Accounting for IGCSE & O level - Accounting Procedures (Section 12)
1
A company allows a customer to take a discount. Which accounts will be impacted?
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B
C
2
If a company purchases equipment for $80,000, the estimated useful life is 5 years, and the residual value is $10,000. Calculate the annual depreciation expense, using the straight-line method.
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(B)
$16,000
3
In a Sales Ledger Control Account, what would a credit balance typically indicate?
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(C)
Customer overpayments.
4
In the context of the Purchases Ledger Control Account, what does a debit balance typically represent?
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(D)
Total amount paid to suppliers for goods on credit.
5
What is a common method for correcting an error in accounting?
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(C)
Creating an adjustment journal entry.
6
What type of error results in debits and credits made on the incorrect side of the account?
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(C)
Error of complete reversal
7
Which prime entry book is used to record credit purchases of goods?
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(C)
Purchases journal
8
Which of the following transactions would be recorded in the general journal?
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(D)
Corrections of errors
9
What is the primary objective of distinguishing between capital and revenue expenditures?
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(B)
To correctly measure the profitability of the business in a given period.
10
A business uses a Sales Ledger Control Account. What should the business do if they find that the debits in their account are greater than the credits?
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(C)
Investigate why the account is out of balance.
11
What type of error will most likely be uncovered by a review of the trial balance?
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(C)
An error in the amount
12
Bradley recorded a $100 expense as a $1000 expense. What kind of error did Bradley make?
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(D)
Error of original entry
13
What could cause profit to be understated?
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A
C
14
Which account is credited to record depreciation expense?
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(B)
Accumulated Depreciation
15
If a company receives cash from a customer, what impact does this have on the Sales Ledger Control Account?
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(B)
The account is credited.
16
If a business records a credit purchase of inventory in the cash payments journal, what is the effect on the trial balance?
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(B)
The trial balance will still balance.
17
In a sales ledger, what is the impact of receiving cash from a customer?
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(B)
Credit the customer's account.
18
If a business purchases plastic sheeting, pipes and moldings to sell, this would be:
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(B)
Revenue expenditure
19
Which of the following actions would cause a credit entry in the Sales Ledger Control Account?
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(C)
Issuing a credit note to a customer.
20
Which depreciation method results in the same amount of depreciation expense being recognized each year?
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(C)
Straight-line method
21
Which of the following will increase owner's equity?
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(B)
Sales
22
Which of the following transactions would likely affect the Purchases Ledger Control Account?
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A
B
D
23
What accounting record is used to keep track of individual amounts owed by customers?
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(C)
Sales ledger
24
What is the primary goal when determining the estimated useful life of an asset?
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(B)
To match the asset's cost to the revenue it helps generate
25
If a payment for advertising was recorded as a debit to the advertising expense and a credit to the bank account, what type of error has occurred?
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(B)
Error of omission
26
How does depreciation impact net income?
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(B)
Decreases net income
27
What is the effect on the financial statements of incorrectly classifying a revenue expenditure as a capital expenditure?
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(D)
Profit is overstated in the income statement.
28
What impact does the error where the payment of £500 to an employee was credited to the wages account and debited to the bank account have on the draft profit?
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(A)
No impact
29
What is the main objective of correcting accounting errors?
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(C)
To present financial statements that are a true and fair reflection of the business's performance and position
30
Which type of prime entry is used to record the entry of a refund issued to a credit customer?
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(D)
General journal
31
Which of the following financial statements are primarily affected by the sales commission which was understated by £240?
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A
B
32
What type of account is debited when recording a capital expenditure?
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(C)
An asset account
33
Which of the following describes an error of principle?
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(B)
The entry is recorded in the wrong type of account.
34
If a building was debited instead of repairs, which entry should be corrected?
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(B)
Debit the repairs account and credit the building account.
35
What happens to the depreciation expense when an asset is disposed of before the end of its useful life?
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(A)
Depreciation stops at the date of disposal.
36
What is the purpose of the sales returns journal?
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(B)
To record goods returned by customers.
37
When using the straight-line method, what impact does the asset's salvage value have on depreciation expense?
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(B)
It decreases depreciation expense.
38
When calculating depreciation using the reducing balance method, which of the following is used?
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(B)
Book value
39
What is the salvage value of an asset?
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(B)
The amount the asset can be sold for at the end of its useful life.
40
The purpose of preparing a trial balance is to:
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(B)
Ensure the accounting equation balances.
41
What effect does recording a capital expenditure as a revenue expenditure have on the balance sheet?
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(B)
Non-current assets are understated.
42
Which of the following best describes revenue expenditure?
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(C)
Costs related to the day-to-day running of the business.
43
In the context of depreciation, what does the term 'useful life' refer to?
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(B)
The period over which an asset is expected to provide economic benefits to the company.
44
What is the impact of a dishonored check on the bank's balance in the sales ledger?
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(B)
The bank balance is decreased by the amount of the check.
45
Which of the following typically causes a credit entry in the Purchases Ledger Control Account?
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B
C
46
What impact does an omission of a cash purchase have on a trial balance?
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(B)
The trial balance will not balance
47
What happens to the balance in trade receivable when an interest is charged?
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(A)
Debit side increases
48
What happens to the asset account when an asset is disposed of?
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(B)
The asset account is credited.
49
What is the impact on the balance sheet when an asset is disposed of?
