Question 1

Which of the following best describes the purpose of a trial balance in accounting?

Accepted Answer

To ensure that total debits equal total credits in the ledger accounts

Question 2

A business purchased equipment for $10,000. The equipment is expected to last for 5 years with no residual value. Using the straight-line method, what is the annual depreciation expense?

Accepted Answer

$2,000

Question 3

Which accounting concept requires that expenses are matched with the revenues they help to generate in the same period?

Accepted Answer

Accruals

Question 4

A company has the following balances: Sales $50,000, Purchases $30,000, Opening Inventory $5,000, Closing Inventory $7,000. What is the Gross Profit?

Accepted Answer

$18,000

Question 5

Which of the following is NOT a book of original entry?

Accepted Answer

Ledger

Question 6

A business writes off an irrecoverable debt of $500. What is the correct double entry?

Accepted Answer

Debit Irrecoverable Debts $500, Credit Trade Receivables $500

Question 7

Which of the following best explains the prudence concept in accounting?

Accepted Answer

Assets and income should not be overstated, and liabilities and expenses should not be understated

Question 8

A business has current assets of $15,000 and current liabilities of $10,000. What is the current ratio?

Accepted Answer

$1.5:1$

Question 9

Which of the following is a characteristic of a partnership?

Accepted Answer

Unlimited liability for partners

Question 10

Why is it important for accountants to follow professional ethics?

Accepted Answer

To maintain trust and integrity in financial reporting

Question 11

Which document is used to request payment from a customer for goods supplied on credit?

Accepted Answer

Invoice

Question 12

A business has the following balances: Trade Receivables $8,000, Provision for Doubtful Debts $500. What is the net realizable value of trade receivables?

Accepted Answer

$7,500$

Question 13

Which of the following is an example of capital expenditure?

Accepted Answer

Buying a delivery van

Question 14

Which of the following is a purpose of preparing a bank reconciliation statement?

Accepted Answer

To identify differences between the cash book and bank statement

Question 15

If a business uses the reducing balance method for depreciation, which of the following statements is correct?

Accepted Answer

The depreciation expense decreases each year

Question 16

Which of the following is NOT a current liability?

Accepted Answer

Loan repayable in 5 years

Question 17

A business has sales of $100,000, cost of goods sold of $60,000, and expenses of $25,000. What is the net profit?

Accepted Answer

$15,000

Question 18

Which of the following best describes the accruals concept?

Accepted Answer

Income and expenses are recognized in the period they relate to, not when cash is received or paid

Question 19

Which of the following is a reason for preparing control accounts?

Accepted Answer

To detect errors and fraud in the ledger accounts

Question 20

A business has opening inventory of $2,000, purchases of $8,000, and closing inventory of $3,000. What is the cost of goods sold?

Accepted Answer

$9,000

Pearson Edexcel International GCSE Accounting: Structured Study Notes

Study Guide - Practice Questions

Study Guide - Flashcards