Advanced Bookkeeping Flashcards
6 cards from real AAT L3 practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Advanced Bookkeeping flashcards as text
Accrued expenses at the year end are recorded as:
Answer: Debit expense account, Credit accruals (liability)
Accrued expenses are costs incurred but not yet paid. The double entry is debit the expense account (to increase the expense in the income statement) and credit accruals (a current liability on the balance sheet).
A prepayment is classified in the balance sheet as:
Answer: A current asset
Prepayments are amounts paid in advance for goods or services not yet received. They represent an asset — a future economic benefit — and are classified as current assets on the balance sheet.
Which of the following is the correct definition of 'net book value' of a non-current asset?
Answer: Cost less accumulated depreciation
Net book value (NBV) = cost of the asset minus total accumulated depreciation to date. It represents the carrying amount of the asset in the balance sheet.
Which depreciation method results in an equal charge to the income statement each year?
Answer: Straight-line method
The straight-line method spreads the depreciable amount (cost minus residual value) equally over the asset's useful life, resulting in a constant annual charge.
On disposal of a non-current asset, a profit on disposal arises when:
Answer: Proceeds from disposal exceed the net book value of the asset
Profit on disposal = proceeds minus net book value. If the proceeds received are greater than the carrying amount (NBV), a profit is recognised in the income statement.
The purpose of the journal in bookkeeping is to:
Answer: Record unusual transactions or corrections not recorded elsewhere
The journal is used to record unusual, one-off, or correcting entries that do not originate from the primary daybooks (sales, purchases, cash), such as opening entries, error corrections, and year-end adjustments.