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Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 40)

1
Which of the following accounts typically have a debit balance?
Answer
A
C
D
2
What is the impact on the statement of financial position when a debt is written off?
Answer
(C)
No impact on total assets
3
Which of the following statements is/are true regarding the impact of increasing a provision for doubtful debts?
Answer
A
B
4
Which of the following are considered key components of a complete credit sale entry?
Answer
(A)
Date, Customer name, Invoice #, and Amount.
5
Which financial statement is directly affected by recording the total credit sales?
Answer
(C)
Income Statement
6
What is the effect on the company's cash balance when an NSF check is returned?
Answer
(B)
The cash balance decreases.
7
What is the main purpose of a credit note?
Answer
(C)
To reduce the debt owed by the customer
8
How would a business record a cheque received from a customer?
Answer
(B)
Debit bank, credit sales
9
Which errors may be caused by incorrect or missing transactions?
Answer
(A)
Errors of omission.
10
When are expenses recognized under accrual accounting?
Answer
(B)
When the expense is incurred.
11
When is the prepaid rent recorded as an expense?
Answer
(B)
When the period that is paid for is used.
12
What happens to the bank balance when a customer uses a debit card to pay?
Answer
(A)
Increases immediately.
13
Which side of the ledger (debit or credit) typically shows an increase in the inventory account?
Answer
(A)
Debit
14
If a company has an 'accrued expense', where is this typically reflected in the financial statements?
Answer
(A)
Income statement and balance sheet.
15
What is the impact on total assets when a customer pays for a credit sale?
Answer
(C)
No change
16
What is the purpose of a 'Debit' entry in accounting?
Answer
(D)
To increase assets and decrease liabilities.
17
What type of account is 'Accounts Payable'?
Answer
(B)
A liability account.
18
Which journal entry should a company make when it pays its rent via cheque?
Answer
(A)
Debit Rent Expense, Credit Bank
19
What is the effect of recording the depreciation expense?
Answer
(B)
Decreases assets
20
When a company accrues an expense, which accounts are affected?
Answer
(B)
An expense account and accounts payable.
21
Which of the following is an example of an operating expense?
Answer
(D)
All of the above
22
If a company receives cash from a customer for services that have not yet been performed, which account is credited?
Answer
(D)
Unearned Revenue
23
Which of the following elements are included on the balance sheet?
Answer
A
B
D
24
What is the journal entry for a business owner investing cash in the business?
Answer
(C)
Debit Cash, Credit Capital
25
When a company takes out a bank loan, what is the correct journal entry?
Answer
(A)
Debit Bank, Credit Loan Payable
26
What is the role of the 'ledger' in the accounting process?
Answer
(B)
To summarize all the transactions from the journal.
27
Which two accounts are involved in recording sales returns?
Answer
B
C
28
If a company fails to account for accrued expenses at the end of the accounting period, the financial statements would:
Answer
(C)
Understate expenses and understate liabilities.
29
What is the significance of a 'statement of account' in a business context?
Answer
(B)
It is a summary of financial transactions between a customer and a supplier.
30
Why is it necessary to prepare a trial balance regularly (e.g., monthly)?
Answer
(B)
To check the accuracy of ledger balances and prepare financial statements.
31
What type of account is 'Accounts Payable'?
Answer
(B)
Liability
32
When is it common to use the general journal?
Answer
(B)
When a mistake needs to be corrected in the books.
33
What is the journal entry when a company receives cash from a customer for a past due invoice?
Answer
(B)
Debit Cash, Credit Accounts Receivable
34
When should a company recognize income from services provided?
Answer
(B)
When the service is performed and the income is earned.
35
What is the impact of unearned revenue in the general ledger?
Answer
(A)
Unearned revenue is recorded as a liability.
36
What effect does a cash sale have on the accounting equation?
Answer
(B)
Assets increase, owner's equity increases.
37
What accounting principle is most directly supported by the use of adjusting entries?
Answer
(B)
The matching principle.
38
When a business borrows money from a bank, what is the impact on the accounting equation?
Answer
(C)
Assets increase, liabilities increase.
39
What type of items are documented using Petty Cash vouchers?
Answer
A
C
D
40
Which of the following is a result of an increase to the allowance for doubtful accounts?
Answer
(B)
A decrease in net income.
41
What does it mean when a trial balance does not balance?
Answer
(B)
The accounting equation is not balanced.
42
What is the effect on the accounting equation when a company sells goods for cash?
Answer
(D)
Assets increase, Equity increases
43
Which of these actions would typically decrease a business's bank balance?
Answer
(C)
A direct debit payment.
44
What is the impact on the accounting equation when the business incurs an expense and pays it in cash?
Answer
(B)
Assets decrease; equity decreases.
45
What is the impact on the accounting equation of a customer returning defective goods previously sold on credit?
Answer
(D)
The composition of assets changes; no net effect.
46
What is the meaning of a 'liability'?
Answer
(B)
A claim on the business's assets by an external party.
47
A business owner deposits personal funds into the business bank account. What is the journal entry?
Answer
(B)
Debit Cash; Credit Owner's Capital
48
In a general ledger, which items would usually be on the credit side?
Answer
A
D
49
What type of entry is required in the cash book when cash is withdrawn from the bank for office use?
Answer
(B)
Debit bank, credit cash.
50
What is the formula for the accounting equation?
Answer
(C)
Assets = Liabilities + Equity