Questions and Answers of Cambridge International AS And A Level Accounting

Explain what is meant by the term 'ploughed back'.
Explain what is meant by the term 'net assets'.
What is the connection (if any) between capital and net assets?
Non-current assets $7000; current assets $3000; current liabilities $2000. Calculate net assets.
Non-current assets $100000; current assets $20000; non-current liabilities $40 000; current liabilities $9000. Calculate capital.
What is meant by the term 'drawings'?
The owner of a clothing business takes some clothes for his son from goods in the store. What is the term used to describe this transaction?
Give an example of drawings that the proprietor of an electrical goods store could make.
Is it possible to make drawings that exceed the profit earned in a year?
Explain what is meant by 'capital introduced'.
The owner of a business will generally produce two statements at the end of a financial year. Name the two statements.
Which statement details the incomes and expenditures of the business?
Which statement lists the assets and liabilities of the business?
An income statement calculates profits more accurately than using the 'net asset' method. True/False?
Explain why the owner of a business might prefer to determine the profits made by his business by using an income statement rather than relying on a 'net asset' calculation.
Why is it important to classify expenses into capital expenditure and revenue expenditure?
Give an example of capital expenditure that could be incurred by a food shop.
Explain what is meant by the term 'revenue expenditure'.
Capital receipts are included in the trading account of the income statement. True/False?
On which side of the cash book would you find the discount received column?
Which columns of the cash book are balanced regularly?
Which columns of the cash book are not balanced?
What is meant by the term 'memorandum column'?
The 'left side' of an account adds to $349. The right side adds to $421. What balance would be shown on the account?
Would the account described above show a debit or a credit balance?
Explain the term 'trial balance'.
Explain why a trial balance should 'balance' if there are no errors in the books of account.
Identify two statements that can be prepared using information shown on a trial balance.
Which of the two statements is used to calculate profits?
Explain the term 'capital'.
Give another name for the term 'capital'.
A business has just purchased a specialised piece of computerised manufacturing machinery for $240 000. It will be used for three years. It would certainly have no resale value because of its
Lopez says 'If we delay paying $45 000 for the purchase of a non-current asset until a couple of weeks after our financial year end our recorded profits will increase by that amount.' Is Lopez
Why is there a need to be consistent in the treatment of accounting information?
What is meant by the term 'substance over form'?
What entries are required to close the following accounts? Account Rent payable Discount received Purchases Debit Credit
Name the type of accounts that are closed down at the end of the financial year.
Why do some traders keep a private ledger?
Insurance; purchases returns; carriage inwards; Orton, a debtor; wages. Identify the account that would not be closed at the end of a financial year.
Axel, a creditor; bank; advertising; capital; vehicles. Identify the account that would be closed at the end of a financial year.
Explain what is meant by the word draft in 'draft income statement'.
What is the overriding principle used in the valuation of inventory?
The application of this principle is an example of the_________ concept.
If closing inventory is overvalued, gross profit will be__________.
Explain how closing inventory is dealt with in financial statements.
The accruals concept is sometimes known as the_______ concept.
Define an accrual.
Give two examples of accrued expenses at a financial year end.
How should an accrued expense be classified in a statement of financial position?
Define a prepayment.
Give an example of a prepayment at a financial year end.
How should a prepayment be classified in a statement of financial position?
The amount of an expense on the trial balance is always entered in an income statement. True/False?
A receivable is a current asset. True/False?
A payable is a current asset. True/False?
Money paid for the next financial year's rent is a current asset. True/False?
Money received from a tenant for next year's rent is a current asset. True/False?
The debit side of a ledger account totals $242; the credit side totals $200. What is the balance on the account?
Generally, which side of a trial balance will have the most entries?
Liabilities are found on the________ side of a trial balance.
Incomes are found on the_________ side of a trial balance.
In which ledger would you expect to find the account of Gisele, a supplier of goods on credit?
In which ledger would you expect to find the sales returns account?
A trial balance balances. This is proof that there are no mistakes in any ledger. True/False?
What is the purpose of extracting a trial balance from the ledgers?
Can a trial balance be used for any other purpose than checking for the accuracy of the double-entry system?
A trial balance is extracted from the general ledger. True/False?
Every_______________ needs a corresponding debit entry.
Define the term 'account'.
Bradley pays the telephone bill $120 cash. The entries to record this transaction are debit cash account $120; credit telephone account $120. True/False?
Which side of an account is the 'receiving' side?
Which side of an account is the 'giving' side?
Every__________________ needs a corresponding credit entry.
Name the book in which all business transactions are entered.
List the three divisions of the ledger.
Explain the meaning of the term 'personal account'.
Name two 'real' accounts found in the ledger.
Name two 'nominal' accounts found in the ledger.
Name two 'liability' accounts found in the ledger.
Why is there a need to use books of prime entry?
Give an alternative name for the books of prime entry.
Give another name for the sales journal.
What is meant by the term 'posting'?
Which book of prime entry is also part of the double-entry system?
Name the source document used to prepare the purchases journal.
Name the source document used to prepare the sales returns journal.
Which two accounts are prepared from the entries in the sales journal?
Which two accounts are prepared from the entries in the purchases returns journal?
Explain how postings are made from the returns journal to the general ledger.
Name one use of the general journal.
How is trade discount entered in the books of prime entry?
Identity the four pieces of information you would expect to find on the debit side of a ledger account.
Identify the four pieces of information you would expect to find on the credit side of a ledger account.
When would you use 'T' accounts?
Which source document would you use to write up the purchases returns journal?
Which type of account would you expect to find in the sales ledger?
Name a personal ledger.
Draw out the headings used in a cash book.
On which side of a cash book would you enter a cheque received?
On which side of a cash book would a cheque payment be entered?

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