AAT L2 Bookkeeping Controls 5

Question 1

A business receives a bank statement showing bank charges of £45 and interest earned of £12 that have not been recorded in the cash book. After adjusting the cash book, the net effect on the cash book balance is:

Accepted Answer

Decrease of £33

Answer

Bank charges reduce the balance (credit the cash book) by £45, and interest earned increases the balance (debit the cash book) by £12. Net effect: -£45 + £12 = -£33, a decrease of £33.

Question 2

The purchase ledger control account has a credit balance of £22,400. A supplier invoice for £800 was recorded in the individual supplier account but was not posted to the control account. After correction, the control account balance will be:

Accepted Answer

£23,200

Answer

A purchase invoice increases the amount owed to suppliers. The control account should be credited with £800 to reflect the missing posting: £22,400 + £800 = £23,200.

Question 3

An aged trade receivables analysis is used to:

Accepted Answer

Monitor how long debts have been outstanding and identify potential irrecoverable debts

Answer

An aged trade receivables analysis categorises outstanding customer balances by the length of time they have been owed (e.g., 0-30 days, 31-60 days, over 90 days). This helps identify slow-paying customers and potential bad debts requiring write-off or provision.

Question 4

A standing order of £150 per month for rent appears on the bank statement but has not been entered in the cash book. The journal entry to correct the cash book is:

Accepted Answer

Debit Rent £150, Credit Bank £150

Answer

The standing order is a payment for rent that the bank has processed but the business has not recorded. The cash book needs updating: debit Rent (the expense) and credit Bank (reducing the cash book balance).

Question 5

Which of the following is NOT a purpose of control accounts?

Accepted Answer

To replace the need for a trial balance

Answer

Control accounts verify the accuracy of subsidiary ledgers, help detect errors and fraud, and provide summary figures for financial statements. However, they do not replace the trial balance — the trial balance serves a separate purpose of checking overall double entry accuracy.

AAT Level 2 Practice Test

AAT Level 2 Practice Test

AAT L2 Bookkeeping Controls 5