Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 35)
1
Which of the following results in a debit entry in the cash book's bank column?
Answer(C)
Receipt of a customer's check.
2
Which of the following is an example of an asset for a business?
3
If a business pays by direct debit, in which column of the cash book is the transaction recorded?
4
What is the correct method for recording an increase in trade receivables?
Answer(A)
Debit trade receivables, credit sales
5
When recognizing an accrued income, which account is increased?
6
If a company declares and pays a cash dividend, how is the cash flow statement affected?
Answer(C)
Cash outflow in the financing activities section.
7
In the context of a purchase returns journal, what is the role of a credit note?
Answer(B)
To document a price reduction or return of goods.
8
What happens to the income statement when a company purchases goods or services on credit and has not yet paid?
Answer(A)
An expense will be recognized.
9
What does the term 'contra-asset' mean in accounting?
Answer(C)
An account that reduces the balance of another asset account.
10
What is the effect on the accounting equation (Assets = Liabilities + Equity) of the bank loan received on Sept 3?
Answer(B)
Increases assets and increases liabilities.
11
Which of the following events increase a company's assets?
12
What type of account is 'Service Revenue'?
13
Which documents serve as the base to prepare the sales return journal?
14
Which of the following errors would cause a trial balance to *not* balance?
Answer(C)
A transaction has been entered on the wrong side of the account.
15
Which of the following is NOT typically found on a sales receipt?
16
When a business sells goods on credit, which accounts are immediately affected?
Answer(C)
Accounts Receivable and Sales Revenue.
17
Which type of accounts are closed at the end of the accounting period?
Answer(B)
Revenue and expense accounts
18
What is the basic principle behind a trial balance?
Answer(B)
Total debits should equal total credits.
19
Which statement best describes the relationship between the provision for doubtful debts and trade receivables?
Answer(B)
The provision decreases trade receivables.
20
What is the primary purpose of the general journal?
Answer(B)
To record transactions that cannot be entered in any other journal.
21
If a company receives cash from a customer for services to be performed next year, what account is credited?
22
A customer returns goods previously purchased on credit. In which journal would this return be recorded?
23
What is the effect of owner taking cash out of the business for personal use?
Answer(B)
Decreases assets and equity
24
If a company's assets total $150,000 and its owner's equity is $60,000, what is the value of the company's liabilities?
25
What is the effect of owner withdrawing cash from the business?
Answer(B)
Decrease assets and equity
26
In an imprest system for petty cash, what action typically occurs at the end of a specific period?
Answer(A)
The petty cash fund is replenished to its original amount.
27
What accounting record is most relevant for tracking credit sales to customers?
28
What does the term 'credit' mean in accounting?
Answer(C)
An increase in liabilities or equity.
29
Which of the following statements describes the purpose of a trial balance?
Answer(B)
To verify the accuracy of accounting records.
30
What is the impact of adjusting for accrued income on the balance sheet?
Answer(B)
Increases assets and increases equity.
31
In a sales return journal, what is the impact to sales revenue?
32
What accounting principle is most relevant when a customer returns goods?
Answer(A)
Revenue Recognition Principle
33
A business purchases goods on credit. In which journal would this transaction be initially recorded?
34
What elements are needed to perform an 'End of accounting year adjustment'?
35
Which of the following document is typically used to record a sale on credit?
36
What type of accounts are sales and purchases?
37
Which accounts are affected by a transaction involving a purchase on credit?
38
What information is included in a sales return journal entry?
39
Which transactions affect the capital account directly?
40
What type of account is 'Unearned Revenue'?
41
Which items are added to the book balance on a bank reconciliation?
Answer(C)
Notes collected by the bank
42
How does a trade discount help build customer loyalty?
Answer(A)
By reducing the cost of goods.
43
Which of these items will result in a debit balance in the trial balance?
44
What kind of transactions are recorded in the sales journal?
45
Which side of the cash book records cash payments?
46
What effects result from a credit purchase of inventory?
47
What happens when a company prepays insurance premiums?
Answer(B)
Debit Prepaid Insurance, Credit Cash
48
What is the function of the purchases ledger?
Answer(B)
To record individual amounts owed to suppliers.
49
What is the effect on the profit calculation of recording an expense?
50
What is the primary goal of financial reporting?
Answer(B)
To provide financial information to external users to help them make economic decisions.
