Accountancy

Correct answer: A

I is incorrect: Bank charges appearing only on the bank statement → Cash book needs a deduction. The bank has reduced the balance before the business records the expense. II is correct: Trial balance agreeing → Total debit balances equal total credit balances. Agreement does not prove that every entry is correct.

Correct answer: C

I is correct: Capital purchase wrongly treated as a routine expense → Error of principle. The distinction between asset and expense is misapplied. II is incorrect: Cheque deposited but not yet collected → Cash-book bank balance is higher than the bank statement, other things equal. The business has recorded receipt before the bank credits it.

Correct answer: D

Uncertainty does not always prevent recognition.

Correct answer: C

I is correct: Adjustment for expired prepaid insurance → Increase expense and reduce prepaid asset. The previously recorded future benefit has been consumed. II is correct: Suspense account → Temporary account for an unresolved imbalance. It is cleared when the error is identified and corrected.

Correct answer: A

The business must record the bank's credit.

Correct answer: C

I is correct: Dishonoured customer cheque → Reverse the earlier receipt and restore the receivable. The expected collection has failed. II is incorrect: Posting a correct amount to the wrong personal account → May leave the trial balance in agreement. Arithmetic equality can survive classification errors.

Correct answer: D

The distinction between asset and expense is misapplied.

Correct answer: A

I is correct: Cheque issued but not yet presented → Cash-book bank balance is lower than the bank statement, other things equal. The business has recorded payment before the bank debits it. II is incorrect: Complete omission of a transaction → May leave the trial balance in agreement. Both debit and credit are missing.

Correct answer: D

The previously recorded future benefit has been consumed.

Correct answer: C

I is incorrect: Trial balance agreeing → Total debit balances equal total credit balances. Agreement does not prove that every entry is correct. II is correct: Interest credited by the bank but unrecorded in the cash book → Cash book needs an addition. The business must record the bank's credit.

Correct answer: D

It is cleared when the error is identified and corrected.

Correct answer: A

I is incorrect: Customer's direct bank deposit not yet in the cash book → Record the receipt in the cash book. The bank balance has increased without an internal entry. II is incorrect: Posting a correct amount to the wrong personal account → May leave the trial balance in agreement. Arithmetic equality can survive classification errors.

Correct answer: D

The business has recorded payment before the bank debits it.

Correct answer: B

I is correct: Bank charges appearing only on the bank statement → Cash book needs a deduction. The bank has reduced the balance before the business records the expense. II is correct: Capital purchase wrongly treated as a routine expense → Error of principle. The distinction between asset and expense is misapplied.

Correct answer: C

Earning precedes cash receipt.

Correct answer: D

I is correct: Posting a correct amount to the wrong personal account → May leave the trial balance in agreement. Arithmetic equality can survive classification errors. II is incorrect: Trial balance agreeing → Total debit balances equal total credit balances. Agreement does not prove that every entry is correct.

Correct answer: B

I is incorrect: Bank charges appearing only on the bank statement → Cash book needs a deduction. The bank has reduced the balance before the business records the expense. II is incorrect: Cheque issued but not yet presented → Cash-book bank balance is lower than the bank statement, other things equal. The business has recorded payment before the bank debits it.

Correct answer: A

Both debit and credit are missing.

Correct answer: C

I is incorrect: Posting a correct amount to the wrong personal account → May leave the trial balance in agreement. Arithmetic equality can survive classification errors. II is correct: Interest credited by the bank but unrecorded in the cash book → Cash book needs an addition. The business must record the bank's credit.

Correct answer: A

Revenue and expense balances are closed into the relevant result/equity accounts.

Correct answer: D

I is correct: Adjustment for accrued income → Increase receivable and recognise income. Earning precedes cash receipt. II is correct: Dishonoured customer cheque → Reverse the earlier receipt and restore the receivable. The expected collection has failed.

Correct answer: A

The bank has reduced the balance before the business records the expense.

Correct answer: B

I is incorrect: Trial balance agreeing → Total debit balances equal total credit balances. Agreement does not prove that every entry is correct. II is correct: Suspense account → Temporary account for an unresolved imbalance. It is cleared when the error is identified and corrected.

Correct answer: C

The bank balance has increased without an internal entry.

Correct answer: D

I is correct: Suspense account → Temporary account for an unresolved imbalance. It is cleared when the error is identified and corrected. II is correct: Adjustment for accrued income → Increase receivable and recognise income. Earning precedes cash receipt.