Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 4)
1
What is the role of the credit column in a ledger?
Answer
(B)
To record decreases in liabilities
2
Prepaid income is an income that ____.
Answer
(B)
will not be earned until the following accounting year.
3
Every expense will require a double entry in an asset account or a liability account. When will expenses incur?
Answer
(D)
To generate revenue or to generate income.
4
What is the effect of an increase in a current asset on the accounting equation?
Answer
(C)
Increases assets, decreases assets
5
When a company receives cash from a customer, but hasn't yet provided the service, what type of account is created?
Answer
(C)
Unearned Revenue
6
What does the debit side of an account typically represent?
Answer
(C)
Increases in assets
7
What is the purpose of a 'Credit Note'?
Answer
(A)
To indicate a decrease in the amount owed by the customer.
8
Which of the following are accrued expenses?
Answer
A
B
D
9
If a company does not record accrued salaries at the end of the year, which of the following would be true?
Answer
(B)
Liabilities and equity would be understated.
10
What kind of account is the trade discount applied to?
Answer
(D)
It is applied to the selling price, therefore impacting the revenue.
11
Which of the following are assets and which are liabilities of a business?
Answer
A
B
C
12
What does it mean to write off an irrecoverable debt?
Answer
(A)
To recognize the debt is uncollectible and reduce the amount owed.
13
Which of the following is recorded on the credit side of a ledger account?
Answer
B
D
14
When a business owes salaries to its employees but hasn't paid them yet, what is the correct accounting treatment?
Answer
(B)
Debit salaries expense and credit salaries payable.
15
If a business is to reduce its provision for doubtful debts, how should that transaction be recorded?
Answer
(D)
Debit the provision for doubtful debts account.
16
What information should be included on a credit note?
Answer
A
B
C
D
17
What is the purpose of a sales return journal?
Answer
(D)
To record returns of goods from customers.
18
Which of the following is a benefit of using journals?
Answer
(B)
They make it easier to identify errors.
19
Which of the following accounts are decreased with a credit entry?
Answer
A
C
20
What transactions are recorded in the cash book?
Answer
(C)
Cash receipts and payments.
21
An insurer earned income can be recognized as the current asset on the ____ of the accounting year.
Answer
(C)
End
22
In a business, what is the accounting year?
Answer
(C)
A 12-month period
23
What is the journal entry when writing off an irrecoverable debt, assuming the provision method is in use?
Answer
(C)
Debit Provision for Doubtful Debts, Credit Trade Receivables.
24
The following trial balance does not balance.
Answer
(C)
The accounts have been added up incorrectly
25
What is the impact of a drawing on a company's assets?
Answer
(B)
Decreases assets
26
How to record regular payment of the balance outstanding to suppliers?
Answer
(D)
Debit Trade Payables, Credit Bank.
27
A company purchases goods on credit. The correct journal entry is:
Answer
(C)
Debit Purchases, Credit Accounts Payable
28
What happens to the balance of the 'Provision for Doubtful Debts' account when an irrecoverable debt is written off?
Answer
(B)
It decreases.
29
Which of these documents are used to reduce a debt?
Answer
(C)
Credit Note
30
Which side of a ledger account is used to record money and items coming into the business?
Answer
(B)
The debit side
31
When is a sales receipt typically issued?
Answer
(C)
After a payment is made
32
A credit for $3700 ____. What is this entry?
Answer
(B)
To balance off the incident at the end of the accounting year. The balance is transferred to the credit side of the income statement to include in the calculation of profit or loss for the year.
33
Accrued income may include fees from the sub- letting of premises, commission on the sales of another firm's products and income on business savings paid in interest.
Answer
(A)
True
34
1.5 Which of the following causes the bank's balance to be lower than the business's cash book balance?
Answer
(B)
Money paid out from the account
35
A cheque received from a customer is recorded on the debit side of the cash book in which column?
Answer
(B)
Bank column
36
Which of the following describes recording of cash received by the business?
Answer
(A)
Debit the cash account and credit sales account
37
What are the main sides of a ledger account?
Answer
(A)
Debit and Credit
38
What is the primary purpose of a receipt?
Answer
(B)
To prove a payment has been made.
39
If a customer returns goods that were originally purchased on credit, how is this recorded in the accounting system?
Answer
(A)
Debit Sales Return, Credit Accounts Receivable
40
Which of the following are characteristics of a trade discount?
Answer
A
C
D
41
What is a cash book?
Answer
(A)
A book of original entry
42
What is an error of principle?
Answer
(C)
Recording a transaction using an incorrect accounting concept.
43
What accounting document shows the transaction details for a customer's return?
Answer
(B)
Sales Return Journal
44
What is the purpose of a sales receipt?
Answer
(B)
To provide proof of purchase.
45
If a business receives cash in advance from a customer for services to be provided later, which accounts are affected?
Answer
(B)
Cash and Unearned Revenue
46
What would the double-entry accounting for a cash sale be?
Answer
(C)
Debit the cash account, credit the sales account
47
If a business has paid for insurance in advance, what is the correct accounting treatment?
Answer
(B)
Debit prepaid insurance and credit cash.
48
In an imprest system, what happens at the end of a period?
Answer
(A)
a) Cash is replenished to its original amount.
49
What is the purpose of adjusting entries?
Answer
(B)
b) To update the accounts at the end of the accounting period to reflect accruals and deferrals.
50
When goods are sold on credit, which accounts are usually affected?
