Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 8)
1
What are the components of the accounting equation?
Answer
(A)
Assets = Liabilities + Equity
2
Which accounting principle states that a business should be treated as a separate entity from its owners?
Answer
(C)
Business entity principle
3
Which of the following is an important step to prepare the trial balance?
Answer
(D)
All the above.
4
Which of the following is a key step when using the percentage of sales method for estimating bad debt expense?
Answer
(B)
Multiplying credit sales by the estimated percentage of uncollectible accounts.
5
What type of asset are inventories?
Answer
(B)
Current asset
6
Which of the following represent the resources of a business?
Answer
(A)
Assets
7
If a company estimates that $5,000 of its accounts receivable will be uncollectible, how is the bad debt expense recorded in journal entries?
Answer
(A)
Debit Bad Debt Expense, Credit Allowance for Doubtful Accounts.
8
What happens if debit does not equal credit?
Answer
(A)
The transaction must be corrected.
9
What is a common cause of errors?
Answer
B
C
10
Which of the following is the correct double entry for cash withdrawn from the bank?
Answer
(A)
Debit Cash, Credit Bank
11
Which of the following is an example of an expense?
Answer
(C)
Paying salaries.
12
What is included on a statement of account?
Answer
A
B
C
D
13
In relation to the provision for doubtful debts, which of the following is true?
Answer
(A)
It is an expense.
14
What document is used to inform a customer of a debt reduction?
Answer
(B)
Credit Note
15
What is the impact of not recording accrued interest expense on the income statement?
Answer
(B)
Expenses are understated.
16
4. What is the function of the general ledger?
Answer
(C)
To summarize all business transactions.
17
What are the key reasons for offering a trade discount?
Answer
B
D
18
Which of the following are considered to be part of Owner's Equity?
Answer
A
B
19
A business may borrow money from its bank by ____________ its bank current account.
Answer
(A)
overdrafting
20
Which of the following are types of receipts?
Answer
A
B
C
D
21
What is the primary goal of adjusting entries?
Answer
(C)
To update accounts for unrecorded transactions.
22
Which of the following will increase a company's assets and increase a company's liabilities?
Answer
(B)
Borrowing money from a bank
23
What could cause an error in a trial balance?
Answer
A
B
C
24
In a bank reconciliation statement, what happens to unpresented cheques?
Answer
(B)
b) They are subtracted from the bank statement balance.
25
What is the accounting equation?
Answer
(A)
Assets = Liabilities + Equity
26
What is the role of a trial balance in the accounting cycle?
Answer
(C)
It comes after the journal entries and before the financial statements.
27
Which of the following are essential components to recording a cash purchase for goods for resale?
Answer
(A)
Debit the purchase account and credit the cash account
28
Which of the following is true regarding adjusting for expenses?
Answer
A
B
C
D
29
Which items represent types of interests bank transfers?
Answer
B
C
D
30
What will a credit do?
Answer
B
D
31
What does it mean when the bank charges are levied?
Answer
(D)
A debit balance in the bank statement and a credit in the cash book
32
On 1st October, Kamal had paid an insurance company to a bill a premium of $900 to provide insurance cover for his bakery's store the next 12 months. The cost of the insurance billed to be $30 September. How much insurance for this year?
Answer
(C)
$600
33
Which of the following is NOT a usual column in the general journal?
Answer
(D)
d) Balance
34
1.14 Which of the following are included in petty cash expenditure?
Answer
(D)
All of the above
35
What is the difference between a trial balance and a balance sheet?
Answer
(C)
A trial balance lists account balances on a specific date, while a balance sheet presents a financial snapshot.
36
What are the documents the business uses for book keeping?
Answer
A
B
C
D
37
In a petty cash book, what is the significance of the total amount column?
Answer
(B)
b) Shows total cash payments
38
Which of the following accounts is usually debited when goods are purchased on credit?
Answer
(D)
Purchases
39
What is the purpose of a provision for doubtful debts?
Answer
(A)
To estimate the amount of bad debts expense.
40
Which of the following is NOT a component of the basic accounting equation?
Answer
(D)
Revenue
41
Which statement is true about a bank deposit amount?
Answer
(C)
It is a sum deposited in a bank deposit account
42
What effect does cash withdrawn from the bank have on the cash book?
Answer
(A)
It increases the cash in hand and decreases the cash at the bank
43
Which of the following is a characteristic of accrued revenue?
Answer
(B)
Revenue has been earned but not yet billed to the customer.
44
What is the process of summing up each side of an account and finding the difference called?
Answer
(B)
Balancing off
45
What is the impact of recording an adjusting entry for depreciation expense?
Answer
(B)
Decreases assets and decreases equity.
46
What is the purpose of a cash discount?
Answer
(A)
To incentivize quicker payments.
47
What does it mean to reconcile a bank account?
Answer
(A)
a) Bringing the bank balance and cash balance into agreement.
48
What would be included in the Cash Book for Unpresented Cheques?
Answer
(A)
Credit the Cash Book
49
Which accounts will have debit balances?
Answer
A
C
D
50
Which document is usually issued at the time of a sale?
