AAT L2 Bookkeeping Transactions 4 — Questions and Answers
Question 1: A business receives a statement from a supplier showing a balance of £3,200. The purchase ledger account shows a balance of £2,800. Which of the following could explain the difference?
- A credit note for £400 has been recorded in the purchase ledger but not yet on the statement (Correct answer)
- An invoice for £400 has been recorded twice in the purchase ledger
- A payment of £400 has not been recorded in the purchase ledger
- A purchase return of £200 has been entered twice on the statement
Correct answer: A credit note for £400 has been recorded in the purchase ledger but not yet on the statement
If a credit note for £400 was recorded in the purchase ledger (reducing the balance to £2,800) but not yet reflected on the supplier's statement (still showing £3,200), this would explain the £400 difference.
Question 2: Which of the following errors would be revealed by a trial balance?
- An error of commission
- An error of original entry
- A single-sided entry where only the debit was recorded (Correct answer)
- A compensating error
Correct answer: A single-sided entry where only the debit was recorded
A single-sided entry means only one side of the double entry has been recorded. This causes the trial balance to be out of balance. The other errors listed maintain equal debits and credits, so the trial balance still balances.
Question 3: Goods costing £200 taken by the owner for personal use should be recorded as:
- Debit Drawings £200, Credit Purchases £200 (Correct answer)
- Debit Purchases £200, Credit Drawings £200
- Debit Sales £200, Credit Drawings £200
- Debit Drawings £200, Credit Sales £200
Correct answer: Debit Drawings £200, Credit Purchases £200
When the owner takes goods for personal use, it is treated as drawings. Purchases are reduced (credited) because the goods are no longer business stock, and drawings are increased (debited) to reflect the owner's withdrawal.
Question 4: A sales invoice for £560 was entered in the sales day book as £650. This is an example of:
- An error of omission
- An error of commission
- An error of original entry (Correct answer)
- An error of principle
Correct answer: An error of original entry
An error of original entry occurs when the wrong amount is entered in the book of prime entry. The incorrect figure is then posted to both sides of the double entry, so the trial balance still balances but the amounts are wrong.
Question 5: Which account is debited when a business pays for carriage inwards?
- Sales account
- Carriage outwards account
- Purchases account or carriage inwards account (Correct answer)
- Trade receivables account
Correct answer: Purchases account or carriage inwards account
Carriage inwards is the cost of delivering goods from the supplier to the business. It is debited to either a separate carriage inwards account or added to purchases, as it forms part of the cost of acquiring goods for resale.
Question 6: What is the purpose of the general ledger?
- To record the original transaction from source documents
- To contain the personal accounts of individual customers and suppliers
- To contain all the accounts needed to prepare the financial statements (Correct answer)
- To list outstanding invoices for credit control
Correct answer: To contain all the accounts needed to prepare the financial statements
The general ledger (also called the nominal ledger) contains all the accounts used to prepare the trial balance and financial statements, including income, expenses, assets, liabilities, and capital accounts.
AAT L2 Bookkeeping Transactions 4
A business receives a statement from a supplier showing a balance of £3,200.
The purchase ledger account shows a balance of £2,800.
Which of the following could explain the difference?