AAT L2 Bookkeeping Controls 6

Question 1

When a business changes from a credit balance to a debit balance on the bank statement, this indicates:

Accepted Answer

The business has moved from a positive balance to an overdraft

Answer

On a bank statement, a credit balance means the bank holds money for the customer (positive for the business). A debit balance means the customer owes the bank money (overdraft). Moving from credit to debit means the business has gone into overdraft.

Question 2

The sales day book was overcast by £1,000. The correcting journal entry is:

Accepted Answer

Debit Sales £1,000, Credit Suspense £1,000

Answer

If the sales day book was overcast (totalled too high), too much was posted to the sales account (overcredited) and the trial balance would not balance. Debit Sales £1,000 to reduce it to the correct amount, and credit Suspense £1,000 to clear the imbalance.

Question 3

A provision for doubtful debts is:

Accepted Answer

An estimate of the amount of trade receivables that may not be collected

Answer

A provision for doubtful debts (allowance for doubtful debts) is an estimate of the portion of trade receivables that may not be collected. It reduces the trade receivables figure on the statement of financial position to show a more realistic value.

Question 4

The petty cash book had an opening imprest of £200. During the week, vouchers totalling £163.50 were recorded, and the cash remaining was £34.00. What action should be taken?

Accepted Answer

Restore the imprest with £163.50 and investigate the £2.50 shortage

Answer

Expected cash remaining: £200 - £163.50 = £36.50, but only £34 is in the box — a shortage of £2.50. The imprest should be restored with £166 (£200 - £34) to bring it back to £200, and the £2.50 discrepancy must be investigated.

Question 5

Which of the following is the correct treatment of a dishonoured cheque from a customer in the cash book?

Accepted Answer

Credit the cash book (bank column)

Answer

When a cheque is dishonoured, the bank reverses the receipt. In the cash book, the bank column is credited to reduce the balance (the money did not actually clear). The trade receivable is reinstated by debiting the customer's account.

AAT Level 2 Practice Test

AAT Level 2 Practice Test

AAT L2 Bookkeeping Controls 6