AAT L2 Bookkeeping Controls 3

Question 1

A business has the following information: Bank statement closing balance £4,500 credit, unpresented cheques £800, outstanding lodgements £350. What is the adjusted bank balance?

Accepted Answer

£4,050

Answer

Starting with the bank statement balance of £4,500 (credit on the statement means a positive balance for the business), deduct unpresented cheques (£800) and add outstanding lodgements (£350): £4,500 - £800 + £350 = £4,050.

Question 2

An error of principle occurs when a transaction is:

Accepted Answer

Posted to the wrong class of account

Answer

An error of principle occurs when a transaction is posted to the wrong class (type) of account, violating an accounting principle. For example, debiting a vehicle repair to the motor vehicles asset account instead of the repairs expense account.

Question 3

The balance on the VAT control account shows a credit balance of £3,400. This means:

Accepted Answer

The business owes HMRC £3,400

Answer

A credit balance on the VAT control account means output VAT (on sales) exceeds input VAT (on purchases). The business has collected more VAT than it has paid, so it owes the net amount of £3,400 to HMRC.

Question 4

When clearing a suspense account, which of the following errors would require an entry to the suspense account?

Accepted Answer

A casting error in the sales day book

Answer

A casting (addition) error in the sales day book means an incorrect total was posted to the general ledger, causing the trial balance to be out of balance. This would require an entry to the suspense account to correct the imbalance.

Question 5

A bank statement shows a direct credit of £1,200 that has not been entered in the cash book. What entry is needed in the cash book?

Accepted Answer

Debit £1,200 on the debit side of the cash book

Answer

A direct credit (such as a BACS payment from a customer) has been received by the bank but not yet recorded in the cash book. The cash book needs to be updated with a debit entry (receipt) of £1,200.

AAT Level 2 Practice Test

AAT Level 2 Practice Test

AAT L2 Bookkeeping Controls 3