Bookkeeping Transactions Flashcards
6 cards from real AAT L2 practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Bookkeeping Transactions flashcards as text
Which of the following is a book of prime entry?
Answer: The petty cash book
The petty cash book is a book of prime entry where small cash transactions are initially recorded. The trial balance and financial statements are not books of prime entry — they are prepared from ledger account balances.
A cheque received from a customer for £750 is dishonoured by the bank. What is the double entry to record this?
Answer: Debit Trade Receivables £750, Credit Bank £750
When a cheque is dishonoured, the original entry must be reversed. The customer still owes the money, so Trade Receivables is debited, and the bank balance is reduced by crediting the bank account.
What is the correct VAT fraction used to extract VAT from a VAT-inclusive amount at the standard rate of 20%?
Answer: 1/6
When VAT at 20% is included in a price, the VAT fraction is 20/120 which simplifies to 1/6. For example, if the VAT-inclusive price is £120, the VAT element is £120 × 1/6 = £20.
The balancing figure on a petty cash book that operates using the imprest system represents:
Answer: Both the amount to restore the imprest and the closing balance
In the imprest system, the closing balance equals the amount of cash remaining, and the restoration amount equals the total of payments made. The imprest is then topped up by this amount to bring it back to the original float.
A sole trader's capital account would be credited when:
Answer: The owner introduces additional capital into the business
When the owner introduces additional capital, the capital account is credited because capital is a liability of the business to the owner. Drawings (withdrawals) would debit the capital or drawings account.
Net purchases are calculated as:
Answer: Total purchases less purchase returns
Net purchases = Total (gross) purchases minus purchase returns. Purchase returns reduce the total cost of goods purchased. Carriage inwards is added separately to calculate the cost of goods sold.