IGCSE Accounting: Sources and Recording of Data — Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs — examination boards hold copyright in their own papers. Use these alongside the official past papers available free from your board.

Related: Sources and Recording of Data revision notes

This specification’s Paper 1 and Paper 2 are each divided into exactly two compulsory sections: Section A (multiple choice plus short-answer questions) and Section B (structured questions). The questions below are numbered continuously within that two-section shape.

---

Section A

1. Name the source document used for each: a credit sale, a credit purchase, goods returned by a customer, a payment made by the business. [4]

2. Name the three divisions of the ledger and state what each contains. [3]

Section B

3. Record the double entry for each transaction:

(a) Sold goods on credit to Rana, $1500. [2] (b) Rana returns goods worth $200. [2] (c) Rana pays $1250 by cheque, having been allowed a discount of $50. [3] (d) Purchased office equipment for cash, $900. [2]

4. Explain the difference between trade discount and cash discount, and state how each is treated in the accounts. [4]

5. A trial balance fails to agree by $180.

(a) Explain what a suspense account is and why it is used. [3] (b) Give two errors that could cause a trial balance not to agree. [2] (c) Give two errors that would not affect the agreement. [2]

6. Explain the purpose of a bank reconciliation statement and give three reasons why the cash book balance may differ from the bank statement balance. [5]

7. Name the book of prime entry in which each of the following is first recorded: (a) a credit sale, (b) a cash purchase of stationery, (c) the purchase of a delivery van on credit, (d) goods returned to a supplier. [4]

8. State the accounting equation, and using it, explain whether an increase in a liability is recorded as a debit or a credit. [3]

9. Distinguish between a credit note and a debit note, stating who issues each. [2]

10. A business buys goods on credit from Farooq for $800, then returns $120 of them as faulty.

(a) Record the double entry for both transactions. [4] (b) State Farooq’s account balance after both entries. [1]

---

Answers

1. Credit sale — sales invoice [1]. Credit purchase — purchase invoice [1]. Goods returned by a customer — credit note [1]. Payment made — cheque counterfoil (or bank statement) [1].

2. Sales ledger — the personal accounts of credit customers (receivables) [1]. Purchases ledger — the personal accounts of credit suppliers (payables) [1]. General (nominal) ledger — all impersonal accounts: income, expenses, assets and capital [1].

3. (a) Debit Rana, credit Sales [1] [1]. (b) Debit Sales returns, credit Rana [1] [1]. (c) Debit Bank $1250 [1], debit Discount allowed $50 [1], credit Rana $1300 [1]. (d) Debit Office equipment, credit Cash [1] [1].

4. Trade discount is a reduction in the list price given to a business customer, often for bulk purchase [1]; it is deducted before the invoice is prepared and never appears in the ledger accounts [1]. Cash discount is a reduction given for prompt payment [1]; it is recorded, as discount allowed (an expense) or discount received (an income) [1].

5. (a) A suspense account is a temporary account opened with the amount of the difference so that the trial balance agrees [1] [1]; it allows the financial statements to be drafted while the error is traced, and is cleared once the error is corrected [1]. (b) Any two: a one-sided entry; posting a different amount to the debit and credit sides; an addition error in a ledger account or in the trial balance itself [1] [1]. (c) Any two: error of omission; error of commission; error of principle; compensating error; complete reversal of entries; error of original entry [1] [1].

6. A bank reconciliation explains the difference between the balance in the cash book and the balance on the bank statement at the same date, confirming both are correct [1] [1]. Reasons: unpresented cheques — paid out and recorded but not yet cleared by the bank [1]; outstanding lodgements — money paid in but not yet credited [1]; bank charges, interest or direct debits appearing on the statement but not yet in the cash book, and dishonoured cheques [1].

7. (a) Sales day book [1]. (b) Petty cash book (or cash book) [1]. (c) General journal — the van is a non-current asset bought on credit, which doesn’t fit any other day book [1]. (d) Purchases returns day book [1].

8. Assets = Capital + Liabilities [1]. An increase in a liability is recorded as a credit [1], because liabilities sit on the credit side of the equation, and the equation must stay balanced whenever a transaction is recorded [1].

9. A credit note is issued by the seller when a customer returns goods, reducing the amount the customer owes [1]. A debit note is sent by the buyer to the seller, requesting such a reduction — typically before the seller replies with the credit note [1].

10. (a) Purchase: debit Purchases $800, credit Farooq $800 [1] [1]. Return: debit Farooq $120, credit Purchases returns $120 [1] [1] — note the return is credited to purchases returns, never to purchases itself. (b) Farooq’s balance = 800 − 120 = $680 credit (still owed) [1].

---

Where marks are usually lost

• Confusing an invoice with a credit note.
• Recording trade discount in the ledger.
• Omitting the discount allowed entry when a customer pays less than the full amount.
• Saying a suspense account corrects the error, rather than holding it temporarily.
• Posting the purchase of a non-current asset on credit to a day book other than the general journal.
• Forgetting that a debit note is sent by the buyer, while the credit note that follows it is issued by the seller.