Accountancy MCQs
Topic Notes: Accountancy
General Description
Plato
- Biography: Ancient Greek philosopher (427–347 BCE), student of Socrates and teacher of Aristotle, founder of the Academy in Athens.
- Important Ideas:
- Theory of Forms
- Philosopher-King
- Ideal State
1
$5000 deposited in bank account was entered twice in the cash book. Identify the correct adjustment in cash book.
Answer:
$5000 will be credited
Source answer preserved: option A ($5000 will be credited). AI attempted to change protected answer data (option_a, option_b), so this item is flagged for manual review before study use.
2
Which type of accounting entries are utilized to correct errors previously made in the books of account?
Answer:
Rectification Entries
Rectification entries are specific journal entries made to correct errors that have occurred in the accounting records. These entries are necessary to ensure that the financial statements reflect the true and fair view of the business by reversing incorrect debits or credits and replacing them with the correct accounting treatment, thereby maintaining the integrity of the double-entry system.
3
A trial balance shows debtors of 43,000, including 2,200 for goods sent on approval at a cost of 1,800. What is the necessary rectification?
Answer:
Add 1,800 to closing stock and deduct 2,200 from debtors and sales
Goods sent on approval are not finalized sales until accepted by the customer. Therefore, the 2,200 must be removed from Sales and Debtors. Since the goods remain in the possession of the customer, they are still part of the firm's inventory and must be included in Closing Stock at their cost price of 1,800. This adjustment ensures that both revenue and inventory are correctly stated.
4
When a bookkeeper identifies that a payment to a supplier was incorrectly recorded in the account of a different supplier, which book of original entry is utilized to rectify this error?
Answer:
general journal
The general journal is the appropriate book of original entry for recording non-routine transactions, including adjusting and rectifying entries. Since the error involves a misallocation between two supplier accounts, a journal entry is required to debit the correct supplier and credit the incorrect one, ensuring the ledger reflects accurate balances.
5
If a $500 debit transaction was incorrectly recorded as a $500 credit in the sales ledger control account, what adjustment is required?
Answer:
$1000 should be debited
When an amount is posted to the wrong side of an account, the error is double the amount. A $500 credit was recorded instead of a $500 debit. To rectify this, you must first credit the account with $500 to nullify the incorrect entry, and then debit it with $500 to record the correct transaction. Thus, a total debit of $1000 is required to fix the discrepancy.
6
Is it true that one-sided errors identified before the trial balance is prepared can be corrected without formal journal entries?
Answer:
True
If an error affects only one account (a one-sided error) and is discovered before the trial balance is finalized, it can often be corrected by simply adjusting the specific ledger account balance directly, as the double-entry system has not yet been fully balanced.
7
A return of goods to a supplier worth 1,750 was incorrectly recorded as 1,570 in the sales return book. What is the impact on Gross Profit?
Answer:
Gross Profit will decrease by 3,320
Recording a supplier return (purchase return) in the sales return book creates a significant accounting error. By treating a purchase return as a sales return, the company understates its purchase returns and overstates its sales returns. This dual error distorts the cost of goods sold calculation, leading to a decrease in the reported Gross Profit by the combined magnitude of the errors.