Month: September 2018

Which of the following double-entries is the correct way to record that goods returned to XYZ Ltd, who is one of your suppliers?

Select ONE answer:

1. Account to Debit Sales / Account to Credit XYZ Ltd
2. Account to Debit Returns Inwards / Account to Credit XYZ Ltd
3. Account to Debit Cash / Account to Credit Purchases
4. Account to Debit XYZ Ltd / Account to Credit Returns Outwards

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Accounting KS5 classes.

The answer is 4 – As XYZ Ltd is a creditor, then their account is a liability to the business. As a result of returning goods to XYZ Ltd, they are now owed less money. This reduction in a liability has to be recorded by a debit entry. Entries in the returns outwards account are always on the credit side.

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In the accounts of ABC Ltd, which of the following double-entries is the correct way to record that goods have been purchased from XYZ Ltd and paid for immediately in cash?

Select ONE answer:

1. Account to Debit Sales / Account to Credit ABC Ltd
2. Account to Debit Returns Inwards / Account to Credit XYZ Ltd
3. Account to Debit Purchases / Account to Credit Cash
4. Account to Debit XYZ Ltd / Account to Credit Returns Inwards

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Accounting KS5 classes.

The answer is 3 – Entries in the purchase account are always made on the debit side. Having paid cash to XYZ Ltd, ABC Ltd has now less cash on hand. This reduction in this asset has to be recorded as a credit entry in the cash account.

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In the accounts of ABC Ltd, which of the following double-entries is the correct way to record that goods have been returned by XYZ Ltd which were originally sold to them on credit?

Select ONE answer:

1. Account to Debit Sales / Account to Credit ABC Ltd
2. Account to Debit Returns Inwards / Account to Credit XYZ Ltd
3. Account to Debit Sales / Account to Credit XYZ Ltd
4. Account to Debit XYZ Ltd / Account to Credit Returns Inwards

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Accounting KS5 classes.

The answer is 2 – Having returned goods, XYZ Ltd, who is a credit customer or debtor, now owes less previously than they did to ABC Ltd. As the amount owed by a debtor is an asset and an asset account has to be credited to reduce it and thus XYZ Ltd’s account has to be credited. Returns inwards, being the opposite of sales (which is always credited) has to be debited.

This work is licensed under a Creative Commons Attribution 4.0 International License.

Which of the following double-entries is the correct way to record the sale of goods on credit to a customer of the business?

Select ONE answer:

1. Account to Debit Customer Account / Account to Credit Sales
2. Account to Debit Returns Inwards / Account to Credit Customer Account
3. Account to Debit Cash / Account to Credit Purchases
4. Account to Debit Customer Account / Account to Credit Returns Inwards

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Accounting KS5 classes.

The answer is 1 – This is the correct double entry record when a business sells goods on credit to a customer as this a debtor account which is an asset.  As a result of selling the good to the customer, they now owe more money than they previously did, and thus to increase the amount in the asset account, that account must be debited.

This work is licensed under a Creative Commons Attribution 4.0 International License.

A newsagent’s total sales will normally include the value of the following items?

Select ONE answer:

1. Any office furniture that is sold by them.
2. Any office furniture sold by them, but only if these items are sold on credit.
3. Any office furniture sold by them, but only if these items are sold for cash.
4. None of the above.

Explain what is meant by selling a good on credit?:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Accounting KS5 classes.

The answer is 4 – In accounting, the meaning of the term “sales” is limited to the sale of goods originally acquired for the purpose of being resold whether this is for cash or credit. In the case of a newsagent, it is highly unlikely that office furniture would have been acquired for the purpose of being resold in the normal course of business.

This work is licensed under a Creative Commons Attribution 4.0 International License.