Accounting Multiple Choice Question – 21 February 2020

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

If cheques totalling £12,000 sent by a firm to its creditors during an accounting period have not been presented at a bank by the end of that period, then, at that date, on the basis of the above information only . . .

Select ONE answer:

  1. the firm is owed £12,000 by its bank.
  2. the bank balance shown in the firm’s nominal (general) ledger is overstated by £12,000.
  3. the balance shown on the firm’s bank statement is £12,000 greater than the amount the firm has available to it from that bank account.
  4. the firm owes its creditors £12,000 more than the amount which will be shown for creditors in its balance sheet.

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. Not correct
  2. Not correct
  3. Correct – Once the cheques are written, the money is no longer available to the firm. However, according to the bank statement, this money is still available as it is not yet recorded on the bank statement.
  4. Not correct

 

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