AAT L3 Advanced Bookkeeping 4

Question 1

The purchase ledger control account is used to:

Accepted Answer

Provide a total of all amounts owed to suppliers, cross-checking the purchase ledger

Answer

Record all individual supplier transactions in detail

Answer

Record only cash payments to suppliers

Answer

Prepare the VAT return

Question 2

Which of the following is a capital expenditure?

Accepted Answer

Buying a new delivery vehicle

Answer

Repainting existing office walls

Answer

Paying the annual vehicle insurance premium

Answer

Replacing a worn component on machinery

Question 3

If closing inventory is understated, the effect on profit for the year is:

Accepted Answer

Profit is understated

Answer

Profit is overstated

Answer

Profit is unaffected

Answer

Cost of sales is understated

Question 4

The accounting equation is:

Accepted Answer

Assets = Capital + Liabilities

Answer

Assets = Liabilities − Capital

Answer

Capital = Assets + Liabilities

Answer

Liabilities = Assets + Capital

Question 5

Which of the following is an example of a revenue expense?

Accepted Answer

Annual subscription for accounting software

Answer

Purchase of a new computer

Answer

Installation of a new air conditioning system

Answer

Costs of extending the factory building

Question 6

Retained profit (retained earnings) appears on the balance sheet as:

Accepted Answer

Part of equity (capital)

Answer

A current asset

Answer

A non-current liability

Answer

A current liability