SS2 Account
  • 1. Bad debts are classified as a _______.
A) Liability
B) Asset
C) Revenue expenditure
D) Capital expenditure
  • 2. The accounting treatment of bad debts is to _______.
A) Add to liabilities
B) Add to sales
C) Add to purchases
D) Deduct from debtors
  • 3. Closing entries are made to transfer balances of _______.
A) Nominal accounts
B) Real accounts
C) Capital and drawings
D) Assets and liabilities
  • 4. The purpose of closing stock is to _______.
A) Determine cost of goods sold
B) Reduce sales
C) Increase liabilities
D) Increase purchases
  • 5. Provision for doubtful debts is created to account for _______.
A) Sales returns
B) Credit purchases
C) Debts likely to be uncollectible
D) Cash discount
  • 6. Provision for doubtful debts appears in the _______.
A) Profit and loss account
B) Trading account
C) Cashbook
D) Balance sheet
  • 7. Increase in provision for doubtful debts is treated as _______.
A) An expense
B) An income
C) A liability
D) An asset
  • 8. Decrease in provision for doubtful debts is treated as _______.
A) Income
B) Loss
C) Liability
D) Expense
  • 9. Provision for discount allowed is made on _______.
A) Creditors
B) Purchases
C) Debtors
D) Cash sales
  • 10. Provision for discount received is made on _______.
A) Purchases
B) Creditors
C) Debtors
D) Sales
  • 11. Provision for discount allowed is shown in the _______.
A) P&L account as an expense
B) Balance sheet as a liability
C) Balance sheet as an asset
D) Trading account
  • 12. Provision for discount received is treated as _______.
A) Income
B) Liability
C) Expense
D) Asset
  • 13. Accrued expenses are recorded as _______.
A) Equity
B) Current asset
C) Long-term liability
D) Current liability
  • 14. Prepaid expenses are recorded as _______.
A) Current asset
B) Capital
C) Current liability
D) Income
  • 15. Income received in advance is classified as _______.
A) Liability
B) Expense
C) Capital
D) Asset
  • 16. Accrued income is classified as _______.
A) Expense
B) Capital
C) Asset
D) Liability
  • 17. Depreciation is charged because _______.
A) Increase in liabilities
B) Assets lose value with use
C) Government requirement only
D) Assets appreciate with time
  • 18. Depreciation is an example of _______.
A) Deferred revenue
B) Capital expenditure
C) Revenue expenditure
D) Prepayment
  • 19. The straight-line method assumes _______.
A) No depreciation
B) Declining depreciation
C) Increasing depreciation
D) Constant depreciation yearly
  • 20. Under reducing balance method, depreciation is charged on _______.
A) Book value
B) Sales value
C) Asset cost only
D) Scrap value
  • 21. The scrap value means _______.
A) Market value of asset
B) Purchase price
C) Salvage value at end of asset life
D) Replacement cost
  • 22. Straight-line depreciation formula is _______.
A) Net book value × Rate
B) Cost × Rate
C) (Cost – Scrap value) ÷ Useful life
D) Scrap value × Rate
  • 23. If depreciation is undercharged, net profit will be _______.
A) Understated
B) Overstated
C) Correct
D) Zero
  • 24. Machinery is an example of _______.
A) Intangible asset
B) Fixed asset
C) Liability
D) Current asset
  • 25. Depreciation is recorded in the _______.
A) Profit and loss account
B) Trading account
C) Balance sheet only
D) Cash book
  • 26. Closing stock is recorded in the _______.
A) Balance sheet only
B) Trading account and balance sheet
C) Cash book
D) Trading account only
  • 27. Carriage inwards is added to _______.
A) Debtors
B) Purchases
C) Sales
D) Expenses
  • 28. Carriage outwards is treated as _______.
A) Current liability
B) Cost of goods sold
C) Trading expense
D) Distribution expense
  • 29. A trial balance is prepared to check _______.
A) Debtors only
B) Cash balance
C) Numerical accuracy of books
D) Assets only
Created with That Quiz — where a math practice test is always one click away.