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Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 46)

1
What is the impact on net profit when a previously written-off debt is recovered and recorded correctly?
Answer
(C)
No impact
2
What is the primary function of the bank column in a cash book?
Answer
(B)
To record all bank transactions.
3
Which of the following best describes the purpose of a business transaction?
Answer
(B)
To record the exchange of goods, services, or money with other people or organizations.
4
Which of the following transactions would typically be recorded in the general journal?
Answer
A
C
5
A bank loan of $13,000 was received. Which two accounts were affected?
Answer
(B)
Cash and Bank Loan
6
Which accounts would be affected by a credit purchase?
Answer
A
B
7
Which of the following would be debited when recording cash sales?
Answer
(B)
Cash/Bank
8
Which of the following describes the purpose of the Statement of Cash Flows?
Answer
(C)
To show how cash entered and left the business during a period.
9
Which of the following is the MOST important reason to match accrued income and expenses?
Answer
(B)
To create a more accurate picture of the company's financial performance.
10
What is the correct journal entry for transferring income and expenses at the end of the accounting period?
Answer
(B)
Debit Revenue and Expenses; Credit Income Summary
11
Which of the following are commonly found in the trial balance?
Answer
A
B
D
12
What is the purpose of preparing a trial balance?
Answer
B
C
13
What is the main purpose of an adjusting entry?
Answer
C
D
14
If a company makes an error by recording a check for a larger amount than it actually paid, how should it be corrected on the bank reconciliation?
Answer
(D)
Subtract the error amount from the book balance.
15
Which of the following accounts are affected when the owner invests cash in the business?
Answer
A
C
16
What type of information is provided in the income statement?
Answer
(B)
Revenues and expenses over a period of time.
17
What type of account is 'Utilities Expense'?
Answer
(D)
An expense account.
18
When does a company recognize revenue under the accrual method?
Answer
(B)
When the goods or services are delivered to the customer.
19
Which of the following are classified as assets?
Answer
A
B
D
20
How is the 'cost of goods sold' (COGS) calculated?
Answer
(A)
Beginning inventory + Purchases - Ending inventory
21
Which of the following accounts will increase when the expenses are recorded?
Answer
(B)
Salaries Expense.
22
In the context of trade discounts, what is meant by the term 'net price'?
Answer
(B)
The final price after the trade discount has been deducted.
23
What is the impact on a company's assets when adjusting for accrued revenue?
Answer
(B)
Assets increase.
24
What is the normal balance of the 'Accounts Receivable' account?
Answer
(A)
Debit
25
What happens when a prepaid expense is used during the accounting period?
Answer
(B)
Debit Expense Account and Credit Prepaid Expense.
26
What type of account is a Drawings account?
Answer
(C)
An equity account
27
If a company's assets are $300,000, and its liabilities are $120,000, what is the value of the owner's equity?
Answer
(B)
$180,000
28
What is the impact of a standing order on a company's bank balance?
Answer
(C)
Decreases.
29
Which of the following correctly states the effect on the accounting equation from writing off an account receivable using the allowance method?
Answer
(C)
No impact on assets, liabilities, or equity.
30
If a business receives a bank statement, what is the usual purpose of this document?
Answer
(B)
To reconcile the cash book with the bank's records.
31
What will happen if goods are sold on credit?
Answer
(B)
A debit is made to the Accounts Receivable and a credit to Sales Revenue.
32
What is the fundamental concept behind the 'matching principle'?
Answer
(B)
Matching revenues with related expenses.
33
What is the purpose of the ledger accounts in the accounting process?
Answer
(C)
To summarize and categorize transactions from the books of prime entry.
34
The journal entry to record a provision for doubtful debts would involve:
Answer
(B)
Debit Bad Debt Expense, Credit Allowance for Doubtful Debts
35
Which of the following are examples of transactions that would *increase* a liability?
Answer
A
B
36
Which of the following best describes the term 'accrual accounting'?
Answer
(B)
Accounting method that recognizes revenues when earned and expenses when incurred, regardless of cash flow.
37
When is revenue recognized under accrual accounting?
Answer
(C)
When the goods or services are delivered.
38
Which financial statement reports the financial performance of a business over a specific period?
Answer
(B)
Income Statement
39
What is the purpose of bank reconciliation?
Answer
(D)
To explain the differences between the cash balance per the bank statement and the cash balance per the company's books.
40
What is the fundamental accounting equation?
Answer
(C)
Assets = Liabilities + Equity
41
In the accounting equation, what does 'liabilities' represent?
Answer
(C)
The debts and obligations of a business.
42
A business has cash in hand of $500. The business makes a cash sale of $200. What is the new cash balance?
Answer
(D)
$700
43
What is the impact on the financial statements of writing off an uncollectible account (after an allowance for doubtful debts has already been established)?
Answer
(C)
No impact on assets, liabilities, or equity.
44
How does a bank statement show a business's transactions?
Answer
(C)
All transactions processed by the bank.
45
What does a company use to record irrecoverable debts?
Answer
A
C
D
46
What type of account is "Trade Receivable"
Answer
(D)
Asset
47
What type of account does the business use to account for cash discounts received?
Answer
(B)
Discounts Received
48
Which of the following are considered temporary accounts?
Answer
A
B
D
49
Which of the following transactions results in an increase in a company's liabilities?
Answer
(A)
Purchasing supplies on credit.
50
What does it mean when an account has a debit balance?
Answer
(D)
The debit side has a greater amount than the credit side.