Tag: Financial Accounting

Peri’s bookkeeper made the following mistakes:

1  Discount allowed £3,840 was credited to discounts received account.

2  Discount received £2,960 was debited to discounts allowed account.

3.  Discounts were otherwise correctly recorded.

Which of the following journal entries will correct the errors?

Select ONE answer:

1. Debit Discount allowed £7,680, Credit Discount received £S,920, Credit Suspense account, £1,760
2. Debit Discount allowed £880, Debit Discount received £880, Credit Suspense account £1,760
3. Debit Discount allowed £6,800, Credit Discount received £6,800
4. Debit Discount allowed £3,840, Credit Discount received £2,960, Credit Suspense account £880

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. Notcorrect
2. Correct – Start by posting the adjustment in full: Debit £ Discount allowed 3,840 Discount received 3,840 Credit £ Discount allowed 2,960 Discount received 2,960 + Suspense account 1,760
3. Not correct
4. Not correct

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

A bank statement on 31 October 2017 showed an overdraft of £800.

On reconciling the bank statement, it was discovered that a cheque drawn for £80 had not been presented for payment, and that a cheque for £130 from a customer had been dishonoured on 30 October 2017, but this had not yet been reflected in the cash book.

The correct bank balance to be shown in the statement of financial position at 31 October 2017 is?

Select ONE answer:

1. £1,010 overdrawn
2. £880 overdrawn
3. £750 overdrawn
4. £720 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 2

1. Notcorrect
2. Correct – Balance per bank statement £(800) – Unpresented cheque (80) – Doubtful cheque £0 = £(880)
3. Not correct
4. Not correct

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

Which TWO of the following statements about bank reconciliations are correct?

A  In preparing a bank reconciliation, unpresented cheques must be deducted from a balance of cash at bank shown in the bank statement.

B  A cheque from a customer paid into the bank but dishonoured must be corrected by making a debit entry in the cash book.

C  An error by the bank must be corrected by an entry in the cash book.

D  An overdraft is a debit balance in the bank statement.

E  Bank charges that only appear on the bank statement must be debited in the cash book.

Select ONE answer:

1. A&B
2. A&C
3. A&D
4. A&E

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 – A&D – Note that bank charges in the bank statement would be credited to the cash book, not debited
4. Not correct

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

The following information relates to a bank reconciliation.

The balance in the cash book before taking the items below into account was £8,970 overdrawn.

• Bank charges of £550 on the bank statement have not been entered in the cash book.
• The bank has credited the account in error with £425 which belongs to another customer.
• Cheque payments totalling £3,275 have been entered in the cash book but have not been presented for payment.
• Cheques totalling £5,380 have been correctly entered on the debit side of the cash book but have not been paid in at the bank.

What was the overdrawn balance as shown by the bank statement?

Select ONE answer:

1. £6,990
2. £10,650
3. £11,200
4. £11,625

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 – Cash book balance b/f £(8,970) – Bank charges  £(550) = Corrected cash book £(9,520) + Error £425 + Unpresented cheques £3,275 – Uncredited lodgements £(5,380) = Bank statement balance £(11,200)
4. Not correct

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

Where a transaction is entered into the correct ledger accounts, but the wrong amount is used, the error is known as an error of?

Select ONE answer:

1. Omission
2. Original entry
3. Commission
4. Principle

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

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