Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 5)
1
What is the normal balance of a revenue account?
2
Which of the following is a limitation of a trial balance?
Answer(C)
It cannot identify some types of errors.
3
Which of the following describes the matching principle?
Answer(B)
Expenses should be recognized in the same period as the revenues they help generate.
4
What would happen if a company recorded $100 for an asset instead of a liability?
Answer(B)
The trial balance will be affected.
5
Which of the following would be considered an asset?
6
What does the matching principle require?
Answer(C)
Expenses are matched with the revenues they helped generate.
7
What is a statement of account?
Answer(B)
A summary of transactions between a supplier and its customer.
8
What is meant by the term business documents?
Answer(A)
Documents that record sales, purchases, and payments
9
What is the primary purpose of the ledger?
Answer(C)
To summarize and categorize financial transactions by account.
10
When do businesses hold cash in hand?
Answer(B)
To make payments to and receive monies.
11
What type of account is 'Accounts Payable'?
12
Which of the following is associated with doubtful debts?
13
Why is it useful to use analysis columns in the cash book?
Answer(B)
b) Show how cash has been used
14
Which ledger accounts would you debit and which ledger accounts would you credit for the double entry for profit transactions in question 8?
15
What information is recorded in the business documents?
16
What are the effects when goods are withdrawn for personal use?
Answer(A)
Drawings account is debited and Purchases account is credited
17
What is the purpose of an invoice?
Answer(A)
To request payment for goods or services.
18
What are the resources of the business mainly used for?
19
What represents the debts a business owes to other people?
20
Where does cash received by the business normally go?
21
Which of the following statements accurately describes accrued expenses?
Answer(B)
Expenses that have been incurred but not yet paid.
22
1.13 When are Petty cash expenses not paid?
Answer(D)
When suppliers need to be paid
23
What is the impact of paying for a new item by cheque?
Answer(D)
The assets are decreased and the liabilities are unchanged.
24
What is the correct accounting treatment of an unrecorded bank deposit when performing bank reconciliation?
Answer(A)
a) Add to the cash book balance.
25
Which of the following is a characteristic of a ledger?
Answer(B)
It is a summary of all transactions.
26
If a business overdraws its bank account, which of the following is true?
Answer(B)
The bank account has a credit balance.
27
Which of the following is NOT an example of a transaction recorded in the general journal?
Answer(B)
b) Sales of goods to customers.
28
Which business document summarizes transactions between a supplier and customer?
29
Which is the correct accounting equation?
Answer(B)
Assets = Liabilities + Equity
30
For a cheque drawn from the bank account to pay an expense.
Answer(A)
Debit expense account, Credit bank account.
31
Which of the following is a fundamental concept in accounting?
Answer(A)
Accounting for the profit or loss, in the appropriate accounting period.
32
If a company pays salaries, which accounts are affected?
Answer(A)
Salaries Expense and Cash
33
What document is issued to correct an overcharged invoice?
34
When a company borrows money from a bank, how are the accounting equation components affected?
Answer(B)
Assets increase, liabilities increase
35
Which of the following are usually listed as a current asset on the financial position?
36
What does the sales journal record?
Answer(A)
Goods sold on credit to customers
37
Which of the following is an example of a nominal account?
38
If a business receives cash from a customer, what is the impact on the cash book?
Answer(B)
Debit entry in the cash column.
39
The trial balance helps in preparing which type of financial statement?
40
When should a business use a provision for doubtful debts?
Answer(C)
When there is a risk of debts becoming uncollectible.
41
For the transaction of selling goods on credit, what is the impact of the accounting equation?
Answer(A)
Impact 1: Sales increases; Impact 2: Trade receivable increases
42
Which of the following items would be classified as a current liability?
43
What is the accounting equation?
Answer(D)
Assets = Owner's equity + Liabilities
44
What are the key elements to consider to make an irrecoverable debt recovered?
Answer(C)
Credit the bank account for the irrecoverable debt recovered.
45
What is the purpose of a general ledger?
Answer(C)
To summarize the transactions that have occurred within each account.
46
The difference between book-keeping and accounting is:
Answer(B)
Book-keeping is the process of recording transactions; accounting involves preparing financial statements.
47
Which document provides proof of a completed transaction?
48
What is the effect on the accounting equation when the owner invests cash in the business?
Answer(C)
Assets increase, owner's equity increases.
49
What are the items impacting income and profit for the year?
50
What does a sales receipt contain?
