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