Advanced Bookkeeping

Question 1

Accounting Equation

Answer 1

Assets - Liabilities = Capital
(Non-Current Assets + Current Assets) - (Non-Current Liabilities + Current Liabilities) = (Capital introduced +/- Profit/Loss - Drawings)

Question 2

Calculate the Capital introduced figure

Opening Capital + Capital Introduced + Profit - Drawings = Closing Capital
£70,000 + ??? + £50,000 - £20,000 = £150,000

Answer 2

Capital Introduced = £50,000

£150,000 + £20,000 - £70,000 - £50,000 = £50,000

Question 3

Is Discounts Allowed Credit or Debit in the extended trial balance

Answer 3

Type of expense, a debit to the SoPL

Question 4

Is Discounts Received Credit or Debit in the extended trial balance

Answer 4

Type of Income, a credit to the SoPL

Question 5

What is shown in the statement of profit or loss

Answer 5

Income and expenses

Income - expenses = Profit or loss

Question 6

What is shown in the statement of financial position

Answer 6

Assets and liabilities

Assets - Liabilities = Capital

Question 7

What is an accrued expense

Answer 7

An expense which has been incurred in an accounting period but has not been paid for at the end of it

Question 8

What is an Accrued income

Answer 8

Income which has been earned in an accounting period but has not yet been received at the end of it

Question 9

What is a prepaid expense

Answer 9

An expense which has been paid for in an accounting period but relates to a later accounting period

Question 10

What is a prepaid income

Answer 10

Income which has been paid in an accounting period but relates to the next accounting period

Question 11

What side of the expense account is an accrued expense recorded on

Answer 11

Credit

Question 12

What side of the income account is a accrued income recorded on

Answer 12

Debit

Question 13

What side of the expense account is a prepaid expense recorded on

Answer 13

Debit

Question 14

What side of the income account is a prepaid income recorded on

Answer 14

Credit

Question 15

What side of the income expense account is a prepaid income (Reversal) recorded on

Answer 15

Debit

Question 16

What side of the expense account is a accrued expense (Reversal) recorded on

Answer 16

Debit

Question 17

What does IAS 16 apply to

Answer 17

Accounting of Property, Plant and Equipment

Question 18

What does IAS 2 Apply to

Answer 18

Inventory

Question 19

What does IAS 1 Apply to

Answer 19

Financial Statements

Question 20

What is the diminishing balance method

Answer 20

A fixed percentage that is charged in each period based on the original cost minus the depreciation.

Original Value * (percentage) = Depreciation
Depreciation - Original Value = Carrying value of the asset

Question 21

What is the straight line method

Answer 21

Equal amount for reduction in value of an asset that is charged in each period

Original Cost - Residual Value (expected value in its disposal)
divided by
useful life
= Depreciable amount

Question 22

Name all ethical principles

Answer 22

Integrity
Objectivity
Professional competence and due care
Confidentiality 
Professional behaviour

Question 23

Error of principle

Answer 23

Entered to the wrong type of account

Question 24

Error of commission

Answer 24

Entered in the wrong account

Question 25

Error of original entry

Answer 25

Wrong value entered in accounts

Question 26

Error of omission

Answer 26

Something was missing from the accounts

Question 27

Reversal of entries

Answer 27

Debit and Credit entries are reversed

Question 28

Compensating error

Answer 28

Errors that balance each other out