to the ledger accounts.
8
What is the purpose of a 'trade discount'?
Answer
(B)
To adjust the price
9
Which of the following actions will decrease a company's assets?
Answer
A
D
10
What accounts are usually affected when adjusting for accrued salaries expense?
Answer
A
B
11
What is the source document for an entry in the purchases returns journal?
Answer
(B)
A credit note received from the supplier
12
Which of the following items would be deducted from the book balance when preparing a bank reconciliation?
Answer
(B)
Bank service charges
13
What is the 'date' column in the general journal used for?
Answer
(A)
To record the date of the transaction
14
What journal entries would be made to replenish a petty cash fund under the Imprest system?
Answer
(C)
Debit various expenses, Credit Cash
15
In the context of the activity, what does 'E & OE' stand for on an invoice?
Answer
(A)
Errors and Omissions Excepted
16
Which statement is true about cash books?
Answer
(C)
Cash book is used to record cash in hand transactions and bank transaction.
17
Which of the following is the best definition of owner's equity?
Answer
(B)
The owner's claim on the assets of the business.
18
What impact do trade discounts have on the final price?
Answer
(B)
Decrease the final price
19
What does the statement of account show for the period?
Answer
(D)
A summary of all transactions during the period
20
Which of the following would be considered a cash equivalent?
Answer
(C)
Short-term investments that are easily convertible to cash
21
What is the normal balance of an asset account?
Answer
(A)
Debit
22
Which of the following actions would cause the balance per the company's books to decrease on the bank reconciliation?
Answer
(C)
Bank Service Charges
23
What are the advantages of dividing the task of record-keeping between different people within an organisation?
Answer
B
C
D
24
What is the effect on owner's equity when the owner invests cash in the business?
Answer
(A)
Increase
25
What is the effect of an owner withdrawing cash for personal use on the accounting equation?
Answer
(D)
Decreases assets and decreases owner's equity.
26
Which of the following would cause a debit entry in the cash book's cash column?
Answer
(C)
Cash sales made.
27
What type of account is 'Trade Receivables'?
Answer
(C)
Asset
28
Which of the following typically increases a company's profit?
Answer
A
B
29
What is a common reason for a supplier to issue a credit note?
Answer
A
B
30
What is the key difference between accrual accounting and cash accounting?
Answer
(C)
Accrual accounting recognizes revenues and expenses when they are earned or incurred, while cash accounting recognizes them when cash changes hands.
31
Which of the following is the correct journal entry for a business owner withdrawing cash for personal use?
Answer
(C)
Debit Drawings, Credit Cash
32
If a company uses the direct write-off method, which of the following is true?
Answer
(B)
Bad debt expense is recognized when an account is deemed uncollectible.
33
When a company purchases office supplies for cash, which accounts are debited and credited?
Answer
(A)
Debit: Office Supplies; Credit: Cash
34
Which of the following is an example of prepaid income?
Answer
(A)
Cash received for services to be provided in the future
35
What documents would commonly accompany an entry in the sales journal?
Answer
A
C
36
What is an example of an 'accrued revenue'?
Answer
(A)
Commission earned but not yet received.
37
Which of the following is a liability?
Answer
(C)
Unearned Revenue
38
How is an 'Unearned Revenue' treated on the balance sheet?
Answer
(B)
Increases liabilities.
39
What is the purpose of the 'general ledger'?
Answer
(B)
To summarize and categorize transactions by account.
40
Which of the following is an example of a source document used in accounting?
Answer
(C)
An invoice.
41
What does the term "cash in hand" refer to in the context of a cash book?
Answer
(B)
Physical cash held by the business.
42
What is the effect on the balance sheet when recognizing accrued interest expense?
Answer
(A)
Increase in liabilities and decrease in assets.
43
When a debt is written off as irrecoverable, what impact does this have on the balance sheet?
Answer
(D)
Trade receivables decrease, and the provision for doubtful debts decreases.
44
What is a likely reason for a business to use a standing order?
Answer
(C)
To make regular payments for utilities.
45
What is the effect on the accounting equation of receiving cash from a customer for services rendered?
Answer
(B)
Assets increase, and owner's equity increases.
46
Which of the following is the best definition of an "error of omission"?
Answer
(C)
A failure to record double entries for a transaction in the ledger accounts.
47
Which of the following is true about the general journal?
Answer
A
B
48
Which financial statement shows the assets, liabilities, and owner's equity at a specific point in time?
Answer
(B)
Balance Sheet
49
What must be done to account for prepaid expenses at the end of an accounting year?
Answer
(B)
Credit the prepaid expense account and debit the expense account.
50
Which of the following are typically found on the credit side?
Answer
A
B