Month: August 2019

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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A wholesaler sold 55 items to a retailer at a price of £20 each, less 20% trade discount.

The retailer subsequently returned twelve of the items.

As a result of this, the retailer should be sent a credit note for …

Select ONE answer:

1. £172
2. £192
3. £240
4. £288

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

1. Incorrect
2. Correct – Cost of items returned = (£20 less 20%) each = £16 each As 12 items were returned, the total cost of all of the items returned is £16 each x 12 = £192
3. Incorrect
4. Incorrect

 

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The data entered in the Returns Outwards Journal comes from . . .

Select ONE answer:

1. invoices sent to customers.
2. invoices received from suppliers.
3. credit notes sent to customers.
4. credit notes received from suppliers.

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

1. Incorrect – Invoices sent to customers are recorded in the sales journal.
2. Incorrect – Invoices received from suppliers are recorded in the purchases journal.
3. Incorrect – Credit notes sent to customers are recorded in the returns inwards journal.
4. Correct

 

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Credit notes issued by a firm should initially be recorded in . . .

Select ONE answer:

1. the sales account in its nominal (general) ledger.
2. the returns inwards account in its nominal (general) ledger.
3. the returns inwards journal.
4. the returns outwards journal.

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

1. Incorrect – Credit notes should first be entered in the returns inwards journal, the total of which is posted to the returns inwards account, not the sales account. Only sales (the total of the sales journal) should be recorded in the sales account. Sales returns (returns inwards) should not be netted off against sales in the sales account.
2. Incorrect – The total of credit notes issued by a firm will eventually end up in its returns inwards account – but only after being posted from the returns inwards journal.
3. Correct
4. Incorrect – It is credit notes received by a firm which are initially recorded in the returns outwards journal.

 

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A firm which purchased five items on credit at a cost of £80 each, less 25% trade discount, is entitled to deduct a cash discount of 5% if it pays for them, in full, within 14 days of the invoice date.

If the firm pays within the above two-week period, it will have to pay:

Select ONE answer:

1. £260
2. £280
3. £285
4. None of the above.

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

1. Incorrect
2. Incorrect
3. Correct – 5 items @ £80 each = £400 Less 25% trade discount = -£100 Less 5% cash discount (5% of the net cost of £300) = -£15 Equals = £285
4. Incorrect

 

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