Deck 20: Control Accounts

Question 1

The balance on a purchases control account should agree with:

A) The total of both individual purchase ledger and individual purchase ledger balances.
B) The trial balance total.
C) The total of individual purchase ledger balances.
D) The balance on the sales ledger control account.

Answer 1

The total of individual purchase ledger balances.

Question 2

The purpose of a sales ledger control account is to ensure that:

A) All errors in the writing up of the sales system are detected.
B) Most errors in the writing up of the sales system are detected.
C) The sales figure in the financial statements is correct.
D) The trade payables figure in the financial statements is correct.

Answer 2

All errors in the writing up of the sales system are detected.

Question 3

A credit balance may appear on a sales ledger account when:

A) The business has paid a refund to a customer.
B) The business has overpaid a customer.
C) The customer has returned the goods after paying for them.
D) The supplier has overpaid his account.

Answer 3

The customer has returned the goods after paying for them.

Question 4

A debit entry of £50 on A's account in the books of B could have arisen by

A) A selling goods on credit to B
B) A paying B
C) A returning goods to B
D) B returning goods to A

Question 5

In a credit customer's account in the sales ledger, a bad debt written off should be shown as:

A) A debit
B) A balance carried down
C) A credit
D) Both a debit and a credit

Question 6

In the accounts of X, which of the following double entries is the correct way to record a historic credit sale that is now considered to be a bad debt in respect of Y, a credit customer?

A) Dr. Sales Cr. Y's account
B) Dr. Provision for bad debts account Cr. Y's account
C) Dr. Bad debts account Cr. Y's account
D) Dr. X's account Cr. Y's account

Question 7

In 20X0, in the accounts of X, the accountant created a provision for a doubtful debt of £100 in respect of Y. In 20X1 the accountant has found out that this debt is totally irrecoverable. Which of the following double entries is the correct way to deal with this new information in 20X1?

A) Dr. Bad debts Cr. Y's account
B) Dr. Provision for doubtful debts account Cr. Y's account
C) Dr. Bad debts account Cr. Provision for doubtful debts account
D) Dr. Provision for doubtful debts account Cr. Bad debts account

Question 8

In the accounts of X, which of the following double entries is the correct way to record goods returned to Y, a credit supplier?

A) Dr Y's account Cr. Purchases
B) Dr. Y's account Cr. Returns outward
C) Dr. X's account Cr. Purchases
D) Dr. Returns outward Cr. X's account

Question 9

At the beginning of an accounting period a firm was owed £25,000 from its credit customers. During the year, the firm's credit sales amounted to £154,000 and cash sales were £14,000. It received £165,000 from its credit customers.
Assuming there were no other transactions relating to the firm's credit customers, at the end of the accounting period the firm had trade receivables of:

A) £14,000
B) £16,000
C) £28,000
D) £36,000

Question 10

The closing balance should equal £15,050 when added together
The sales ledger control account at 1 December had balances of £12,750 debit and £275 credit. During December sales of £25,000 were made on credit. Receipts from debtors amounted to £22,500 and cash discounts of £55 were allowed. Refunds of £130 were made to customers. The closing balances at the end of May could be:

A) £15,090 debit and £300 credit
B) £15,410 debit and £250 credit
C) £15,250 debit and £200 credit
D) £14,890 debit and £100 credit

Question 11

Which of the following statements is not the purpose of a purchase ledger control account?

A) A purchase ledger control account provides a check on the arithmetic accuracy of the personal ledger.
B) Control accounts deter fraud.
C) A purchase ledger control account helps locate errors in the trial balance.
D) A purchase ledger control account ensures that there are no errors in the personal ledger.

Question 12

In a sales ledger control account, bad debts written off should be shown as:

A) A debit
B) A balance carried down
C) A credit
D) Both a debit and a credit

Question 13

The total of the balances in the purchase ledger control account is £3,000 more than the total of the individual balances on the personal accounts in the purchase ledger. Which of the following would explain the difference?

A) The purchase day book is over added by £3,000
B) Discounts received have not bee posted in the purchase ledger accounts
C) Cash paid to creditors has not been posted in come accounts in the purchase ledger
D) A contra entry between the purchase and sales ledgers has been omitted from the purchase ledger but was posted to the control account

Question 14

What is the balance on the trade receivables control account at 31/12/X1?
The following information concerns XYZ Ltd

A) £7,660
B) £36,260
C) £39,260
D) £42,260

Question 15

What is the balance on the trade receivables control account at 30/11/X2?
The following information relates to Veronica Ltd. for the year ended 30 November 20X2:

A) £120,000
B) £134,400
C) £139,200
D) £144,000

Question 16

At the start of a financial year a firm's gross trade receivables amounted to £10,000. At the end of the year this amount had increased by 20%. During the year £30,000 was received from credit customers and discounts totalling £2,000 were allowed to credit customers. Bad debts written off amounted to £4,000. Credit sales for the year were:

A) £28,000
B) £30,000
C) £38,000
D) £40,000