Tag: A-Level

In a sales ledger control account, bad debts written off should be shown as . . .

Select ONE answer:

1. a debit.
2. a balance carried down.
3. a credit.
4. both a debit and a credit.

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 – Debtors becoming bad debts means that less will now be collected from them than would otherwise have been the case. Therefore, the value of debtors (an asset) has been reduced. A credit entry is required to record a decrease in an asset account.
4. Not correct

 

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

The total amount of money received from debtors, in addition to being recorded in the bank account, should be . . .

Select ONE answer:

1. credited to the sales account.
2. credited to the debtors’ control account.
3. debited to the debtors’ control account.
4. debited to the sales account.

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. Not correct
2. Correct – The twin effects of receiving money from debtors are that the bank balance will be increased when the money is lodged and the debtors owe less than they previously did. To increase an asset account (bank), that account must be debited (therefore, debit the bank account) and to decrease an asset account (debtors), that account must be credited (therefore credit the debtors’ control account).
3. Not correct
4. Not correct

 

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

At 31 May, according to John Smith’s creditors’ ledger, he owed Alpha Ltd, one of his suppliers, £1,518.

The balance shown on the statement he received from Alpha Ltd did not agree with this. A purchase by John Smith from Alpha Ltd of goods costing £520 was recorded on Alpha’s statement but not in John Smith’s ledger.

A cheque for £250 paid to Alpha Ltd was correctly recorded in John Smith’s ledger but was not shown on the statement from Alpha Ltd.

The balance on the statement from Alpha Ltd was?

Select ONE answer:

1. £748
2. £1,248
3. £1,788
4. £2,288

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 3

1. Not correct
2. Not Correct
3. Correct
   Balance per John Smith’s ledger £1,518
   Invoice not yet recorded in the ledger £520
   The amount owed by John Smith to Alpha Ltd £2,038
   Cheque paid to Alpha Ltd. not yet recorded by Alpha Ltd -£250
   The balance shown on the statement from Alpha Ltd £1,788
4. Not correct

 

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

At 31 December the balance on a firm’s bank statement was £1,000 overdrawn. At the same date, outstanding cheques amounted to £3,000, outstanding lodgements amounted to £5,000 and there was a dishonoured cheque from a customer of £500 entered on the firm’s bank statement but not yet entered in the bank account in the firm’s ledger.

The balance brought down on the bank account in the firm’s ledger was?

Select ONE answer:

1. £500 debit
2. £500 credit
3. £1,000 credit
4. £1,500 debit

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
   Computation of Correct Ledger Balance as at 31 December
   Balance per bank statement -£1,000
   Outstanding lodgements £5,000
   Cheques not presented -£3,000
   Balance per ledger (corrected) £1,000

   However, as the dishonoured cheque has not yet been entered in the ledger, the actual ledger balance exceeds the correct ledger balance by £500. Therefore, the actual ledger balance is £500 debit.

2. Not Correct
3. Not correct
4. Not correct

 

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

On 31 March the balance brought down on a firm’s bank account in its ledger was £3,600, credit.

At the same date, outstanding cheques amounted to £1,400 and outstanding lodgements amounted to £2,000. A cheque for £500, received from a debtor, was subsequently dishonoured. The receipt of the cheque had been correctly recorded but no entry has yet been made in the accounting records in respect of it being dishonoured.

On the basis of the above information, the balance on the firm’s bank statement at 31 March was:

Select ONE answer:

1. £3,500 credit
2. £3,700 credit
3. £4,200 overdrawn
4. £4,700 overdrawn

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
2. Not correct
3. Not correct
4. Correct

Correction of Ledger
Bank
Dr Balance c/d £4,100
Cr Balance b/d £3,600
Cr Dishonoured cheque £500
Totals £4,100

Bank Reconciliation Statement as at 31 March
Balance per ledger (corrected) -£4,100
Outstanding lodgements -£2,000
Cheques not presented +£1,400
Balance per bank statement £4,700

 

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