Accounting for IGCSE & O level - Accounting Procedures (Section 18)
1
Which type of error is least likely to be detected by preparing a trial balance?
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(B)
Error of Principle
2
A company receives a debit note from a supplier. How would this be recorded?
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(B)
Credit the Purchases Ledger Control Account.
3
What is the significance of the balance on the sales ledger control account?
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(C)
It should always equal the sum of the balances on the individual trade receivable accounts in the sales ledger.
4
What is the role of the purchases journal in the accounting system?
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(B)
To record credit purchases of goods or services.
5
Which of these actions is a correcting entry designed to perform?
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(C)
To change a previous entry.
6
What impact does interest charged on a customer's overdue account have on the trade receivable balance?
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(A)
Increases the trade receivable balance
7
What is the impact on the financial statements if a revenue expenditure is incorrectly capitalized?
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(A)
Expenses are understated, and profit is overstated in the current period.
8
What action is most likely to reduce the number of accounting errors?
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(C)
Implement robust internal controls.
9
Which of the following is an example of capital expenditure?
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(C)
Acquiring a delivery vehicle
10
What is a common purpose of capital receipts for a business?
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(B)
To fund the purchase of non-current assets
11
The sales commission was posted for £400 and the actual amount was £160, which of the following will be the result of the correction?
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(D)
Decrease the expense account by £240
12
Which of the following actions decrease the balance of the Purchases Ledger Control Account?
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A
B
C
13
If the owner invests in the business, the value of the non-current assets will:
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(C)
Remain the same.
14
Which of the following statements is correct about the journal entry for the accumulated depreciation upon disposal of a non-current asset?
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(A)
Debit Accumulated Depreciation, Credit the Asset account
15
What is the impact on profit of failing to record cash received from customers?
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(C)
No effect
16
What is the correct accounting treatment for a cash discount received from a supplier?
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(B)
Credit the discount received account; debit the supplier's account
17
In the journal entry to record the sale of an asset, which accounts are most likely to be credited?
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B
C
D
18
If the trial balance is imbalanced, which of the following is a likely cause?
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(B)
The amounts are incorrect in the ledger.
19
What is the correct accounting treatment for a discount received from a supplier?
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(B)
Debit Supplier Account, Credit Discount Received
20
What is the impact of an error of principle on the trial balance?
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(A)
The trial balance remains balanced.
21
Which of the following is NOT an advantage of correct classification of expenditures?
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(D)
Reduced tax liability.
22
What is the impact on profit if a revenue expenditure is incorrectly recorded as a capital expenditure?
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(A)
Profit is overstated.
23
If drawings of £6,000 were omitted from the books, which statement is true?
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(D)
Drawings and capital are understated
24
Which of the following events would *increase* the balance on a customer's account within the sales ledger?
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(B)
A credit sale to the customer
25
Bradley's trial balance did not balance, so a suspense account was opened. After investigation, Bradley made an entry to correct an earlier error. The error was originally an undercast by $100. What should be done to the suspense account?
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(B)
Credit the suspense account by $100.
26
What type of entry should you make when a customer returns goods to the business?
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(B)
Credit the Sales Ledger Control Account.
27
Which type of error is most difficult to discover?
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(D)
Compensating error
28
What will be the impact on the statement of financial position when an asset is disposed of?
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A
C
29
If a customer pays their account, how is it recorded in the Sales Ledger Control Account?
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(B)
Credit
30
What should be debited to record a sale on credit?
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(B)
The Sales Ledger Control Account
31
If a company records a revenue expenditure as a capital expenditure, what is the impact on the company's financial position in the current year?
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(A)
Non-current assets will be overstated.
32
What is the impact on the financial statements when a capital receipt is incorrectly recorded as a revenue receipt?
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(B)
Revenue and profit are understated, owner's equity is overstated.
33
What impact does misclassifying a revenue expenditure as a capital expenditure have on the income statement?
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(B)
Expenses are understated, and profit is overstated.
34
The trial balance has the following errors, payment to an employee of £500 was debited to wages and credited to the bank account, and a purchase of £45 has been omitted. Which is the impact on the financial position?
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A
C
D
35
When an asset is disposed of, the net book value should be compared to which of the following to determine if a gain or loss has occurred?
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(C)
The selling price or proceeds from the disposal.
36
What is the effect on the purchases ledger control account of a purchase return?
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(B)
Decreases the balance.
37
A company’s Purchases Ledger Control Account has a credit balance of $50,000. The company returns defective goods to a supplier worth $5,000. What is the new balance?
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(B)
$45,000 (credit)
38
Which financial statement would be used to find depreciation expense?
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(B)
Income statement
39
When correcting the error in the journal due to the sales commission amount of £160 which was misposted for £400, which is the correct entry?
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(A)
Debit sales account £160 and credit the trade payable amount and add £240 from the draft profit.
40
A business owner discovered that a piece of equipment costing $5,000 was not recorded in the accounts. What is the immediate effect on the accounting equation?
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(A)
Assets and Owner's Equity are both understated.
41
What will happen after a correcting entry is made?
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(B)
The suspense account is zeroed out.
42
An error where the debit side of a transaction is recorded as a credit and vice versa is known as what?
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(C)
Error of reversal
43
If the purchases were understated by £200. What is the implication of this error to the financial statement?
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(D)
The profit is overstated by £200.
44
What type of error is it when the debit and credit entries for electricity expenses were reversed? For example, debiting the bank account and crediting the electricity expense account.
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(D)
Error of complete reversal
45
If a company *overstates* its revenue, what effect does this have on its financial statements?
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(B)
Owner's equity will be overstated.
46
What effect would a change in depreciation method have on the financial statements?
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(C)
Affect both the income statement and balance sheet
47
If a customer receives a refund for returned goods, how is this recorded in the sales ledger?
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(B)
Credit customer account, debit cash.
48
When calculating the gain or loss on disposal, which amount represents the 'carrying amount'?
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(C)
The asset's book value at the time of sale.
49
What is the effect on capital if drawings are not recorded?
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(B)
Capital is understated
50
Which statement accurately describes the impact of an error where a building cost was incorrectly debited to the Repairs account?
