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Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 48)

1
What effect do sales returns have on the balance sheet's assets?
Answer
(A)
Assets decrease
2
Who typically initiates a 'debit note'?
Answer
(B)
The supplier
3
Which of the following entries could cause a posting error if not corrected?
Answer
A
B
C
D
4
What type of document usually shows the name of the bank?
Answer
(B)
Receipt
5
What document is issued by the supplier to the customer?
Answer
(B)
Invoice
6
How does a cash discount offered to a customer affect the business's financial statements?
Answer
(B)
Decreases revenue, decreases expenses
7
Which of the following transactions would increase the balance in the 'Cash' account?
Answer
A
B
D
8
A trial balance is prepared at the end of the accounting period and which of the following will be a necessary step?
Answer
(C)
Balancing off the cash book and all the ledger accounts at the end of the accounting period.
9
A business makes a cash payment for rent. Where is this transaction initially recorded?
Answer
(C)
Cash column (credit).
10
Which of the following will *decrease* equity?
Answer
(B)
Expenses
11
Which of the following is a characteristic of a 'long-term liability'?
Answer
(B)
It is due beyond one year.
12
If the debit side of an account is $5,000 and the credit side is $3,000, what is the balance?
Answer
(A)
$2,000 debit
13
What happens to the 'Cost of Goods Sold' (COGS) when goods are sold?
Answer
(A)
Increases
14
Who usually issues a 'delivery note'?
Answer
(B)
The seller
15
In a standard accounting system, which of the following would decrease inventory?
Answer
A
D
16
What is the proper accounting treatment for receiving cash in advance for services that have not yet been provided?
Answer
(C)
Debit Cash; Credit Unearned Revenue
17
Which entries in the cash book require a double entry in the general ledger?
Answer
(C)
All entries in the cash book.
18
If a business pays for goods in cash, where will this transaction be recorded?
Answer
(B)
Credit side of the cash column.
19
What is the primary function of a cash book?
Answer
(C)
To record both cash receipts and cash payments.
20
What is a contra-asset account and give an example of one?
Answer
(A)
An account that decreases the value of an asset; accumulated depreciation.
21
When a business pays its employees’ wages, which of the following entries should be recorded?
Answer
(A)
Debit: Wages Expense; Credit: Cash
22
In accrual accounting, when should a business record sales revenue?
Answer
(C)
When the goods or services are provided.
23
When using the bank statement method for bank reconciliation, what action is taken for deposits in transit?
Answer
(C)
Added to the bank balance
24
When a customer returns defective goods and is given a refund, which account is credited?
Answer
(A)
Cash
25
Which book of prime entry is used to record cash payments for goods?
Answer
(C)
Cash Book
26
Which of the following is an example of a permanent account?
Answer
(D)
Accounts Receivable
27
Which statements are prepared at the end of the accounting period?
Answer
A
B
C
28
What happens to the owner's equity when the business incurs an expense?
Answer
(B)
Decreases
29
What is the journal entry to record a sale on credit?
Answer
(B)
Debit Accounts Receivable, Credit Sales Revenue
30
What are the advantages of using a general journal?
Answer
A
B
C
31
What are some of the main financial statements?
Answer
A
B
C
32
Which of the following statements best describes the purpose of double-entry bookkeeping?
Answer
(B)
To ensure the accounting equation remains balanced.
33
Which of the following are examples of source documents?
Answer
A
B
C
34
Which of the following accounts would be debited in an adjusting entry for accrued salaries?
Answer
(C)
Salaries Expense.
35
Which of the following is an example of an adjusting entry?
Answer
C
D
36
If a company overdraws its bank account, what is the impact on the accounting equation?
Answer
(A)
Assets decrease, liabilities increase.
37
If a company has already recognized an expense but has not yet paid the related cash outflow, what type of entry is necessary?
Answer
(B)
An accrual entry.
38
Which financial statement presents a company's assets, liabilities, and equity at a specific point in time?
Answer
(C)
Balance Sheet
39
Which accounts are closed at the end of the accounting period?
Answer
A
B
40
If a customer returns goods purchased on credit, which of the following accounts are affected?
Answer
B
C
41
When does a supplier usually issue a 'delivery note'?
Answer
(C)
When the goods are delivered.
42
What is the function of the statement of cash flows?
Answer
(C)
To show the movement of cash into and out of a company.
43
What would happen to a trial balance if the accounts were not balanced at the end of an accounting period?
Answer
(C)
The trial balance would not balance.
44
In a sales journal, what kind of transaction would be recorded?
Answer
(B)
Credit sales
45
What is the effect of depreciation expense on the financial statements?
Answer
(B)
Decreases net income and decreases assets.
46
What is the effect of debiting the Purchases account?
Answer
(C)
Increases purchases of inventory.
47
Where does information from the Sales Journal get posted?
Answer
(B)
To the General Ledger
48
Which of the following are recorded in the Cash Book?
Answer
A
B
49
What is the effect on the accounting equation if a company declares and pays dividends?
Answer
(D)
Decreases assets and decreases owner's equity.
50
Which accounts are affected when a customer pays for a credit sale?
Answer
A
B