Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 47)
1
Which financial statement reports a company's financial performance over a period?
Answer
(B)
Income Statement
2
What does it mean to have a cash book?
Answer
(A)
It is a summary of all of the cash transactions.
3
Which of the following is an example of an adjusting entry?
Answer
(B)
Depreciating an asset
4
A company pays its rent using a bank transfer. Where does this transaction get recorded in the cash book?
Answer
(D)
Credit side of the bank column.
5
What document would be issued if too much was charged on an invoice?
Answer
(C)
Credit Note
6
What is the effect of depreciation expense on the accounting equation?
Answer
(C)
Assets decrease, equity decreases.
7
What is the normal balance of 'Accounts Receivable'?
Answer
(A)
Debit
8
Which of the following would increase a company's owner's equity?
Answer
A
B
9
What is the key function of a sales receipt?
Answer
(B)
To confirm a purchase has been made
10
What is the purpose of the debit and credit system in accounting?
Answer
(B)
To ensure that the accounting equation remains in balance.
11
What is the effect on profit if an expense incurred is not recorded in the same period?
Answer
(A)
Profit is overstated.
12
What is typically included in a Chart of Accounts?
Answer
A
B
C
13
If a company fails to recognize accrued salaries at the end of the accounting period, what is the effect on the financial statements?
Answer
(B)
Expenses and liabilities will be understated.
14
At the end of the year, what account is generally closed out to determine a company's profit or loss?
Answer
(C)
Income Summary.
15
What journal would be used to record the payment of wages?
Answer
(C)
Cash Book
16
Which of the following accounts is increased with a credit entry?
Answer
(C)
Service Revenue
17
When is it appropriate to use the direct write-off method for uncollectible accounts?
Answer
(B)
When bad debts are immaterial.
18
What does it mean when a check is 'dishonored'?
Answer
(C)
The bank refuses to pay the check due to insufficient funds.
19
What is a key benefit of a cash book?
Answer
A
B
C
20
What is the normal balance of the Drawings account?
Answer
(A)
Debit
21
Which of the following statements is true regarding the matching principle?
Answer
(C)
It matches expenses with the revenues they help generate.
22
What would be the impact of failing to record accrued interest expense?
Answer
(B)
Understated expenses, understated liabilities.
23
Which financial statement provides information about a company's cash inflows and cash outflows during a period?
Answer
(C)
Statement of Cash Flows
24
Which document is used to request goods?
Answer
(B)
Purchase Order
25
In a bank reconciliation statement, what are outstanding checks?
Answer
(B)
Checks that have been recorded by the business but not yet cashed by the payee
26
What is the primary purpose of double-entry bookkeeping?
Answer
(B)
To ensure the accounting equation always remains in balance.
27
In the context of business accounting, what usually precedes an invoice?
Answer
(B)
Purchase Order
28
Which documents are involved in a sale where the goods are paid for by cheque?
Answer
A
B
C
29
What is the impact on the accounting equation when unearned revenue is earned?
Answer
(C)
Decrease liabilities, increase equity.
30
How are deposits in transit handled on a bank reconciliation?
Answer
(C)
They are added to the bank statement balance.
31
How are bank charges typically recorded in the cash book?
Answer
(B)
Debit bank charges, credit bank.
32
What does it mean when the total credits exceed the total debits in the bank column?
Answer
(B)
The business has an overdraft.
33
Which documents are most closely associated with payment transactions?
Answer
B
C
34
What is the effect of a credit sale on a company's assets and equity?
Answer
(A)
Assets increase, equity increases.
35
Which of the following is a characteristic of an invoice?
Answer
(A)
It's a request for payment.
36
When is the allowance for doubtful accounts increased?
Answer
(B)
At the end of the accounting period when the provision is increased.
37
What is the impact of bank charges to a company's financial position?
Answer
(B)
Decrease in bank balance and increase in expenses.
38
Which of the following is considered a current liability?
Answer
(B)
Accounts payable.
39
When a business pays a supplier via an online bank transfer, which section of the cash book is used?
Answer
(B)
The bank column.
40
When a company sells goods for cash, which accounts are affected?
Answer
(B)
Debit Cash, Credit Sales Revenue.
41
Which of the following transactions require an adjusting entry?
Answer
(C)
Incurring utility expenses but not yet paying the bill.
42
Which of the following transactions would increase a company's owner's equity?
Answer
A
B
43
When a business makes an accrual, which financial statement accounts are impacted?
Answer
(C)
Both the balance sheet and income statement accounts.
44
Which of the following is *not* a common reason for differences between the cash balance per the bank and the cash balance per the company's books?
Answer
(D)
Sales revenue from cash sales
45
Which financial statement reflects the balance of debit and credit balances?
Answer
(D)
Trial Balance
46
What is the impact on 'Accounts Payable' when a supplier is paid?
Answer
(B)
Decreases
47
A company purchased goods on credit and was offered a discount for early payment. The company paid within the discount period. How would the company record the payment?
