Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 42)
1
Which of the following is NOT a key feature of a book of prime entry?
Answer(C)
They summarize the data for the ledger accounts.
2
What is the correct accounting treatment for paying a monthly internet bill via direct debit?
Answer(B)
Debit Internet Expense, Credit Bank
3
If a company's estimated uncollectible accounts increase, what is the immediate effect on the financial statements?
Answer(C)
An increase in bad debt expense and a decrease in net income.
4
When a company provides services to a customer and receives cash immediately, what is the correct journal entry?
Answer(D)
Debit Cash, Credit Service Revenue
5
What is a common reason for businesses to use specialized journals?
6
What is the main difference between the cash basis and the accrual basis of accounting?
Answer(A)
Cash basis focuses on cash flow, while accrual basis focuses on revenue and expenses.
7
What is the impact on the balance sheet of making the adjusting entry for accrued salaries?
Answer(D)
Increase liabilities and decrease equity.
8
What does a business require a Purchases journal to record?
Answer(B)
Purchases of goods on credit.
9
What is the role of the income statement?
Answer(B)
To show the profitability of a company over a period of time.
10
Which account(s) is/are debited when using the allowance method and writing off a specific customer's account as uncollectible?
Answer(C)
Allowance for Doubtful Accounts
11
Which of the following transactions would *increase* the balance in the cash book?
Answer(C)
Receiving cash from a customer for a sale.
12
Which of the following are considered to be assets?
13
What is the correct order of the accounting cycle after the trial balance is prepared?
Answer(B)
Record adjusting entries, prepare the financial statements, then close the books.
14
Which account is debited when a company receives a bank statement with a bank service charge?
15
Which of the following would be considered an accrued expense?
16
In the provided example, what does 'Income earned during the year' mean for accounting purposes?
Answer(B)
The company’s total revenue earned in the financial year.
17
Which of the following items are usually recorded in the debit column of a trial balance?
18
Which of the following is *not* a primary function of a trial balance?
Answer(D)
To determine the company's profitability.
19
What is the journal entry for a business paying cash for advertising expense?
Answer(B)
Debit Advertising Expense, Credit Cash
20
What is the effect on the accounting equation when a company pays its suppliers?
21
Which of the following statements is true regarding the Sales Ledger?
Answer(B)
It contains the personal accounts of customers.
22
What is the effect of declaring and paying a cash dividend on the accounting equation?
Answer(B)
Decreases assets, decreases equity
23
If a business has a credit balance in its bank account, what does this mean?
Answer(B)
The company has cash available.
24
What does a bank overdraft mean?
Answer(C)
The company has spent more money than it has in its account.
25
What kind of information is needed for 'making end-of-year adjustments'?
26
Which of the following is a characteristic of accrued expenses?
27
What is the impact on the income statement when using the direct write-off method for bad debts?
Answer(A)
Expense increases, net income decreases.
28
What type of account is Accounts Payable?
29
What are the main components of the financial position of an entity?
Answer(B)
Assets, liabilities, and equity.
30
Which of the following are examples of potential causes of differences between a company's cash balance and the bank statement?
31
Which of the following is a characteristic of the Imprest system of Petty Cash?
Answer(B)
The petty cash fund is replenished on a regular basis.
32
A trial balance is best described as:
Answer(B)
A summary of all account balances at a specific point in time.
33
What is the normal balance of the Rent Expense account?
34
What is the purpose of 'accrual accounting'?
Answer(B)
To recognize revenue when earned and expenses when incurred.
35
If a customer returns goods, what is the journal entry made in the sales returns journal?
Answer(A)
Debit Sales Returns, Credit Accounts Receivable
36
What accounts are generally affected by an adjusting entry for unearned revenue that is now earned?
37
What does 'credit' mean in accounting?
38
A business wants to record the return of faulty goods purchased on credit. Which is the correct process?
Answer(A)
Record a credit note in the Purchases Returns Journal
39
What is the effect on the accounting equation when a company receives cash from a customer for services performed?
Answer(C)
Assets increase, equity increases.
40
Which of the following is an example of an expense?
41
Which of the following is a goal of preparing a trial balance?
Answer(B)
To verify the mathematical accuracy of the general ledger.
42
Which of the following transactions result in a decrease in a company's assets?
43
Which accounts are affected when a business provides services on credit?
44
What is the purpose of an allowance for doubtful accounts?
Answer(B)
To provide a more accurate valuation of accounts receivable.
45
Which source document would be used to record a customer's return of goods previously sold on credit?
46
What is the role of the 'customer' in accounting transactions?
Answer(B)
To receive goods or services
47
What is the purpose of the matching principle?
Answer(D)
To match expenses with the revenues they help generate.
48
Which of the following will be recorded on the credit side of a cash book?
49
Which of the following best describes the 'net realizable value' of accounts receivable?
Answer(D)
The difference between the outstanding invoices and the provision for doubtful debts.
50
What is the accounting impact of a cash deposit into a company's bank account?
