Accounting for IGCSE & O level - Accounting Procedures (Section 16)
1
In the context of error correction, if an expense has been omitted, what is the effect on the profit and financial position?
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(C)
Profit is overstated and total liabilities are unaffected.
2
Which of the following is *least* likely to be considered a capital receipt?
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(C)
Cash received from a customer for future services.
3
Which of the following is a key advantage of preparing control accounts?
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(C)
They help to check the arithmetical accuracy of the entries.
4
Which of the following is directly impacted by a gain on disposal?
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(B)
Retained earnings.
5
A purchase of $200 worth of goods on credit was entered in the cash book as a cash payment. How will this affect the trial balance?
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(B)
The trial balance will be out of balance.
6
In the context of the disposal of an asset, what does the term 'proceeds' refer to?
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(C)
The selling price of the asset.
7
If a business sells goods on credit, how does this affect the Sales Ledger Control Account?
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(A)
The account is debited.
8
Which book of prime entry is used to record a purchase return?
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(D)
Purchases Returns Journal
9
When preparing the control accounts, the sales ledger control account balance does NOT include which of the following?
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(C)
Purchases on credit
10
A cash purchase of £45 has been omitted. What type of error is this?
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(B)
Error of Omission
11
What effect does incorrectly classifying a revenue expenditure as a capital expenditure have on the financial position of a business in the current period?
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(B)
Assets are overstated, and equity is overstated.
12
When a business returns goods to a supplier, what entry is recorded in the purchases journal?
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(A)
No entry is made in the purchases journal.
13
What are some factors affecting the total of trade payables in the purchases ledger?
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A
B
C
14
Which of the following actions increases a company's liabilities?
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(C)
The business takes out a loan from the bank.
15
The purchase of goods for resale is an example of:
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(B)
Revenue expenditure
16
Which of these situations can trigger a revaluation of an asset?
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A
D
17
In the sales ledger, what is the accounting entry for a sale on credit?
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(B)
Debit Customer, Credit Sales Revenue
18
If an incorrect sales entry impacts the profit, which of the following is affected?
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A
B
19
Which financial statement reports a company's assets, liabilities, and owner's equity at a specific point in time?
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(B)
Balance sheet
20
What is the purpose of calculating the gain or loss on disposal?
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(C)
To reflect the difference between the asset's book value and the proceeds from the sale.
21
If a company decides to change the estimated useful life of an asset, what will that do?
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(A)
Impact future depreciation expense.
22
Which of the following would reduce the balance of the sales ledger control account?
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B
C
D
23
What is the impact on the statement of financial position for not including prepaid expenses?
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(C)
Increase prepaid expenses by $1,000
24
When recording a sale of goods on credit, which accounting entry is made?
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(A)
Debit the customer's account, credit sales.
25
Which of the following is an advantage of using control accounts?
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(B)
They allow quick identification of errors.
26
If a business sold goods for $5,000 on credit, but the sale was incorrectly recorded in the cash account, how would this error affect the trial balance?
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(B)
The trial balance would be out of balance.
27
When should depreciation expense be calculated up to when disposing of an asset?
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(C)
The date of disposal.
28
When a transaction is recorded in the wrong account but for the correct amount, which type of error has occurred?
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(A)
Error of Principle
29
What happens to the Depreciation Expense when an asset is disposed of?
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(D)
Depreciation Expense is updated up to the date of disposal.
30
Which method of depreciation generally results in higher depreciation expense in the earlier years of an asset's life?
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(B)
Reducing balance method
31
What is the effect on profit when depreciation expense is recorded?
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(B)
Decreases Profit
32
Which actions increase the balance of the Purchases Ledger Control Account?
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(A)
Purchasing inventory on credit.
33
In accounting, what does capitalization mean?
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(A)
To record an expenditure as an asset rather than an expense.
34
What is the effect of incorrectly calculating and overstating total sales on the profit?
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(C)
Profit is overstated.
35
When is a suspense account closed?
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(B)
When correcting entries are made.
36
What type of entry is a dishonored cheque in the sales ledger?
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(C)
General journal
37
If a sale on credit of $1,000 was recorded in the cash book, how would this error affect the trial balance?
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(D)
The trial balance will be out of balance.
38
What type of entry is made in the Purchases Ledger Control Account if a company uses the bank to pay a supplier?
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(B)
Credit entry
39
Which of the following statements is true about revenue receipts?
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(C)
They are related to the ordinary operations of the business.
40
What action will reduce the balance on the Purchases Ledger Control Account?
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(C)
Returning goods to a supplier.
41
What would be the result if the total balance for the electricity expenses was overstated?
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(C)
The profit will be overstated.
42
What is the impact of a refund on a trade receivable account?
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(B)
Decreases the balance.
43
If a company uses the units-of-production method, what factors are needed to calculate depreciation expense?
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A
B
D
44
If drawings were not recorded, which will be the result in the journal?
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(D)
No entry will be required.
45
In the purchases ledger, which type of transaction would typically result in a debit to a supplier's account?
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(C)
A return of goods to the supplier.
46
In a sales ledger, what is the impact of receiving a payment from a customer?
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(B)
Credit the customer's account.
47
What does a credit balance in the Purchases Ledger Control Account represent?
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(A)
The business owes money to suppliers.
48
What is the book value of an asset?
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(C)
The cost of the asset less accumulated depreciation.
49
Which of the following actions will increase the balance in a supplier's account within the purchases ledger?
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(D)
Making a credit purchase from the supplier.
50
If a company uses the straight-line method and an asset's cost is $10,000, with a salvage value of $1,000 and a useful life of 5 years, what is the annual depreciation expense?
