AAT L2 Bookkeeping Controls 4 — Questions and Answers
Question 1: A payment of £340 for office expenses was debited to the office equipment account. This error is corrected by:
- Debit Office Expenses £340, Credit Office Equipment £340 (Correct answer)
- Debit Office Equipment £340, Credit Office Expenses £340
- Debit Office Equipment £680, Credit Office Expenses £680
- Debit Suspense £340, Credit Office Equipment £340
Correct answer: Debit Office Expenses £340, Credit Office Equipment £340
The expense was wrongly debited to an asset account (error of principle). To correct it, debit Office Expenses (where it should have gone) and credit Office Equipment (to remove the incorrect entry).
Question 2: The sales ledger control account is an example of a:
- Personal account (Correct answer)
- Real account
- Memorandum account
- Nominal account
Correct answer: Personal account
The sales ledger control account is a personal account in the general ledger that represents the total of all individual trade receivable balances. It is part of the double entry system and appears on the statement of financial position.
Question 3: A contra entry of £300 has been made between the sales ledger and purchase ledger. What is the double entry in the control accounts?
- Debit Sales Ledger Control Account £300, Credit Purchase Ledger Control Account £300
- Debit Purchase Ledger Control Account £300, Credit Sales Ledger Control Account £300 (Correct answer)
- Debit Bank £300, Credit Sales Ledger Control Account £300
- Debit Purchase Ledger Control Account £300, Credit Bank £300
Correct answer: Debit Purchase Ledger Control Account £300, Credit Sales Ledger Control Account £300
A contra entry offsets a trade receivable against a trade payable for the same entity. The purchase ledger control account is debited (reducing the amount owed to the supplier) and the sales ledger control account is credited (reducing the amount owed by the customer).
Question 4: Which of the following would cause the trial balance to fail to balance?
- Recording a sale to Customer A in Customer B's account
- Omitting a transaction entirely
- Posting the debit entry of a transaction but not the credit entry (Correct answer)
- Recording a purchase of equipment as an expense
Correct answer: Posting the debit entry of a transaction but not the credit entry
If only one side of the double entry is recorded, the total debits will not equal total credits, and the trial balance will not balance. The other errors maintain equal debits and credits.
Question 5: When preparing a bank reconciliation, which items would appear on the bank reconciliation statement (as opposed to being adjusted in the cash book)?
- Bank charges and standing orders
- Direct debits and interest received
- Unpresented cheques and outstanding lodgements (Correct answer)
- Dishonoured cheques and bank errors
Correct answer: Unpresented cheques and outstanding lodgements
Unpresented cheques and outstanding lodgements are timing differences — they are correctly recorded in the cash book but have not yet appeared on the bank statement. They appear on the reconciliation statement but do not require cash book adjustments.
Question 6: The opening balance on the suspense account is £500 debit. Investigation reveals a receipt of £500 from a customer was credited to the bank account but no other entry was made. The correcting journal entry is:
- Debit Suspense £500, Credit Trade Receivables £500 (Correct answer)
- Debit Trade Receivables £500, Credit Suspense £500
- Debit Suspense £500, Credit Bank £500
- Debit Bank £500, Credit Suspense £500
Correct answer: Debit Suspense £500, Credit Trade Receivables £500
The bank account was credited (incorrect — it should have been debited for a receipt) and no debit entry was made. However, the suspense account already has a £500 debit from the trial balance. To correct: Credit Trade Receivables £500 (the missing entry) and the suspense account debit is cleared.
AAT L2 Bookkeeping Controls 4
A payment of £340 for office expenses was debited to the office equipment account.
This error is corrected by: