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
The purchase ledger control account is used to:
Answer: Provide a total of all amounts owed to suppliers, cross-checking the purchase ledger
The purchase ledger control account (PLCA) provides a totals check: the closing balance should equal the sum of all individual supplier account balances in the purchase ledger.
Which of the following is a capital expenditure?
Answer: Buying a new delivery vehicle
Capital expenditure creates a new non-current asset or increases the capacity or economic benefits of an existing one. Buying a new vehicle is a capital item; routine maintenance and repainting are revenue expenses.
If closing inventory is understated, the effect on profit for the year is:
Answer: Profit is understated
Closing inventory appears in the cost of sales calculation: COGS = opening inventory + purchases − closing inventory. Understating closing inventory increases COGS and therefore understates profit.
The accounting equation is:
Answer: Assets = Capital + Liabilities
The fundamental accounting equation is Assets = Capital + Liabilities (or Assets = Equity + Liabilities). Every transaction maintains this balance.
Which of the following is an example of a revenue expense?
Answer: Annual subscription for accounting software
Revenue expenditure is incurred for the ongoing operation of the business and is charged to the income statement. An annual software subscription is a revenue expense consumed within a short period.
Retained profit (retained earnings) appears on the balance sheet as:
Answer: Part of equity (capital)
Retained earnings are the cumulative profits kept in the business after dividends; they represent the owners' stake in the business and are classified as equity in the balance sheet.