AAT LEVEL 3 ADVANCED CERTIFICATE FOR ACCOUNTING TECHNICIANS (QCF) ACCOUNTS PREPARATION I & II TUTOR ASSESSED TEST 1 The

objective of this test is to give you the opportunity to demonstrate competence by giving you further practice in the learning outcomes and assessment criteria within Accounts Preparation. The questions set relate to the study material covered in Book 1 of the Accounts Preparation I & II course materials.. It is recommended that you attempt this test without making reference to your course material (Book 1).

SECTION ONE The following are multiple choice questions. You are required to select your answer by ticking () the box next to the most appropriate answer. Question 1 Which of the following concepts distinguishes and separates the business from its owner(s)?
Historic cost concept Dual aspect concept Money measurement concept Business entity concept

Question 2 A credit balance on the owners capital account is equal to?

The value of the fixed assets of the business The total of the cash and bank account balances of the business The difference between the assets and external liabilities of the business The amount the owner owes the business

Question 3 Which of the following concepts is regarded as being the essence of the double entry system of bookkeeping?
Historic cost concept Dual aspect concept Money measurement concept Business entity concept

Question 4 The capital of a business is 50,000; its liabilities are 25,000. Its assets therefore would have a value of?
25,000 100,000 75,000 50,000

Question 5 Which of the following ledger accounts are likely to carry a credit balance?
Sales account and cash account Drawings account and cash account Sales account and rent received account Wages account and vehicle expense account

Question 6

Which of the following represents a debit balance on a ledger account?

An amount owing to the business A liability or income A liability or an expense An asset or income

Question 7 A business keeps double entry records and uses a sub-divided bookkeeping system. Double entry takes place in the General Ledger and the Cash Book. The personal accounts of customers and suppliers are kept as memorandum accounts. A Sales Ledger Control Account and Purchase Ledger Control Account are kept in the General Ledger. The business keeps Day Books for the purpose of listing details from invoices and credit notes issued and received. A Journal is kept and used in conjunction with the main books. Answer each of the following questions which are based on the information provided above: (i) The personal accounts of credit customers are kept in the :
Sales day book Purchase ledger General ledger Sales ledger

(ii) The sales ledger control account is kept in the:


General ledger Sales ledger Sales day book Cash book

(iii) The drawings account is kept in the:

Journal Cash book General ledger Purchase ledger

(iv) The sales account is kept in the:

General ledger

(v) The personal accounts of suppliers are kept Purchase ledger in the:
Cash book

Purchase ledger Sales ledger Purchase day book General ledger

Sales ledger

Question 8 In a sales ledger control account, which of the following consists only of the items that would be posted to the credit side of the account?
Sales on credit, bad debts written off, settlement discounts allowed to trade debtors

Sales on credit, payments received from trade debtors, dishonoured cheques Bad debts written off, payments received from customers, sales on credit, sales returns, bad debts written off Sales returns, payments received from trade debtors, settlement discounts allowed to trade debtors, bad debts written off

Question 9 In a purchase ledger control account, which of the following consists only of items that would be posted to the debit side of the account?
Purchases on credit, payments made to trade creditors, settlement discounts received from trade creditors Purchase returns, payments made to trade creditors, settlement discounts received from trade creditors Payments made to trade creditors, settlement discounts received from trade creditors, purchases on credit Purchases on credit, cash purchases, settlement discounts received from

Question 10 Which of the following items would not be posted to the sales ledger control account?
Cash sales Sales on credit Bad debts written off Credit customer cheque dishonoured

Question 11 Which of the following is the source for posting bad debts written off to the sales ledger control account?
Sales day book

Cash book Purchase day book Journal

Question 12 Which of the following describes the process for making entries from the sales day book to accounts in the general ledger?
Debit sales, debit VAT, credit sales ledger control account Credit sales, debit VAT, debit sales ledger control account Credit sales, credit VAT, debit sales ledger control account Debit sales, credit VAT, debit sales ledger control account

Question 13 Which of the following describes the process for making entries from the purchase returns day book to accounts in the subsidiary purchase ledger?

Credit each total credit note amount to each supplier personal account Debit each total credit note amount to each supplier personal account Debit purchase returns, debit VAT, credit purchase ledger control Credit purchase returns, credit VAT, debit purchase ledger control

Question 14 Which of the following accounts would be found in the subsidiary sales ledger?
Jackson & Co a credit customer B & K Trading Ltd a credit supplier Sales Sales returns

Question 15 In totalling the purchase day book an error was made resulting in the total invoice column being overstated by 1,000. Assuming that no other errors have been made the effect of this error will be that the balance on the purchase ledger control account is:


Equal to the total of creditor personal account balances in the subsidiary purchase ledger 1,000 less than the total of creditor personal account balances in the subsidiary purchase ledger 1,000 more than the total of creditor personal account balances in the subsidiary purchase ledger 2,000 more than the total of creditor personal account balances in the subsidiary purchase ledger

Question 16 A credit note received from a supplier will be entered in:

The sales day book The journal The cash book The purchase returns day book

Question 17 You are presented with the following information: Creditors opening balance 54,000

Payments made to creditors Cash purchases Credit purchases Goods returned to creditors Settlement discount received from creditors

147,000 5,700 159,000 3,300 2,400

The closing balance on the purchase ledger control account should be?
66,000 (DR) 66,000 (CR) 60,300 (DR) 60,300 (CR)

Question 18 A suspense account was opened when the trial balance column totals failed to agree. The following errors were discovered and corrected resulting in the elimination of the suspense account balance 1. A gas bill of 420 had been debited to heat and light account as 240. 2. Discount of 50 allowed to a credit customer had been credited to the discounts received account. 3. Interest received of 70 had been debited to the bank account only. 4. Repairs to an item of office machinery costing 250 had been debited to the office machinery asset account. The original entry posted to the suspense account prior to the correction of the errors was?

160 (DR) 160 (CR)

210 (DR) 210 (CR)

Question 19 A list of personal account balances extracted from the subsidiary sales ledger of a business as at 31 May 201Y, showed total debtors as at that date to be 31,042. Since preparing the list, however, the following errors have been discovered: The balance on the personal account of a trade debtor in the subsidiary sales ledger was transposed when the original list was prepared. The account balance of 2,619 was listed as 2,961. A sales invoice, total 752, issued to a credit customer on 20 May 2010, had not been posted to their personal account in the subsidiary sales ledger. Goods returned by a credit customer on 22 May 201Y, credit note total 470, had been credited to their personal account in the subsidiary sales ledger as 740 The balance on the personal account of a trade debtor of 2,350 had been missed from the original list when it was prepared.

Assuming that no other errors have been made, the total of balances per the subsidiary sales ledger as at 31 May 201Y should be:
34,756 34,216 33,532 34,072

Question 20 Determine whether each of the following statements are true or false by ticking () the appropriate box: True Fals e

(i) You would expect to find a debit balance on the proprietors drawings account (ii) A payment made to a supplier of goods on credit would be debited to the bank account and credited to their personal account (iii) Assets plus liabilities are equal to capital (iv) Assets less capital are equal to liabilities (v) Output tax is credited to the VAT control account in the ledger

Question 21 The following terms are used in accounting to categorise items of business income and expenditure: Capital income Revenue income Capital expenditure Revenue expenditure

Use the terms that you consider are the most appropriate to complete the gaps in the following sentences: (i)
(ii)

Expenditure which has a long-term effect on the profit making capacity of a business is known a _______ ___________. Revenue earned by a business from its trading activities is known as _______ ______. The cost of goods purchased for resale, the payment of rent, rates, insurances and gas and electricity bills are examples of _______ ___________.

(iii)

SECTION TWO You must answer all questions and complete all tasks in this section of the paper. Question 1 Using the table provided below name the account to be debited, account to be credited and the amount to be posted for each transaction given. The first transaction has been posted for you by way of an example: Transaction Returned goods previously bought on credit from Beta Ltd costing 1,000, to the supplier. Paid for repairs to vehicle 250 by cheque Sold goods on credit 2,500 to West & Co Proprietor transferred funds of 20,000 from his private bank account into the business bank account Paid cash of 750 into the business bank account Proprietor took goods previously purchased by the business for resale at a cost of 200 for personal use Question 2 The following account appeared in the ledger of a business at close of business on 31 May 201Y: (i) Insert the balance carried down, together with the date and details (ii) Insert the account totals (iii) Insert the balance brought down, together with the date and details Dr Date 201Y 5 May 20 May Details Bank Purchase returns Total Peters & Co Amount Date 201Y 420 1 May 140 10 May Details Balance b/f Purchases Total Cr Amount 650 800 Account to be Debited Account to be Credited

Select the details to be used in completing the above tasks from the following lists: Question 3 The following account appeared in the ledger of a business at close of business on 30 April 201Y: (i) Insert the balance carried down, together with the date and details (ii) Insert the account totals (iii) Insert the balance brought down, together with the date and details Dr Date 201Y 1 April 10 April 25 April Details Balance b/f Sales Sales Cash Amount Date 201Y 150 7 April 1,120 12 April 1,250 26 April 29 April 2,520 Details Wages Bank Bank Wages Cr Amount 650 800 260 650 Balance b/d Balance c/d Opening balance Closing balance Supplier account

Total

Select the details to be used in completing the above tasks from the following lists: Balance b/d Balance c/d Opening balance Closing balance Cash account

Question 4 Using the table provided below categorise the items listed as being examples of either capital income or expenditure or revenue income or expenditure. You are to complete the task by ticking () the appropriate column: Table Categorising Items of Income and Expenditure Item Capital Income Payment for repairs to an item of office machinery Purchase of photo-copier for use in the business Income from sales Receipt of funds invested by the owner of the business Payment of wages Rent received from the tenant in respect of premised sub-let Interest received on amount invested in a bank deposit account Payment made to purchase goods for resale Expenditure Revenue Income Expenditure

Question 5

Using the table provided below indicate whether you consider the accounts listed should carry a debit (DR) or credit (CR) balance and classify each balance as being either an , Asset, Cost, Expense, Drawings, Capital, Liability or Income: Account
Sales Fixtures and fittings Bank interest received Cash Purchases Rent and rates Rent received Office equipment Bank loan Robson & Co (customer account) Heat & Light Discount received Poppy Ltd (supplier account) Carriage inwards Capital Drawings

Balance DR or CR

Classification of Balance

Question 6 A sales invoice is currently being prepared for goods delivered today (31 May 201Y). The net goods amount on the invoice is 2,400.00. The customer has been offered a settled discount of 2.5% if the invoice is settled within 10 days of invoice date, otherwise net payment is required within 30 days.
(i)

Calculate the VAT which would appear on the invoice to be issued to the customer

(ii)

What is the amount the customer should pay if the invoice is settled on 6 June 201Y

(iii)

What is the amount the customer should pay if the invoice is settled on 25 June 201Y

Question 7 City Electricals list invoices and credit notes issued and received in day books. At the close of business each day the day books are totalled and transfers are made into the appropriate accounts in the General Ledger and subsidiary Sales and Purchase Ledgers.

The following are the Purchase Day Book and Sales Returns Day Book showing invoices received from credit suppliers and credit notes issued to credit customers listed. The day books have been totalled Purchase Day Book Date 201Y 1 June 1 June 1 June 1 June Supplier High Lights Ltd Electrical Wholesale Ltd Central Electrics Electrical Supplies Ltd Totals Invoice Number 1824 1825 1826 1827 Invoice Total 6,580 4,935 3,243 9,165 23,923 VAT 980 735 483 1,365 3,563 Net Goods 5,600 4,200 2,760 7,800 20,360

Sales Returns Day Book Date 201Y 1 June 1 June 1 June Customer Brite Lites J & K Lighting Powerplus Totals Credit Note Number 236 237 238 Credit Note Total 235 188 94 517 VAT 35 28 14 77 Net Goods 200 160 80 440

(i)

From the purchase day book complete the following table and identify the entries to be made from the day book to accounts in the general ledger. Select the account names to be used in completing this task from the following Sales Ledger Control, Purchase Ledger Control, Purchases, Sales, Sales Returns, Purchase Returns, VAT: General Ledger Account Name Amount Debit Credit

(ii)

From the purchase day book above complete the following table and identify the entries to be made from the day book to accounts in the subsidiary purchase ledger. Select the account names to be used in completing this task from the following High Lights Ltd, Electrical Wholesale Ltd, Central Electrics,

Electrical Supplies Ltd, Sales, Purchases, Sales Ledger Control, Purchase Ledger Control. Subsidiary Purchase Ledger Account Name Amount Debit Credit

(iii)

From the sales return day book above complete the following table and identify the entries to be made from the day book to accounts in the General Ledger. Select the account names to be used in completing this task from the following Sales Ledger Control, Purchase Ledger Control, Purchases, Sales, Sales Returns, Purchase Returns, VAT. General Ledger Account Name Amount Debit Credit

(iv)

From the sales returns day book above complete the following table and identify the entries to be made from the day book to accounts in the subsidiary sales ledger. Select the account names to be used in completing this task from the following Brite Lites, J & K Lighting, Powerplus, Sales Returns, Purchase Returns, Sales Ledger Control, and Purchase Ledger Control. Subsidiary Sales Ledger Account Name Amount Debit Credit

SECTION 3

The questions in this section of the paper require you to complete a series of tasks. You must complete all tasks. Question 1 Provided below is a list of balances extracted from the double entry accounting system of a business as at 31 May 201Y. The balances are to be used to prepare a trial balance.
Account b al a n c e 11,070 100 12,140 5,000 32,000 38,450 20,000 705,260 621,480 16,120 10,980 1,860 2,920 46,450 6,680 16,220 1,500 500 2,460 55,000 30,000 82,130 78,560 Trial Balance

Account name

Debit

Credit

Bank (overdrawn balance) Petty cash VAT amount owing to HM Revenue and Customs Fixtures and fittings Vehicles Stock Bank loan Sales Purchases Sales returns Purchase returns Discount received Discount allowed Wages Vehicle expenses Rent and rates Advertising Trade subscriptions (paid) General office expenses Capital Drawings Purchase ledger control Sales ledger control
Totals

Required Extend the account balances listed above to the trial balance debit or credit columns, as appropriate, and total each column. The column totals should agree. Question 2 A trial balance was extracted from the books of a business and the totals failed to agree. Debit balances totalled 895,620 and credit balances totalled 892,400. Indicate below the entry required in the suspense account to balance the trial balance:
Account name Amount Debit Credit

Question 3 There are a number of bookkeeping errors that would not be disclosed by a trial balance. Indicate which of the errors listed below would or would not be disclosed by the trial balance.
Errors disclosed by trial balance Payment for repairs to machinery posted to machinery account Balance on wages account incorrectly calculated and brought down Payment made by cheque for rates 400 credited to bank as 4,000 and debited to rates as 4,000 Cash sales of 1,175 debited only to cash account Payment for vehicle repairs debited to bank account and vehicle repairs account Errors NOT disclosed by trial balance

Error in General Ledger

Question 4 On preparing a trial balance it was found that the trial balance column totals failed to agree, debit balances exceeded credit balances by 800. The difference in

books was posted to a suspense account. The errors leading to the imbalance in the books have now been traced and the following journal entries have been prepared:

Journal entries
Account name Discount allowed Discount received Debit Credit

1,000 1,000

Heat and Light Suspense

400 400

Suspense Sales

1,200 1,200

Post the entries from the journal to the following ledger accounts (dates are not required):

Select your entries for the details column from the following:

Discount allowed, discount received, heat and light, sales, suspense

DR Details

Discount Allowed Amount Details

CR Amount

DR Details

Discount Received Amount Details

CR Amount

DR Details

Heat and Light Amount

Details

CR Amount

DR Details

Sales Amount

Details

CR Amount

DR Details

Suspense Amount

Details

CR Amount

Question 5 A trial balance was extracted from the books of a business as at 31 May 201Y and the column totals failed to agree. A suspense account was opened and the difference in books amount was posted to it. On 1 June 201Y journal entries were prepared to correct the errors and eliminate the suspense account balance. The list of balances from the initial trial balance, together with the journal entries required to correct the errors, are shown below:

Account name Land and buildings Equipment Vehicles Capital Drawings Bank loan Stock Sales Purchases Wages and salaries Vehicle expenses Other expenses Bank Sales ledger control Purchase ledger control VAT Suspense Totals

Account bala nce 125,000 20,000 25,000 100,000 30,000 50,000 40,000 418,000 277,000 36,000 5,000 4,000 (DR) 5,000 28,000 30,000 (CR) 2,000 (DR) 5,000

Trial Balance Debit Credit

Journal entries to correct errors

Account name Sales Suspense

Debit

Credit

18,000 18,000

Suspense Sales

15,000 15,000

Account name Drawings Wages and salaries

Debit

Credit

2,000 2,000

Account name Purchase ledger control Suspense

Debit

Credit

8,000 8,000

Suspense Purchase ledger control

6,000 6,000

Required Redraft the trial balance at 1 June 201Y by placing the figures in the debit or credit column. You should take into account the journal entries prepared to correct errors and use the corrected balance in redrafting the trial balance. Question 6 The following is a summary of a businesss transactions with its credit customers in the month on May 201Y: (i) Indicate whether each transaction will be a debit or credit entry in the sales ledger control:
Amount 76,150 69,480 49,220 2,350 1,200 800 Debit Credit

Details Balance of total debtors at 1 May Payments received from credit customers Sales on credit Goods returned by credit customers Discount allowed to credit customers Bad debt written off

(ii)

Indicate below what the balance brought down on the sales ledger control account at 1 June 201Y, prepared from the transactions above would be

52,740 DR 52,740 CR 51,540 DR 51,540 CR 53,340 DR 53,340 CR

The following debit balances were brought down as at 1 June 201Y on accounts kept in the subsidiary sales ledger of the business:

Account name Arnold & Co Dibb & Sons F & J Trading L & T Ltd Simms Wholesale West & Co Ltd

Amount 13,280 9,160 10,140 8,250 9,940 3,120

(iii)

Reconcile the balances listed from the subsidiary sales ledger with the sales ledger control account balance you calculated in part (i):

Details Sales ledger control account balance at 1 June Total of subsidiary sales ledger balance at 1 June Difference

Amount

(iv)

From the following list of possibilities indicate what may have caused the difference reported in part (iii) above: Goods returned by credit customers may have not been posted to their personal accounts in the subsidiary sales ledger Discounts allowed to credit customers may not have been posted to their personal accounts in the subsidiary sales ledger Goods returned by credit customers may have been posted twice to their personal accounts in the subsidiary sales ledger