Exam Questions Bookkeeping 2 Entry & Systems Chapter.5 2e

Chapter 5: Double-entry Bookkeeping 2: Books of Prime Entry, Accounting Systems

Test Bank

Type: multiple response question

Title: Chapter 05 Question 01

1) Credit sales invoices record:

Please select all that apply.

Heading reference: The sales and cash received system

a. The value of goods or services supplied

b. Sales taxes on the value of goods or services supplied

c. Cash received

d. A unique sequential invoice number

Type: multiple response question

Title: Chapter 05 Question 02

2) Which of the following are deductions from gross pay?

Please select all that apply.

Heading reference: The payroll system

a. PAYE

b. Employer’s national insurance

c. Trade union subscriptions

d. Pension contributions

Type: true-false

Title: Chapter 05 Question 03

3) Sales invoices record the amounts owed by customers for goods supplied on credit.

a. True

Heading reference: The sales and cash received system

b. False

Heading reference: The sales and cash received system

Type: multiple response question

Title: Chapter 05 Question 04

4) Credit notes in the purchases system:

Please select all that apply.

Heading reference: The purchases and cash paid system

a. Represent purchase returns

b. Are given a unique sequential number in the purchases system

c. Record the cancellation of expenses

d. Are debit entries to expense accounts in the nominal ledger

Type: true-false

Title: Chapter 05 Question 05

5) The total amounts recorded on sales invoices – the total amounts recorded on sales credit notes = the total sales income earned by an entity during a financial period

a. True

Heading reference: The sales and cash received, The double entry to record sales listed in the sales day book

b. False

Heading reference: The sales and cash received, The double entry to record sales listed in the sales day book

Type: multiple response question

Title: Chapter 05 Question 06

6) Purchase invoices show the value of goods or services supplied, any VAT charged on the supply of goods and services and the total amount owed by the entity (value of the goods or services supplied + the VAT). What other features would you expect to see on a purchase invoice when it is received by an organization?

Please select all that apply.

Heading reference: The purchases and cash paid system

a. Supplier’s name and address.

b. Unique sequential internal invoice number added during posting of the invoice to the purchase day book.

c. Details of goods or services supplied.

d. Supplier’s VAT number.

Type: true-false

Title: Chapter 05 Question 07

7) The petty cash book is a book of prime entry which is the first record of the receipt of small sums of cash from the bank and of small sums of cash paid out of the business on a day to day basis.

a. True

Heading reference: Petty cash

b. False

Heading reference: Petty cash

Type: multiple response question

Title: Chapter 05 Question 08

8) Books of prime entry:

Please select all that apply.

Heading reference: Recording daily sales: the sales day book

The sales returns day book

The sales ledger

Cash received

Recording daily purchases: the purchase day book

Purchase returns day book

The purchase ledger

The petty cash book

The double entry to record the weekly/monthly payroll

a. Are the first point at which transactions are recorded in the accounting system.

b. Represent daily listings of transactions.

c. Are used to complete the double entry into the nominal ledger.

d. Record individual amounts owed by customers and individual amounts owed to suppliers.

Type: multiple choice question

Title: Chapter 05 Question 09

9) Which one of the following is not an accurate description of the sales day book?

a. Also known as the sales listing.

Heading reference: Recording daily sales: the sales day book

b. The book of prime entry for sales and sales returns.

Heading reference: Recording daily sales: the sales day book, Sales returns day book

c. Records the daily sales made on each trading day of the year.

Heading reference: Recording daily sales: the sales day book

d. Records the total amount due from each customer, the net sales value of each sale and the VAT due on each sale.

Heading reference: Recording daily sales: the sales day book

Type: multiple response question

Title: Chapter 05 Question 10

10) Cash payments in the cash book:

Please select all that apply.

Heading reference: Cash payments

a. Reduce liabilities

b. Split payments to trade payables into net purchases and VAT

c. Are analysed into various headings

d. Are credit entries in the bank account in the nominal ledger

Type: multiple choice question

Title: Chapter 05 Question 11

11) Which one of the following is not a function of the purchase day book?

a. To record purchases of goods and services each day.

Heading reference: Recording daily purchases: the purchase day book

b. To maintain the book of prime entry for purchases of goods and services.

Heading reference: Recording daily purchases: the purchase day book

c. To record the total amount, the net goods and services cost and the VAT amount on each purchase invoice.

Heading reference: Recording daily purchases: the purchase day book

d. To record the amounts due to each individual supplier.

Heading reference: Recording daily purchases: the purchase day book

Heading reference: The purchase ledger

Type: true-false

Title: Chapter 05 Question 12

12) Cash receipts in the cash book represent all the income of an organisation for the financial period.

a. True

Heading reference:

Determining the amount of income or expense

Recording daily sales: the sales day book

Sales returns day book

Cash received

b. False

Heading reference:

Determining the amount of income or expense

Recording daily sales: the sales day book

Sales returns day book

Cash received

Type: multiple choice question

Title: Chapter 05 Question 13

13) Which one of the following would not be recorded in the sales returns day book?

a. The transaction date on a credit note.

Heading reference: Sales returns day book

b. The customer name.

Heading reference: Sales returns day book

c. Details of goods or services to which the credit note relates.

Heading reference: The sales and cash received system, Sales returns day book

d. The credit note total amount.

Heading reference: Sales returns day book

Type: true-false

Title: Chapter 05 Question 14

14) An entity’s payroll system calculates two expenses, gross pay and employer’s national insurance, and a series of liabilities for settlement at a later date.

a. True

Heading reference: The payroll system, The double entry to record the weekly/monthly payroll

b. False

Heading reference: The payroll system, The double entry to record the weekly/monthly payroll

Type: multiple response question

Title: Chapter 05 Question 15

15) Credit notes from suppliers in the purchase returns day book:

Please select all that apply.

a. Reduce amounts owed to trade payables.

b. Record the total amount of the credit note, the net expense and the VAT on the net expense.

c. Are totalled up daily and the daily total credited to the trade payables control account.

d. Analyse net credits from suppliers across nominal ledger expense headings.

Type: true-false

Title: Chapter 05 Question 16

16) Debit trade receivables, Credit sales, Credit VAT is the correct double entry to record cash sales made by a business

a. True

Heading reference: The double entry to record sales listed in the sales day book

b. False

Heading reference: The double entry to record sales listed in the sales day book

Type: multiple choice question

Title: Chapter 05 Question 17

17) In November, Pia Limited’s gross wages and salaries were £54,000. PAYE of £12,000 and NIC of £5,400 were deducted from gross wages and salaries for the month, leaving net wages and salaries to be paid of £36,600. What is the correct double entry to record gross wages and salaries in the books of Pia Limited?

a. Debit wages and salaries £36,600, Credit wages control account £36,600.

Heading reference: The double entry to record the weekly/monthly payroll

b. Debit wages control account £36,600, Credit cash £36,600.

Heading reference: The double entry to record the weekly/monthly payroll

c. Debit wages and salaries £54,000, Credit wages control account £54,000.

Heading reference: The double entry to record the weekly/monthly payroll

d. Debit wages and salaries £54,000, Credit wages control account £36,600, Credit PAYE and NIC control account £17,400.

Heading reference: The double entry to record the weekly/monthly payroll

Type: multiple choice question

Title: Chapter 05 Question 18

18) In April, Gina received credit notes from her suppliers for equipment hire services which were ordered and invoiced but never provided. The credit notes total up to £7,200 which includes VAT of 20%. What is the correct double entry to record these credit notes in Gina’s books of account?

a. Debit trade payables control account £7,200, Credit equipment hire £7,200.

Heading reference:

Value Added Tax (VAT) Purchase returns day book

The double entry to record purchase returns listed in the purchase returns day book

b. Debit cash £7,200, Credit equipment hire £6,000, Credit VAT £1,200.

Heading reference:

Value Added Tax (VAT) Purchase returns day book

The double entry to record purchase returns listed in the purchase returns day book

c. Debit trade payables control account £7,200, Credit equipment hire £6,000, Credit VAT £1,200.

Heading reference:

Value Added Tax (VAT) Purchase returns day book

The double entry to record purchase returns listed in the purchase returns day book

d. Debit equipment hire £6,000, Debit VAT £1,200, Credit trade payables control account £7,200.

Heading reference:

Value Added Tax (VAT) Purchase returns day book

The double entry to record purchase returns listed in the purchase returns day book

Type: true-false

Title: Chapter 05 Question 19

19) Debit VAT account, Credit cash is the correct double entry to record the payment of VAT to HM Revenue and Customs.

a. True

Heading reference: Cash payments

b. False

Heading reference: Cash payments

Type: multiple choice question

Title: Chapter 05 Question 20

20) In June, Hitesh Limited received cash from trade receivables of £54,000. The company is registered for VAT and charges VAT of 20% on all the sales of services it makes. What is the correct double entry to record this receipt of cash from trade receivables?

a. Debit trade receivables control account £54,000, Credit cash £54,000.

Heading reference: Determining the amount of income or expense, Cash received

b. Debit cash £54,000, Credit trade receivables control account £54,000.

Heading reference: Determining the amount of income or expense, Cash received

c. Debit cash £54,000, Credit sales £45,000, Credit VAT £9,000.

Heading reference: Determining the amount of income or expense, Cash received

d. Debit trade receivables control account £54,000, Credit sales £45,000, Credit VAT £9,000.

Heading reference: Determining the amount of income or expense, Cash received

Type: true-false

Title: Chapter 05 Question 21

21) Debit interest receivable, Credit cash is the correct double entry to record the receipt of interest from the bank.

a. True

Heading reference: Cash received

b. False

Heading reference: Cash received

Type: multiple choice question

Title: Chapter 05 Question 22

22) During January, Meera Limited makes credit purchases of goods for resale at a net cost of £42,000. Meera Limited’s suppliers charge 20% VAT on the net cost of purchases. What is the correct double entry to record these credit purchases of goods for resale?

a. Debit purchases £42,000, Debit VAT £8,400, Credit trade payables control account £50,400.

Heading reference: The double entry to record purchases listed in the purchase day book

b. Debit trade payables control account £50,400, Credit purchases £42,000, Credit VAT £8,400.

Heading reference: The double entry to record purchases listed in the purchase day book

c. Debit purchases £42,000, Debit VAT £8,400, Credit cash £50,400.

Heading reference: The double entry to record purchases listed in the purchase day book

d. Debit purchases £35,000, Debit VAT £7,000, Credit trade payables control account £42,000.

Heading reference: The double entry to record purchases listed in the purchase day book

Type: multiple choice question

Title: Chapter 05 Question 23

23) In September, Hamza Limited makes cash sales with a net sales value of £2,400. The company is registered for VAT and charges VAT at the rate of 20% on the net sales value. What is the correct double entry to record these cash sales in the books of Hamza Limited?

a. Debit cash £2,880, Credit sales £2,400, Credit VAT £480.

Heading reference: Determining the amount of income or expense, Cash received

b. Debit trade receivables control account £2,880, Credit sales £2,400, Credit VAT £480.

Heading reference: Determining the amount of income or expense, Cash received

c. Debit cash £2,400, Credit sales £2,000, Credit VAT £400.

Heading reference: Determining the amount of income or expense, Cash received

d. Debit trade receivables control account £2,400, Credit sales £2,000, Credit VAT £400.

Heading reference: Determining the amount of income or expense, Cash received

Type: true-false

Title: Chapter 05 Question 24

24) When cash is paid to settle the net wages and salaries due to employees the correct double entry to record this transaction is Debit wages control account, Credit bank.

a. True

Heading reference: Cash payments

b. False

Heading reference: Cash payments

Type: multiple choice question

Title: Chapter 05 Question 25

25) In March, Imtiaz Limited made payments of cash from the bank to trade payables for purchases of raw materials of £90,000. The company’s suppliers charge VAT of 20% on all raw materials supplied. What is the correct double entry to record this payment of cash to trade payables?

a. Debit cash £90,000, Credit purchases £75,000, Credit VAT £15,000.

Heading reference: Cash payments

b. Debit trade payables control account £90,000, Credit purchases £75,000, Credit VAT £15,000.

Heading reference: Cash payments

c. Debit cash £90,000, Credit trade payables control account £90,000.

Heading reference: Cash payments

d. Debit trade payables control account £90,000, Credit cash £90,000.

Heading reference: Cash payments

Type: multiple choice question

Title: Chapter 05 Question 26

26) Yu Limited records a VAT inclusive figure for sales of £105,000 for the month of August. All sales are made on credit and VAT is charged at the rate of 20% on the net sales value of each sale. What is the correct double entry to record these sales?

a. Debit trade receivables £126,000, Credit sales £105,000, Credit VAT £21,000.

Heading reference: Recording daily sales: the sales day book

Heading reference: The double entry to record sales listed in the sales day book

b. Debit cash £126,000, Credit sales £105,000, Credit VAT £21,000.

Heading reference: Recording daily sales: the sales day book

Heading reference: The double entry to record sales listed in the sales day book

c. Debit trade receivables £105,000, Credit sales £87,500, Credit VAT £17,500.

Heading reference: Recording daily sales: the sales day book

Heading reference: The double entry to record sales listed in the sales day book

d. Debit cash £105,000, Credit sales £87,500, Credit VAT £17,500.

Heading reference: Recording daily sales: the sales day book

Heading reference: The double entry to record sales listed in the sales day book

Type: true-false

Title: Chapter 05 Question 27

27) Debit interest payable, Credit cash is the correct double entry to record the payment of interest to the bank.

a. True

Heading reference: Cash payments

b. False

Heading reference: Cash payments

Type: true-false

Title: Chapter 05 Question 28

28) Debit wages and salaries expense account, Credit cash is the correct double entry to record the payment of PAYE and NIC to HM Revenue and Customs.

a. True

Heading reference: Cash payments

b. False

Heading reference: Cash payments

Type: multiple choice question

Title: Chapter 05 Question 29

29) Hina Limited records a VAT inclusive figure for sales returns of £9,600 for the month of October. All sales are made on credit and VAT is charged at the rate of 20% on the net sales value of each sale. What is the correct double entry to record these sale returns?

a. Debit trade receivables control account £9,600, Credit sales £8,000, Credit VAT £1,600.

Heading reference: Sales returns day book

b. Debit cash £9,600, Credit sales £8,000, Credit VAT £1,600.

Heading reference: Sales returns day book

c. Debit sales £8,000, Debit VAT £1,600, Credit cash £9,600.

Heading reference: Sales returns day book

d. Debit sales £8,000, Debit VAT £1,600, Credit trade receivables control account £9,600.

Heading reference: Sales returns day book

Type: multiple choice question

Title: Chapter 05 Question 30

30) Jiafan Limited’s production payroll for May shows deductions from wages for PAYE and employee’s NIC totalling £18,900. What is the correct double entry to record these PAYE and employee’s NIC deductions from wages?

a. Debit wages £18,900, Credit PAYE and NIC control £18,900.

Heading reference: The double entry to record the weekly/monthly payroll

b. Debit wages control £18,900, Credit PAYE and NIC control £18,900.

Heading reference: The double entry to record the weekly/monthly payroll

c. Debit cash £18,900, Credit PAYE and NIC control £18,900.

Heading reference: The double entry to record the weekly/monthly payroll

d. Debit PAYE and NIC control £18,900, Credit cash £18,900.

Heading reference: The double entry to record the weekly/monthly payroll

Type: true-false

Title: Chapter 05 Question 31

31) Debit wages control account, Credit PAYE and NIC control account is the double entry required to record employer’s NIC.

a. True

Heading reference: The double entry to record the weekly/monthly payroll

b. False

Heading reference: The double entry to record the weekly/monthly payroll

Type: multiple response question

Title: Chapter 05 Question 32

32) Which of the following statements accurately describe the sales ledger?

Please select all that apply.

Heading reference: The sales ledger, The sales ledger and cash receipts

a. The total of the balances on each individual sales ledger account added together at the end of each accounting period should be equal to the total balance carried forward at the end of the same accounting period on the trade receivables control account.

b. The function of the sales ledger is to exercise control over the amounts owed by individual customers.

c. The sales ledger is part of the double entry system.

d. Each individual customer’s sales ledger account is debited with the total sales invoice value for each invoice raised and credited with any credit notes issued and any cash received.

Type: true-false

Title: Chapter 05 Question 33

33) Discounts received are debited to each individual sales ledger account.

a. True

Heading reference:

Discounts allowed (early settlement discounts) The sales ledger

The sales ledger and cash receipts

Exercising control: the trade receivables control account

b. False

Heading reference:

Discounts allowed (early settlement discounts) The sales ledger

The sales ledger and cash receipts

Exercising control: the trade receivables control account

Type: true-false

Title: Chapter 05 Question 34

34) Maintaining a sales ledger account for each trade receivable enables entities to exercise very close control over their trade receivable assets.

a. True

Heading reference: The sales ledger, The sales ledger and cash receipts

b. False

Heading reference: The sales ledger, The sales ledger and cash receipts

Type: matching question

Title: Chapter 05 Question 35

35) The sales ledger records transactions with individual credit customers. Are the transactions listed below debits or credits in each individual customer’s sales ledger account?

Feedback: Sales ledger accounts for individual customers and the trade receivables control account post transactions to the same sides of the T account. Invoices for goods and services sold on credit are credited to the sales account and debited to the trade receivables control account so sales invoices are debits in each customer’s sales ledger account. Cash receipts decrease the amounts owed by individual customers so these are debited to cash and credited to the trade receivables control account and to each sales ledger account. Irrecoverable debts are reductions in the trade receivables asset, so when these arise they are debited to the irrecoverable debt expense account and credited to individual sales ledger accounts to reflect the decrease in the receivables asset. Cash refunds are rare, but do occur. If cash is refunded to a customer, this amount is credited to cash (the cash asset decreases) and debited to the trade receivables control account and to individual sales ledger accounts.

Page reference: 194-196, 198-199, 199-201

Heading reference:

The sales ledger

The sales ledger and cash receipts

Exercising control: the trade receivables control account

a. Cash refunds = Debit

b. Cash received = Credit

c. Irrecoverable debts = Credit

d. Sales invoices = Debit

Type: multiple response question

Title: Chapter 05 Question 36

36) Which of the following transactions would you expect to find on each purchase ledger account for each individual supplier?

Please select all that apply.

Heading reference:

The purchase ledger

The purchase ledger and cash payments

Exercising control: the trade payables control account

a. Purchase invoices for goods and services bought on credit.

b. Discounts allowed.

c. Cash paid.

d. Credit notes for purchase returns.

Type: matching question

Title: Chapter 05 Question 37

37) The purchase ledger records transactions with individual suppliers of goods and services. Are the transactions listed below debits or credits in each individual supplier’s purchase ledger account?

Feedback: Purchase ledger accounts for individual suppliers and the trade payables control account post transactions to the same sides of the T account. Invoices for goods and services purchased on credit are debited to the various expense accounts and credited to the trade payables control account so purchase invoices are credits in each supplier’s purchase ledger account. Conversely, credit notes for purchase returns are debits in the trade payables control account and credits in each expense account, so these credit notes are debited to individual suppliers’ purchase ledger accounts. Discounts received decrease the amounts owed to individual suppliers so these are debits to the trade payables control account and to each purchase ledger account. Cash refunds are rare, but do occur. When cash is received from a supplier to refund an overpayment, there is a debit to cash (the cash asset increases) and a credit to the trade payables control account and to individual purchase ledger accounts.

Page reference: 208-210, 213-214, 214-216

Heading reference:

The purchase ledger

The purchase ledger and cash payments

Exercising control: the trade payables control account

a. Credit notes = Debit

b. Purchase invoices = Credit

c. Discounts received = Debit

d. Cash refunds = Credit

Type: true-false

Title: Chapter 05 Question 38

38) Maintaining a separate purchase ledger account for each individual supplier = control.

a. True

Heading reference:

The purchase ledger

The purchase ledger and cash payments

Exercising control: the trade payables control account

b. False

Heading reference:

The purchase ledger

The purchase ledger and cash payments

Exercising control: the trade payables control account

Type: multiple response question

Title: Chapter 05 Question 39

39) VAT is a liability because:

Please select all that apply.

Heading reference:

Liabilities

Value Added Tax (VAT) The double entry to record sales listed in the sales day book

a. There is a present obligation arising from past events.

b. There is expected to be a transfer of an economic resource.

c. It represents a right that has the potential to produce economic benefits.

d. It can be measured in such a way that a faithful representation of its monetary value is achieved.

Type: true-false

Title: Chapter 05 Question 40

40) The total cost of paying employees is the gross wages and salaries expense.

a. True

Heading reference: The payroll system, The double entry to record the weekly/monthly payroll

b. False

Heading reference: The payroll system, The double entry to record the weekly/monthly payroll

Type: true-false

Title: Chapter 05 Question 41

41) When a sale is described as being VAT inclusive, this means that the VAT at a rate of 20% on that sale is calculated by dividing the VAT inclusive figure by 6.

a. True

Heading reference:

Sales

Value Added Tax (VAT) The double entry to record sales listed in the sales day book

b. False

Heading reference:

Sales

Value Added Tax (VAT) The double entry to record sales listed in the sales day book

Type: true-false

Title: Chapter 05 Question 42

42) PAYE and employee’s NIC increase the cost of employees’ wages and salaries.

a. True

Heading reference: The payroll system, The double entry to record the weekly/monthly payroll

b. False

Heading reference: The payroll system, The double entry to record the weekly/monthly payroll

Type: true-false

Title: Chapter 05 Question 43

43) Charging VAT on the sales of goods and services increases the total invoice amount but does not increase income.

a. True

Heading reference:

Sales

Value Added Tax (VAT) The double entry to record sales listed in the sales day book

b. False

Heading reference:

Sales

Value Added Tax (VAT) The double entry to record sales listed in the sales day book

Type: true-false

Title: Chapter 05 Question 44

44) The first step in preparing the bank reconciliation is to ensure that all the transactions recorded in the bank statement are also recorded in the cash book.

a. True

Heading reference: Exercising control: the bank reconciliation

b. False

Heading reference: Exercising control: the bank reconciliation

Type: true-false

Title: Chapter 05 Question 45

45) The bank balance in the bank statement + cash book receipts not yet recorded in the bank statement – cash book payments not yet recorded in the bank statement = the bank balance in the cash book.

a. True

Heading reference: Exercising control: the bank reconciliation

b. False

Heading reference: Exercising control: the bank reconciliation

Type: true-false

Title: Chapter 05 Question 46

46) The bank balance in the cash book + cash book receipts not yet recorded in the bank statement – cash book payments not yet recorded in the bank statement = the cash balance in the bank statement.

a. True

Heading reference: Exercising control: the bank reconciliation

b. False

Heading reference: Exercising control: the bank reconciliation

Type: multiple choice question

Title: Chapter 05 Question 47

47) Mansoor’s bank statement at 30 September shows a cash balance in the bank of £32,341.61. There is a deduction of £250 for bank charges in the bank statement but not yet recorded in Mansoor’s cash book. Cash book receipts paid into the bank but not yet recorded in the bank statement by 30 September total up to £2,494.24 while cash book payments that have not been listed as payments on the bank statement at 30 September add up to £5,875.40. What is the bank balance in Mansoor’s cash book at 30 September once any necessary adjustments to the bank balance in the cash book have been made?

a. £28,710.45

Heading reference: Exercising control: the bank reconciliation

b. £28,960.45

Heading reference: Exercising control: the bank reconciliation

c. £29,210.45

Heading reference: Exercising control: the bank reconciliation

d. £35,472.77

Heading reference: Exercising control: the bank reconciliation

Type: multiple choice question

Title: Chapter 05 Question 48

48) Zahid’s bank statement at 30 November shows a cash balance in the bank of £18,472.38. There is a receipt for £850.00 from a customer in the bank statement but not yet recorded in Zahid’s cash book. Cash book receipts paid into the bank but not yet recorded in the bank statement by 30 September total up to £4,321.67 while cash book payments that have not been listed as payments on the bank statement at 30 September add up to £8,733.41. What is the bank balance in Zahid’s cash book at 30 November once any necessary adjustments to the bank balance in the cash book have been made?

a. £13,210.64

Heading reference: Exercising control: the bank reconciliation

b. £14,060.64

Heading reference: Exercising control: the bank reconciliation

c. £14,910.64

Heading reference: Exercising control: the bank reconciliation

d. £23,734.12

Heading reference: Exercising control: the bank reconciliation

Type: multiple choice question

Title: Chapter 05 Question 49

49) Aurora’s bank statement at 30 June shows a cash balance in the bank of £42,489.79. There is a receipt for £1,050.00 from a customer in the bank statement which has not yet been recorded in Aurora’s cash book. Bank charges and interest totalling up to £814.57 have been deducted from the cash in the bank statement but have not yet been recorded in Aurora’s cash book. Cash book receipts paid into the bank but not yet recorded in the bank statement by 30 June total up to £914.32 while cash book payments that have not been listed as payments on the bank statement at 30 June add up to £675.43. What is the bank balance in Aurora’s cash book at 30 June once any necessary adjustments to the bank balance in the cash book have been made?

a. £42,486.33

Heading reference: Exercising control: the bank reconciliation

b. £42,493.25

Heading reference: Exercising control: the bank reconciliation

c. £42,728.68

Heading reference: Exercising control: the bank reconciliation

d. £42,964.11

Heading reference: Exercising control: the bank reconciliation

Type: multiple choice question

Title: Chapter 05 Question 50

50) The bank balance shown in Reza’s cash book at 31 July is £93,497.60. Receipts recorded in the cash book and paid into the bank which have not yet been recorded as receipts on the bank statement at 31 July total up to £8,741.90. Payments recorded in the cash book that have not yet been listed as payments on the bank statement at 31 July add up to £10,432.25. What is the bank balance on the bank statement at 31 July?

a. £91,807.25

Heading reference: Exercising control: the bank reconciliation

b. £93,497.60

Heading reference: Exercising control: the bank reconciliation

c. £95,187.95

Heading reference: Exercising control: the bank reconciliation

d. £112,671.75

Heading reference: Exercising control: the bank reconciliation

Type: multiple choice question

Title: Chapter 05 Question 51

51) The bank balance shown in Jay’s cash book at 31 October is £52,135.67. Receipts recorded in the cash book and paid into the bank, which have not yet been recorded as receipts on the bank statement at 31 October total up to £5,981.45. Payments recorded in the cash book that have not yet been listed as payments on the bank statement at 31 October add up to £4,621.40. The bank statement shows a direct payment to a supplier of £275.22 which has not been recorded in the cash book. What is the bank balance on the bank statement at 31 October once any necessary adjustments to the bank balance in the cash book have been made?

a. £50,500.40

Heading reference: Exercising control: the bank reconciliation

b. £50,775.62

Heading reference: Exercising control: the bank reconciliation

c. £51,050.84

Heading reference: Exercising control: the bank reconciliation

d. £53,220.50

Heading reference: Exercising control: the bank reconciliation

Type: multiple choice question

Title: Chapter 05 Question 52

52) The bank balance shown in Florian’s cash book at 31 December is £22,988.44. Receipts recorded in the cash book and paid into the bank, which have not yet been recorded as receipts on the bank statement at 31 December total up to £4,762.12. Payments recorded in the cash book that have not yet been listed as payments on the bank statement at 31 December add up to £8,269.74. The bank statement shows a direct receipt from a customer of £481.66 and a direct payment to a supplier of £212.33 neither of which has been recorded in the cash book. What is the bank balance on the bank statement at 31 December once any necessary adjustments to the bank balance in the cash book have been made?

a. £19,750.15

Heading reference: Exercising control: the bank reconciliation

b. £26,226.73

Heading reference: Exercising control: the bank reconciliation

c. £26,496.06

Heading reference: Exercising control: the bank reconciliation

d. £26,765.39

Heading reference: Exercising control: the bank reconciliation

Type: true-false

Title: Chapter 05 Question 53

53) If the total of the credit entries on the non-current asset disposals account is greater than the total of the debit entries, then a profit has been made on the disposal of non-current assets.

a. True

Heading reference: The nominal ledger, The double entry to record disposals of non-current assets

b. False

Heading reference: The nominal ledger, The double entry to record disposals of non-current assets

Type: multiple choice question

Title: Chapter 05 Question 54

54) During the financial year ended 30 September, Daria Limited sells a piece of plant and machinery. This piece of plant and machinery had originally cost £30,000 when it was acquired four years ago. What is the correct double entry to record the removal of the cost of this piece of plant and machinery from the books of account of Daria Limited?

a. Debit cash £30,000, Credit plant and machinery cost account £30,000.

Heading reference: The nominal ledger, The double entry to record disposals of non-current assets

b. Debit non-current asset disposals account £30,000, Credit cash £30,000.

Heading reference: The nominal ledger, The double entry to record disposals of non-current assets

c. Debit non-current asset disposals account £30,000, Credit plant and machinery cost account £30,000.

Heading reference: The nominal ledger, The double entry to record disposals of non-current assets

d. Debit plant and machinery cost account £30,000, Credit non-current asset disposals account £30,000.

Heading reference: The nominal ledger, The double entry to record disposals of non-current assets

Type: multiple choice question

Title: Chapter 05 Question 55

55) £50,000 cash is received on the disposal of property, plant and equipment. What is the correct double entry to record this cash receipt in the books of account of an organisation?

a. Debit cash £50,000, Credit property, plant and equipment cost account £50,000.

Heading reference: The nominal ledger, The double entry to record disposals of non-current assets

b. Debit non-current asset disposals account £50,000, Credit cash £50,000.

Heading reference: The nominal ledger, The double entry to record disposals of non-current assets

c. Debit non-current asset disposals account £50,000, Credit property, plant and equipment cost account £50,000.

Heading reference: The nominal ledger, The double entry to record disposals of non-current assets

d. Debit cash £50,000, Credit non-current asset disposals account £50,000.

Heading reference: The nominal ledger, The double entry to record disposals of non-current assets

Type: multiple choice question

Title: Chapter 05 Question 56

56) The accumulated depreciation at the date of sale of a non-current asset is £25,600. What is the correct double entry to record the removal of this accumulated depreciation on the disposal of the non-current asset in the books of account of an organisation?

a. Debit depreciation expense £25,600, Credit accumulated depreciation £25,600.

Heading reference: The nominal ledger, The double entry to record disposals of non-current assets

b. Debit accumulated depreciation £25,600, Credit non-current asset disposals account £25,600.

Heading reference: The nominal ledger, The double entry to record disposals of non-current assets

c. Debit non-current asset disposals account £25,600, Credit accumulated depreciation £25,600.

Heading reference: The nominal ledger, The double entry to record disposals of non-current assets

d. Debit accumulated depreciation £25,600, Credit depreciation expense £25,600.

Heading reference: The nominal ledger, The double entry to record disposals of non-current assets

Type: true-false

Title: Chapter 05 Question 57

57) A debit balance on the non-current asset disposals account means that a loss has been made on the disposal of non-current assets.

a. True

Heading reference: The nominal ledger, The double entry to record disposals of non-current assets

b. False

Heading reference: The nominal ledger, The double entry to record disposals of non-current assets

Type: multiple choice question

Title: Chapter 05 Question 58

58) Jess runs a market stall, selling stationery for cash. Her cash balance at 1 March 2020 was £250 and her cash balance at 28 February 2021 was £400. During the financial year to 28 February 2021, she paid £92,617 of cash into her business bank account and paid cash to her suppliers totalling up to £48,913. What were Jess’s sales of stationery in the financial year ended 28 February 2021?

a. £141,280

Heading reference: Finding missing figures by using T accounts: incomplete records

b. £141,380

Heading reference: Finding missing figures by using T accounts: incomplete records

c. £141,530

Heading reference: Finding missing figures by using T accounts: incomplete records

d. £141,680

Heading reference: Finding missing figures by using T accounts: incomplete records

Type: multiple choice question

Title: Chapter 05 Question 59

59) Michael buys and sells second hand goods for cash. During the financial year ended 31 October 2021, his total cash takings were £150,325. He paid £70,895 to sellers of goods and paid £50,240 into his bank account. His cash balance at 1 November 2020 was £495 and he had cash in the till of £525 at 31 October 2021. Michael takes money out of his cash takings to pay for his personal living expenses. What were Michael’s drawings in the financial year ended 31 October 2021?

a. £28,170

Heading reference: Finding missing figures by using T accounts: incomplete records

b. £29,160

Heading reference: Finding missing figures by using T accounts: incomplete records

c. £29,190

Heading reference: Finding missing figures by using T accounts: incomplete records

d. £29,220

Heading reference: Finding missing figures by using T accounts: incomplete records

Type: multiple choice question

Title: Chapter 05 Question 60

60) Fran runs a small retail store. During the financial year ended 30 September 2021, Fran’s store generated cash sales of £210,329. She paid £62,510 into the business bank account and withdrew £30,000 from cash for her personal living expenses. Cash at 1 October 2020 was £150 and cash at 30 September 2021 was £300. Fran pays cash for her purchases when these are delivered to the store. How much cash did Fran pay for purchases during the financial year ended 30 September 2021?

a. £117,369

Heading reference: Finding missing figures by using T accounts: incomplete records

b. £117,669

Heading reference: Finding missing figures by using T accounts: incomplete records

c. £117,819

Heading reference: Finding missing figures by using T accounts: incomplete records

d. £117,969

Heading reference: Finding missing figures by using T accounts: incomplete records

Type: multiple choice question

Title: Chapter 05 Question 61

61) What type of error results in two or more errors cancelling each other out?

a. A complete reversal of entries.

Heading reference: Potential errors

b. An error of original entry.

Heading reference: Potential errors

c. A compensating error.

Heading reference: Potential errors

d. An error of principle.

Heading reference: Potential errors

Type: multiple choice question

Title: Chapter 05 Question 62

62) An error of commission arises when:

a. A transaction is completely missed out.

Heading reference: Potential errors

b. A transaction is posted to the correct type of account (income, expense, asset, liability or capital) but the wrong account is debited or credited.

Heading reference: Potential errors

c. Two or more errors cancel each other out.

Heading reference: Potential errors

d. Transactions are posted to the correct accounts, but the debit and credit entries are reversed.

Heading reference: Potential errors

Type: multiple choice question

Title: Chapter 05 Question 63

63) An error of principle arises when:

a. The correct accounts are debited and credited, but the wrong amount is recorded.

Heading reference: Potential errors

b. Transactions are posted to the correct accounts, but the debit and credit entries are reversed.

Heading reference: Potential errors

c. A transaction is completely missed out.

Heading reference: Potential errors

d. A transaction is posted to the wrong type of account.

Heading reference: Potential errors

Type: multiple choice question

Title: Chapter 05 Question 64

64) Which one of the following is not a complete reversal of entries error?

a. Debit trade payables, Credit cash with cash payments to trade payables.

Heading reference: Potential errors

b. Debit trade receivables, Credit cash with cash received from trade receivables.

Heading reference: Potential errors

c. Debit VAT, Debit sales, Credit trade receivables with the daily credit sales total.

Heading reference: Potential errors

d. Debit irrecoverable debts, Credit cash with amounts recovered from irrecoverable debts previously charged as an expense.

Heading reference: Potential errors

Type: multiple choice question

Title: Chapter 05 Question 65

65) An error of omission arises when:

a. Two or more errors cancel each other out.

Heading reference: Potential errors

b. A transaction is posted to the correct type of account (income, expense, asset, liability or capital) but the wrong account is debited or credited.

Heading reference: Potential errors

c. A transaction is completely missed out.

Heading reference: Potential errors

d. A transaction is posted to the wrong type of account.

Heading reference: Potential errors

Type: multiple choice question

Title: Chapter 05 Question 66

66) An error of original entry arises when:

a. A transaction is completely missed out.

Heading reference: Potential errors

b. A transaction is posted to the wrong type of account.

Heading reference: Potential errors

c. Transactions are posted to the correct accounts, but the debit and credit entries are reversed.

Heading reference: Potential errors

d. The correct accounts are debited and credited, but the wrong amount is recorded.

Heading reference: Potential errors

Type: multiple choice question

Title: Chapter 05 Question 67

67) Farzana Limited makes credit sales of £225,324 (including VAT of £37,554) in September. The double entry to record these sales was Debit trade receivables £252,324, Credit Sales £210,270, Credit VAT £42,054. What is the journal entry required to correct this error of original entry?

a. Debit sales £27,000, Credit trade receivables £27,000.

Heading reference: Potential errors, Journals

b. Debit trade receivables £27,000, Credit sales £27,000.

Heading reference: Potential errors, Journals

c. Debit sales £22,500, Debit VAT £4,500, Credit trade receivables £27,000.

Heading reference: Potential errors, Journals

d. Debit trade receivables £27,000, Credit sales £22,500, Credit VAT £4,500.

Heading reference: Potential errors, Journals

Type: multiple choice question

Title: Chapter 05 Question 68

68) Marwan Limited made sales net of VAT of £90,000 in May. These net sales were posted in error to the credit side of the purchases account. What is the journal entry required to correct this error of principle?

a. Debit sales £90,000, Credit purchases £90,000.

Heading reference: Potential errors, Journals

b. Debit purchases £90,000, Credit sales £90,000.

Heading reference: Potential errors, Journals

c. Debit sales £180,000, Credit purchases £180,000.

Heading reference: Potential errors, Journals

d. Debit purchases £180,000, Credit sales £180,000.

Heading reference: Potential errors, Journals

Type: multiple choice question

Title: Chapter 05 Question 69

69) Fortuna Limited received an invoice for purchases of goods for resale of £20,000. This invoice was debited to the salaries expense account and credited to trade payables. What is the journal entry required to correct this error of commission?

a. Debit purchases £20,000, Credit salaries £20,000.

Heading reference: Potential errors, Journals

b. Debit salaries £20,000, Credit purchases £20,000.

Heading reference: Potential errors, Journals

c. Debit trade payables £20,000, Credit salaries £20,000.

Heading reference: Potential errors, Journals

d. Debit purchases £20,000, Credit trade payables £20,000.

Heading reference: Potential errors, Journals

Type: multiple choice question

Title: Chapter 05 Question 70

70) Errors Limited made credit sales of £12,000 inclusive of VAT. The double entry to records these sales was Debit sales £10,000, Debit VAT £2,000, Credit trade receivables £12,000. What is the journal entry required to correct this error?

a. Debit trade receivables £12,000, Credit sales £10,000, Credit VAT £2,000.

Heading reference:

Potential errors

The trial balance does not balance

Journals

b. Debit cash £12,000, Credit sales £10,000, Credit VAT £2,000.

Heading reference:

Potential errors

The trial balance does not balance

Journals

c. Debit trade receivables £24,000, Credit sales £20,000, Credit VAT £4,000.

Heading reference:

Potential errors

The trial balance does not balance

Journals

d. Debit cash £24,000, Credit sales £20,000, Credit VAT £4,000.

Heading reference:

Potential errors

The trial balance does not balance

Journals

Type: multiple choice question

Title: Chapter 05 Question 71

71) CDC Limited buys goods from and sells goods to DAD Limited. CDC Limited owes DAD Limited £8,400, while DAD owes CDC Limited £12,600. The two companies agree to net off the amounts owed by each company to leave an amount owing by DAD Limited to CDC Limited of £4,200 (£12,600 – £8,400). What is the correct double entry in the books of CDC Limited to record this netting off of £8,400 between the two companies?

a. Debit sales £8,400, Credit purchases £8,400.

Heading reference: Exercising control: the trade receivable control account

Exercising control: the trade payables control account

b. Debit trade receivables control account £8,400, Credit trade payables control account £8,400

Heading reference: Exercising control: the trade receivable control account

Exercising control: the trade payables control account

c. Debit purchases £8,400, Credit sales £8,400

Heading reference: Exercising control: the trade receivable control account

Exercising control: the trade payables control account

d. Debit trade payables control account £8,400, Credit trade receivables control account £8,400.

Heading reference: Exercising control: the trade receivable control account

Exercising control: the trade payables control account

Type: multiple response question

Title: Chapter 05 Question 72

72) When posting cash receipts in the cash book to the nominal ledger, the double entry increases the balance on the cash account and:

Please select all that apply.

Heading reference: The T account

Cash received

Cash payments

a. Increases the balance on asset accounts

b. Increases the balance on income accounts

c. Increases the balance on capital accounts

d. Increases the balance on liability accounts

Type: multiple choice question

Title: Chapter 05 Question 73

73) Greg Limited sells a piece of property, plant and equipment. This non-current asset had originally cost £64,000. £42,000 accumulated depreciation had been charged on this asset by the date of disposal. The sale of this non-current asset generated a profit on disposal of £3,000. How much cash was received from the disposal of this piece of property plant and equipment?

a. £19,000

Heading reference: The double entry to record disposals of non-current assets

b. £22,000

Heading reference: The double entry to record disposals of non-current assets

c. £25,000

Heading reference: The double entry to record disposals of non-current assets

d. £39,000

Heading reference: The double entry to record disposals of non-current assets

Type: multiple choice question

Title: Chapter 05 Question 74

74) Anna Limited sells a piece of property, plant and equipment for £15,000. £22,500 accumulated depreciation had been charged on this asset by the date of disposal. The sale of this non-current asset resulted in a loss on disposal of £1,500. What was the original cost of the piece of property plant and equipment disposed of?

a. £24,000

Heading reference: The double entry to record disposals of non-current assets

b. £36,000

Heading reference: The double entry to record disposals of non-current assets

c. £37,500

Heading reference: The double entry to record disposals of non-current assets

d. £39,000

Heading reference: The double entry to record disposals of non-current assets

Type: multiple choice question

Title: Chapter 05 Question 75

75) Ola Limited sells a piece of property, plant and equipment for £21,000. The original cost of this asset was £102,000 and cash received from the sale was £21,000. The sale of this non-current asset generated a profit on disposal of £8,000. What was the accumulated depreciation that had been charged on this piece of property plant and equipment by the date of disposal?

a. £73,000

Heading reference: The double entry to record disposals of non-current assets

b. £89,000

Heading reference: The double entry to record disposals of non-current assets

c. £115,000

Heading reference: The double entry to record disposals of non-current assets

d. £131,000

Heading reference: The double entry to record disposals of non-current assets