Question 1

In accounting, what is the term for a record of a companys financial transactions, including purchases and sales?

Accepted Answer

c) Journal

Explanation: A journal is a record of a companys financial transactions.

Question 2

What is the term for the practice of spreading the cost of an intangible asset over its useful life?

Accepted Answer

b) Amortisation

Explanation: Amortisation is used for intangible assets to spread their cost over their useful life.

Question 3

What is the term for a financial statement that shows changes in a companys retained earnings over a specific period?

Accepted Answer

d) Statement of retained earnings

Explanation: The statement of retained earnings shows changes in a companys retained earnings over time.

Question 4

Which accounting principle dictates that revenue should be recognized when it is earned, not necessarily when cash is received?

Accepted Answer

b) Revenue recognition principle

Explanation: The revenue recognition principle states that revenue should be recognized when it is earned.

Question 5

What is the term for a tax that is imposed on certain goods and services, often referred to as sin taxes?

Accepted Answer

c) Excise tax

Explanation: Excise tax is imposed on specific goods and services.

Question 6

Which type of account holds funds set aside for specific purposes and is not available for general spending?

Accepted Answer

d) Restricted account

Explanation: Restricted accounts hold funds designated for specific purposes and are not available for general spending.

Question 7

What is the accounting term for the difference between a companys assets and liabilities?

Accepted Answer

c) Equity

Explanation: Equity represents the difference between a companys assets and liabilities.

Question 8

What is the term for a tax levied on the income earned by an individual or business?

Accepted Answer

d) Income tax

Explanation: Income tax is levied on the income of individuals and businesses.

Question 9

What is the primary purpose of a trial balance in accounting?

Accepted Answer

a) To identify errors and discrepancies

Explanation: A trial balance is used to identify errors and discrepancies in accounting records.

Question 10

What is the standard deduction available to salaried individuals in some countries?

Accepted Answer

b) A fixed amount

Explanation: In some countries, salaried individuals are allowed a fixed amount as a standard deduction.

Question 11

Which document is used to report an individuals annual income and tax liability to the tax authorities?

Accepted Answer

c) Tax return

Explanation: A tax return is used to report annual income and tax liability to tax authorities.

Question 12

What is the tax imposed on the profit earned from the sale of a capital asset?

Accepted Answer

a) Capital gain tax

Explanation: Capital gain tax is levied on profits from the sale of capital assets.

Question 13

Which income is considered exempt from income tax in many countries?

Accepted Answer

c) Gifts

Explanation: In many countries, gifts are exempt from income tax up to a certain threshold.

Question 14

In double-entry accounting, what is the balancing figure that represents the difference between total debits and total credits?

Accepted Answer

c) Net assets

Explanation: In double-entry accounting, net assets represent the difference between total debits and total credits.

Question 15

What is the term for the practice of distributing a companys earnings to its shareholders in the form of dividends?

Accepted Answer

c) Dividends

Explanation: Dividends are earnings distributed to shareholders.

Question 16

What is the term for a tax levied on the income generated from an individuals employment?

Accepted Answer

d) Payroll tax

Explanation: Payroll tax is levied on income generated from an individuals employment.

Question 17

Which type of accounting method recognizes revenue when cash is received and expenses when cash is paid?

Accepted Answer

b) Cash basis accounting

Explanation: Cash basis accounting recognizes revenue and expenses when cash is received or paid.

Question 18

What is the primary source of income for an individual under the Income Tax Act?

Accepted Answer

d) All of the above

Explanation: The Income Tax Act recognizes various sources of income, including salary, rent, and capital gains, among others.

Question 19

What is the term for the income that is subject to tax after all deductions and exemptions?

Accepted Answer

b) Taxable income

Explanation: Taxable income is the income remaining after accounting for deductions and exemptions.

Question 20

What is the term for a financial statement that provides an overview of a companys revenues and expenses during a specific period?

Accepted Answer

b) Income statement

Explanation: An income statement provides an overview of a companys revenues and expenses over a period.

Income tax law and accounts — Question Paper

10 more questions to unlock