AAT L3 Accounts Payable & Receivable Advanced 5

Question 1

When reconciling the purchase ledger control account to the list of supplier balances, a difference may arise from:

Accepted Answer

Posting an invoice to the correct supplier account but with the wrong amount

Answer

The business earning a profit

Answer

Exchange rate differences on sterling invoices

Answer

The tax year end falling on a different date

Question 2

Invoice discounting differs from factoring in that:

Accepted Answer

The business retains control of credit collection under invoice discounting (confidential)

Answer

Invoice discounting provides a lower advance rate

Answer

Invoice discounting only applies to overseas invoices

Answer

Factoring charges no fees

Question 3

Which of the following would reduce the balance on the purchase ledger control account?

Accepted Answer

Purchase returns to suppliers

Answer

Purchase invoices received from suppliers

Answer

Goods received from suppliers

Answer

Carriage inwards charged by a supplier

Question 4

The cash discount available to a customer for payment within 10 days on a £5,000 invoice at 2% is:

Accepted Answer

£100

Answer

£50

Answer

£150

Answer

£500

Question 5

Under UK company law, what is the maximum interest rate a creditor can charge on overdue commercial debts under the Late Payment of Commercial Debts (Interest) Act 1998?

Accepted Answer

Bank of England base rate plus 8%

Answer

Bank of England base rate plus 4%

Answer

A flat rate of 15% per annum

Answer

The rate specified in the contract only

Question 6

Which of the following is a key internal control in accounts receivable?

Accepted Answer

Segregation of duties between invoicing, cash receipts, and ledger update functions

Answer

Allowing the same person to raise invoices, receive cash, and update the ledger

Answer

Waiving the credit application process for large customers

Answer

Allowing unlimited credit to all customers