Day: March 1, 2020

Over the course of an accounting period, the amount owed to a firm by its debtors increased by £50,000. During the period, credit sales totaled £230,000 and money received from debtors amounted to £190,000. The £10,000 apparent discrepancy could be due to unrecorded . . .

Select ONE answer:

1. discount allowed
2. bad debts
3. sales returns
4. credit sales

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. Not correct – Recording discount allowed not previously recorded would reduce the balance on the debtor control account.
2. Not correct – Recording bad debts not previously recorded would reduce the balance on the debtor control account.
3. Not correct -Recording sales returns not previously recorded would reduce the balance on the debtor control account.
4. Correct – Based solely on the total of the credit sales (£230,000) and the total amount received from debtors (£190,000) it would appear that debtors increased by £40,000. However, the actual increase is £50,000. Therefore, the correct solution is the one which, when corrected, would increase the balance on the debtor control account.

 

 

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