Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 44)
1
If a business receives a direct credit from a customer for goods, what would be recorded in the cash book?
Answer(C)
A debit in the bank column.
2
What does the 'Materiality' principle state?
Answer(A)
Only significant information needs to be disclosed in the financial statements.
3
Which of the following events result in an increase in a company's equity?
4
Which accounts will usually show a debit balance in a trial balance?
5
Which of the following is the correct formula for calculating net income?
6
What is the 'matching principle' primarily concerned with?
Answer(B)
Matching revenues with expenses in the same accounting period.
7
How is the 'cost of goods sold' categorized?
8
What is the process that follows the initial recording of business transactions in the books of prime entry?
Answer(C)
Posting to the ledger accounts.
9
What is the impact on the income statement when a prepaid expense is adjusted?
Answer(A)
The expense account is debited, decreasing the profit.
10
What does the provision for doubtful debts represent on a company's balance sheet?
Answer(C)
An estimated amount of trade receivables that the company anticipates it will not collect.
11
Which document confirms that goods were received in good order?
12
Which of the following are examples of assets?
13
Which of the following is true regarding the relationship between the balance sheet and the income statement?
Answer(A)
The income statement provides information used to prepare the balance sheet.
14
Which of the following describes accrued revenue?
Answer(B)
Revenue earned but not yet billed.
15
If a business has earned but not received income, how is that reflected in the accounting system?
Answer(C)
It's recorded as accrued income or accrued revenue.
16
What is the relationship between the Income Statement and the Statement of Retained Earnings?
Answer(B)
Net income (or loss) from the Income Statement is used to calculate the ending retained earnings on the Statement of Retained Earnings.
17
If a company's assets are $100,000 and its liabilities are $40,000, what is the amount of owner's equity?
18
Which of the following scenarios would increase owner's equity?
19
A company increases its provision for doubtful debts. What happens to its net income?
20
What are the main categories of accounts that are closed at the end of the accounting period?
Answer(B)
Revenue and Expense accounts
21
What transactions are recorded on the credit side of the cash book?
22
What is the primary goal of a cash book?
Answer(C)
To track all cash inflows and outflows.
23
Which of the following is an example of a credit transaction?
Answer(C)
A customer promises to pay for a product at a later date.
24
What does a trial balance show?
Answer(B)
A list of all account balances.
25
What is the general impact on the bank account balance when the firm makes payments to its suppliers?
Answer(B)
Bank account balance decreases.
26
Which of the following is a primary benefit of using good credit control procedures?
27
Which events increase the bank balance of a company?
28
Which of the following statements is true regarding the accounting equation?
Answer(B)
Assets = Liabilities + Equity.
29
Which of the following correctly describes the impact of a cash purchase of equipment?
Answer(B)
Debit equipment, credit cash
30
What effect does a sales return have on a company's profitability?
31
What are compensating errors?
Answer(A)
Errors that balance each other out, but are still incorrect.
32
What type of account is 'Unearned Revenue'?
33
Which of the following is true about the Going Concern assumption?
Answer(C)
It assumes the company will be in business for a long time.
34
What does the matching principle dictate?
Answer(B)
To ensure all expenses are recognized when incurred, regardless of when paid.
35
If a business receives cash from a customer, where does it go in the cash book?
Answer(C)
Debit in the cash column.
36
If a business has a net income, which financial statement will reflect this amount?
37
Which of the following is an example of a non-current liability?
Answer(B)
Bank loan (due in 5 years)
38
In a sales journal, what is the source document for recording a credit sale?
39
Which accounts are affected when the owner invests cash in the business?
Answer(C)
Debit Cash, Credit Capital
40
What impact do adjusting entries for accrued expenses have on the income statement?
41
Which type of error *would not* be revealed by a trial balance?
42
Which of the following is an example of a transaction that would *increase* the balance in the drawings account?
Answer(C)
The owner withdraws cash for personal use.
43
What accounting concept is essential to the double-entry system?
44
What is an 'account receivable'?
Answer(A)
Money owed to a business by its customers.
45
What is the primary impact on the accounting equation when a business pays its rent?
Answer(C)
Assets decrease and equity decreases.
46
Which of the following items would be reduced in the accounting records when a debt is written off as irrecoverable?
47
If a company overstates its ending inventory, what effect will this have on the cost of goods sold (COGS) and net income?
Answer(C)
COGS understated, net income overstated
48
Which of the following describes an 'imprest system' for petty cash?
Answer(B)
The petty cash fund is replenished to a fixed amount at regular intervals.
49
Which of the following is a core objective of managerial accounting?
Answer(B)
To help internal management make informed decisions.
50
Which transactions will increase the bank balance?
