O-Level Principles of Accounts 3

Question 1

What is the purpose of preparing a bank reconciliation statement?

Accepted Answer

To reconcile differences between the cash book balance and the bank statement balance

Answer

A bank reconciliation statement is prepared to explain and reconcile any differences between the balance in the cash book and the balance shown on the bank statement.

Question 2

In partnership accounts, which account records partners' salaries, interest on capital, and drawings?

Accepted Answer

Current account

Answer

Partners' current accounts record variable items including salaries, interest on capital, share of profits or losses, and drawings made by each partner.

Question 3

A debit balance in a suspense account after extracting a trial balance indicates:

Accepted Answer

Total debits exceeded total credits in the trial balance

Answer

A debit balance in the suspense account means total debits exceeded total credits in the trial balance, so the suspense account was credited to make both sides agree.

Question 4

In the accounts of a club or society, the Receipts and Payments account records:

Accepted Answer

All actual cash and bank receipts and payments during the period

Answer

A Receipts and Payments account is a summary of all actual cash and bank transactions — both capital and revenue — received and paid during the accounting period.

Question 5

What is the primary purpose of a sales ledger control account?

Accepted Answer

To provide an overall check on the accuracy of the individual debtor accounts

Answer

A sales ledger control account summarises all postings to the debtors ledger and acts as a checking mechanism to verify the accuracy of the individual debtor accounts.

GCE O-Level Practice Test

GCE O-Level Practice Test

O-Level Principles of Accounts 3