Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 36)
1
In a company's bank reconciliation, a check that was recorded in the cash disbursements journal for $200 but cleared the bank for $20. How should this difference be treated?
Answer
(D)
Subtract $180 from the book balance.
2
What are the key components of a journal entry?
Answer
A
B
C
D
3
What does 'FIFO' stand for in inventory accounting?
Answer
(A)
First In, First Out
4
What is the normal balance of the Allowance for Doubtful Accounts?
Answer
(B)
Credit
5
How is the 'Sales Revenue' account classified?
Answer
(D)
Revenue
6
Which of the following describes the purpose of a bank statement?
Answer
(C)
To reconcile the business's bank balance.
7
What is the effect of a debit entry in an account?
Answer
(C)
It increases asset and expense accounts and decreases liability, owner's equity, and revenue accounts.
8
A business buys goods on credit. Which of the following accounts is immediately affected?
Answer
(B)
Inventory and Accounts Payable
9
When a company provides a service on account, what accounts are affected?
Answer
(B)
Accounts Receivable and Service Revenue
10
What is the journal entry for a company selling goods on credit?
Answer
(B)
Debit Accounts Receivable, Credit Sales Revenue.
11
What is the impact of a cash discount received on the trade receivable account?
Answer
(B)
Decreases the amount in trade receivable
12
When do adjusting entries take place?
Answer
(B)
At the end of the accounting period.
13
What will be the impact of an overdrawn bank account?
Answer
(C)
Increase the liability
14
Which method is the best way to record an irrecoverable debt?
Answer
(C)
Debit bad debt expense, credit allowance for doubtful debts
15
Which of the following is an example of an investing activity on the statement of cash flows?
Answer
(B)
Purchase of a long-term investment
16
What is the purpose of the 'trial balance'?
Answer
(A)
To check the mathematical accuracy of the ledger.
17
Which of the following is an example of a liability?
Answer
(D)
Accounts Payable
18
In a three-column cash book, where would you record the cash discount allowed?
Answer
(A)
Debit side, in a separate column
19
What does the 'Sales Returns' account typically represent?
Answer
(B)
A reduction in sales revenue.
20
Which of the following scenarios will reduce a company's equity?
Answer
A
C
21
In the context of credit sales, what happens to a customer's trade receivable account when a return is processed?
Answer
(B)
It decreases.
22
What items are included in the 'Details' column of the general journal?
Answer
(A)
The account names and transaction description.
23
If a company receives cash for a product sold, what is the journal entry?
Answer
(A)
Debit Cash, Credit Sales Revenue
24
What will decrease owner's equity?
Answer
(B)
Expenses paid
25
Which of the following accounts are considered permanent accounts?
Answer
A
C
26
Which of the following are source documents?
Answer
A
B
D
27
If a company receives a utility bill at the end of the month but does not pay it until the next month, how should this be recorded under accrual accounting?
Answer
(B)
Debit Utilities Expense, Credit Accounts Payable.
28
Which of these are the likely components of a Sales Journal entry?
Answer
A
B
C
D
29
What is the normal balance of an asset account?
Answer
(A)
Debit
30
What does the term 'assets' represent?
Answer
(B)
Resources owned by the business.
31
What is a direct debit in relation to the cash book?
Answer
(D)
A variable payment authorized by the payer and paid from the payer's account.
32
Which of the following transactions would be recorded as a credit entry?
Answer
A
B
D
33
Which of the following statements best describes the function of a cash book?
Answer
(B)
Records all cash transactions.
34
What is the effect of recording an increase in the provision for doubtful debts on the ledger accounts?
Answer
(B)
Credit the provision account and debit the income statement.
35
Which journal entry would be recorded for the purchase of a machine for $1,200?
Answer
(B)
Debit Machine $1,200, Credit Cash $1,200
36
What kind of impact does an accrued but unpaid expense have on the profit?
Answer
(B)
Decrease profit.
37
Which of the following are examples of specialized journals, also known as books of prime entry?
Answer
A
B
D
38
Which of the following transactions would decrease owner's equity?
Answer
A
B
D
39
What are the main errors that the trial balance can help to find?
Answer
A
C
40
What is the purpose of a cash book?
Answer
(B)
To record all cash receipts and payments.
41
What is the impact of adjusting for prepaid income?
Answer
(D)
It decreases the company’s liabilities and increases the company's income.
42
What does the 'Debits must equal Credits' rule ensure in accounting?
Answer
(C)
The accounting equation remains balanced
43
What information is typically included on a petty cash voucher?
Answer
A
B
D
44
When recording the sale of goods for cash, what impact does this transaction have on the cash book?
Answer
(A)
Debit the cash column.
45
What type of account is Sales Revenue?
Answer
(D)
Revenue
46
What would be included in the calculation of 'Total credit balances for the income earned'?
Answer
(D)
Income earned during the year.
47
Which of the following is an example of a cash inflow?
Answer
(C)
Receiving cash from a customer.
48
A company overstates the provision for doubtful debts. What is the effect of this error?
Answer
A
B
49
What is the impact on a company's assets when it pays cash to its suppliers?
Answer
(B)
Assets decrease.
50
What happens when a company pays for equipment with cash?
