Accounting Multiple Choice Question – 26 August 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Accounting

The total of all credit notes received by a firm during a particular period and recorded in its Returns Outwards Journal for that period should be posted to . . .

Select ONE answer:

  1. the credit side of the returns outwards account in its nominal (general) ledger.
  2. the debit side of the returns outwards account in its nominal (general) ledger.
  3. the credit side of the purchases account in its nominal (general) ledger.
  4. the debit side of the purchases account in its nominal (general) ledger.

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

  1. Correct
  2. Incorrect – Returns outwards (goods going back to suppliers) are the opposite of purchases (goods coming in from suppliers). As purchases are recorded as a debit in the purchases account in the double-entry accounting records, returns outwards must be recorded as a credit.
  3. Incorrect – Purchases returns (returns outwards) should not be offset against purchases in the purchases account, as showing the two amounts separately provides better information about what has actually happened.
  4. Incorrect – As per answer B above, returns outwards must be recorded as a credit and, as per answer C above, returns outwards should not be recorded in the purchases account.

 

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Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor

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