Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 45)
1
Which of the following is a characteristic of a good accounting system?
Answer(B)
It provides information that is useful and relevant to decision-making.
2
What kind of error will likely NOT be detected by the trial balance?
Answer(D)
Posting a transaction to the wrong account.
3
What type of account is 'Sales Commission Revenue'?
4
What is the purpose of closing entries at the end of an accounting period?
Answer(B)
To transfer temporary account balances to retained earnings
5
What are some characteristics of a corporation?
6
What is a typical use for a delivery note?
Answer(B)
To confirm the quantity of goods delivered.
7
What account is debited when a company receives payment and takes a cash discount?
8
What does the term 'double-entry bookkeeping' refer to?
Answer(C)
The principle that for every transaction, there is an equal impact on the assets and liabilities of a business.
9
When recording the sale of a product on credit, which of the following accounts are affected?
10
During the balancing off process, when the total of debit side exceeds the total of credit side, the account has:
11
Which of the following scenarios would *decrease* the owner's equity?
12
Which of these are essential elements in a journal entry?
13
What is the effect of a credit sale on a company's accounting equation?
Answer(B)
Assets increase and equity increases.
14
Which of the following is the best definition of 'liabilities' in accounting?
Answer(C)
Obligations of a company to transfer assets or provide services to others.
15
Which of the following is typically an item on the credit side of the income statement?
16
What is the impact on the accounting equation when a company pays salaries to its employees in cash?
Answer(C)
Assets decrease, equity decreases.
17
What is the journal entry when a customer pays off their accounts receivable?
Answer(B)
Debit Cash; Credit Accounts Receivable
18
Which side of the cash book is used to record payments made by cheque?
Answer(D)
Credit side of the bank column
19
What accounts are affected when using the accrual basis and accruing a liability for a utilities bill received but not yet paid?
20
In a double-entry bookkeeping system, which accounts are always affected by a transaction?
21
What is the main difference in accounting for accrued and prepaid expenses?
Answer(B)
Accrued expenses increase liabilities, and prepaid expenses increase assets.
22
Which accounts are impacted by the payment of monthly insurance premium via standing order?
Answer(C)
Debit insurance expense, credit bank
23
When goods are purchased for cash, what will be the effect on the cash book?
Answer(C)
Cash decreases, bank remains unchanged.
24
What is the impact on a company's bank balance when cash is withdrawn from the bank?
Answer(B)
The bank balance decreases.
25
What type of account is 'Rent Expense'?
26
What is the impact on the seller's cash account when they grant credit to a customer for goods sold?
27
What happens to the accounting equation when the owner withdraws cash from the business?
Answer(C)
Assets decrease, equity decreases.
28
What is the purpose of the statement of cash flows?
Answer(C)
To track the sources and uses of cash.
29
If a company purchases equipment with cash, what is the impact on the accounting equation?
30
In a company's accounting records, what does 'Accounts Payable' represent?
Answer(B)
Amounts owed to suppliers.
31
What is the normal balance of an 'Accounts Receivable' account?
32
What does the cash book record?
Answer(C)
All cash inflows and outflows
33
Which of the following transactions result in a cash inflow?
Answer(C)
Receiving payment from a customer
34
What is the general order of items in the accounting cycle?
Answer(A)
Journalizing, Posting, Trial Balance, Financial Statements
35
What does it mean when the total debits exceed the total credits in the bank column of a cash book?
Answer(D)
The business has an overdraft.
36
What is the journal entry when a business receives cash from a customer for services provided?
Answer(B)
Debit Cash, Credit Service Revenue
37
Which of the following is considered an error that a trial balance *will not* detect?
38
A company borrows money from a bank. How does this transaction affect the accounting equation?
Answer(A)
Assets increase; liabilities increase.
39
Which of these entries will reduce the cash balance?
40
What is the effect of recording a credit entry to an account?
Answer(C)
Increases accounts with a credit balance and decreases accounts with a debit balance.
41
Which of the following is a component of owner's equity?
42
What is the effect on the accounting equation when an expense is incurred and paid?
Answer(D)
Assets decrease, and equity decreases.
43
When recording the sale of a non-current asset (e.g., furniture), what type of account is credited in the general journal?
Answer(B)
The asset account (e.g., Furniture)
44
Which accounts are affected when a company makes a credit sale and offers a trade discount?
45
If a business makes a cash sale of $500, what is the immediate impact on its accounting equation?
Answer(B)
Assets increase, equity increases.
46
When a customer pays cash in advance for a service, what is the effect on the accounting equation?
Answer(C)
Assets increase, liabilities increase.
47
What is the effect of owner taking inventory for personal use?
48
What are some examples of source documents?
49
What entry is recorded on the company's books when a bank erroneously credits the company's account?
50
Which of the following are examples of business transactions?
