Chapter 5 Self-test questions

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. The sales day book of YC Limited for 25 June shows sales of £32,340 and VAT charged on those sales of £6,468. All sales of the business are made on credit to customers. What is the correct double entry required to record these transactions in the nominal ledger of YC Limited?

Debit sales £32,340, Debit VAT £6,468, Credit cash £38,808 correct incorrect

Debit cash £38,808, Credit sales £32,340, Credit VAT £6,468 correct incorrect

Debit sales £32,340, Debit VAT £6,468, Credit trade receivables £38,808 correct incorrect

Debit trade receivables £38,808, Credit sales £32,340, Credit VAT £6,468 correct incorrect

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. Which of the following are books of prime entry? Please select all that apply.

Sales day book correct incorrect

Purchase returns day book correct incorrect

Nominal ledger correct incorrect

Petty cash book correct incorrect

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. Discounts received, cash paid and purchase returns are all _________ entries in the trade payables control account.

Your response

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. The VAT inclusive value of credit sales and credit purchase invoices is posted to the trade receivables and trade payables control accounts from the sales and purchase day books.

True correct incorrect

False correct incorrect

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. Match the error and the correct description of each error.

Compensating error

These errors arise when two or more errors cancel each other out. These errors arise when a transaction is posted to the wrong type of account. These errors arise when a transaction is posted to the correct type of account (income, expense, asset, liability or capital) but the wrong account is debited or credited. These errors arise when the correct accounts are debited and credited, but the wrong amount is recorded.

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Error of principle

These errors arise when a transaction is posted to the correct type of account (income, expense, asset, liability or capital) but the wrong account is debited or credited. These errors arise when two or more errors cancel each other out. These errors arise when the correct accounts are debited and credited, but the wrong amount is recorded. These errors arise when a transaction is posted to the wrong type of account.

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Error of original entry

These errors arise when a transaction is posted to the correct type of account (income, expense, asset, liability or capital) but the wrong account is debited or credited. These errors arise when two or more errors cancel each other out. These errors arise when a transaction is posted to the wrong type of account. These errors arise when the correct accounts are debited and credited, but the wrong amount is recorded.

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Error of commission

These errors arise when two or more errors cancel each other out. These errors arise when a transaction is posted to the wrong type of account. These errors arise when the correct accounts are debited and credited, but the wrong amount is recorded. These errors arise when a transaction is posted to the correct type of account (income, expense, asset, liability or capital) but the wrong account is debited or credited.

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. Mehmood's bank statement at 31 July shows a cash balance in the bank of £15,875.42. Cash paid into the bank and recorded in the cash book but not yet recorded in the bank statement by 31 July totalled up to £6,322.68 while payments listed in the cash book that have not yet been deducted from the cash in the bank at 31 July add up to £4,995.40. What is the bank balance according to Mehmood's cash book at 31 July?

£14,548.14 correct incorrect

£15,875.42 correct incorrect

£17,202.70 correct incorrect

£27,193.50 correct incorrect

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. Which of the following would be the double entries required to record disposals of non-current assets in the books of account of an organisation? Please select all that apply.

Debit cash, credit non-current assets cost account correct incorrect

Debit accumulated depreciation, credit non-current assets disposals account correct incorrect

Debit non-current assets disposals account, credit non-current assets cost account correct incorrect

Debit cash, credit non-current assets disposals account correct incorrect

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. PAYE and employees' NIC deductions are debited to the ____________ account.

Your response

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. In the payroll system, gross pay is the amount paid over to employees at the end of each week or each month.

True correct incorrect

False correct incorrect

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. Mary is a market trader, selling fruit and vegetables for cash. She has not kept any records of the cash received from sales in the financial year ended 30 November 2021. Her cash in the till at 1 December 2020 was £450 and the cash at the end of trading on 30 November 2021 was £229. Her bank statements show that she paid £100,717 of cash into the bank during the financial year and she has expense invoices paid in cash which total up to £78,612. What were Mary's cash sales for the financial year ended 30 November 2021?

£178,650 correct incorrect

£179,108 correct incorrect

£179,550 correct incorrect

£180,008 correct incorrect

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. Debit cash, credit VAT account is the correct double entry to record a repayment of VAT to an organisation.

True correct incorrect

False correct incorrect

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. When posting cash payments in the cash book to the nominal ledger, the effect of such cash payments is to decrease the balance on the cash account and to:
Please select all that apply.

Reduce the balance on liability accounts correct incorrect

Increase the balance on asset accounts correct incorrect

Increase the balance on capital accounts correct incorrect

Increase the balance on expense accounts correct incorrect

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. The non-current asset disposals account can be both a debit and a credit account.

True correct incorrect

False correct incorrect

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. Which one of the following is not a function of the sales day book?

To record the amounts due from each individual customer. correct incorrect

To record daily sales of goods and services. correct incorrect

To record the total amount, the net goods and services selling price and the VAT amount on each sales invoice. correct incorrect

To maintain the book of prime entry for sales of goods and services. correct incorrect

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. JTB Limited trades on credit terms with its customers. At 1 February, JTB Limited's trade receivables were £22,599. During February, the company made VAT inclusive sales of £174,768, received cash from customers of £172,443 and was notified that one trade receivable would be unable to pay the £4,392 owed to the company due to insolvency. What are JTB Limited's trade receivables at the end of February?

£15,882 correct incorrect

£20,532 correct incorrect

£24,924 correct incorrect

£29,316 correct incorrect