AAT L2 Bookkeeping Transactions 1

Question 1

Which document is issued by a seller to a buyer to confirm the details and price of goods or services to be provided?

Accepted Answer

Quotation

Answer

A quotation is issued by the seller to the buyer setting out the price and terms for goods or services offered. It is the first formal document in many sales transactions.

Question 2

A business purchases goods on credit for £2,400 plus VAT at 20%. What is the correct double entry to record this transaction?

Accepted Answer

Debit Purchases £2,400, Debit VAT £480, Credit Trade Payables £2,880

Answer

Under UK VAT rules, the purchase is recorded net of VAT in the purchases account (£2,400), VAT is debited to the VAT control account (£480), and the full amount including VAT (£2,880) is credited to trade payables.

Question 3

What is the purpose of a sales day book?

Accepted Answer

To record all credit sales from sales invoices

Answer

The sales day book (also called the sales journal) is a book of prime entry used to record credit sales invoices. Cash sales are recorded separately in the cash book.

Question 4

A trade discount of 10% is offered on goods with a list price of £500. What amount appears on the invoice before VAT?

Accepted Answer

£450

Answer

A trade discount is deducted from the list price before the invoice is prepared. £500 less 10% = £500 - £50 = £450. VAT is then calculated on the discounted price.

Question 5

Which of the following is classified as capital expenditure?

Accepted Answer

Purchase of a delivery van

Answer

Capital expenditure is spending on non-current assets that will be used in the business over more than one accounting period. A delivery van is a non-current asset. The other options are revenue expenditure — day-to-day running costs.

AAT Level 2 Practice Test

AAT Level 2 Practice Test

AAT L2 Bookkeeping Transactions 1