AAT L3 Advanced Bookkeeping 5

Question 1

When a credit note is issued to a customer for goods returned, the double entry is:

Accepted Answer

Debit Sales Returns, Credit Trade Receivables

Answer

Issuing a credit note for returned goods: debit Sales Returns (reduces revenue) and credit Trade Receivables (reduces the amount the customer owes).

Question 2

Which of the following describes the purpose of the nominal (general) ledger?

Accepted Answer

To contain all accounts used to prepare the trial balance and financial statements

Answer

The nominal (general) ledger contains all accounts — assets, liabilities, income, expenses, and equity — from which the trial balance and financial statements are prepared.

Question 3

The recoverability of a debt is doubtful. An allowance for doubtful debts is created by:

Accepted Answer

Debit Irrecoverable Debts Expense (or Allowance Adjustment), Credit Allowance for Doubtful Debts

Answer

Creating an allowance: debit the expense account (or allowance adjustment) and credit the Allowance for Doubtful Debts account. The allowance reduces trade receivables net on the balance sheet.

Question 4

Which of the following would increase the balance on the sales ledger control account?

Accepted Answer

Sales invoices issued to customers

Answer

Sales invoices increase trade receivables (debit the SLCA). Cash receipts, discounts allowed, and irrecoverable debts written off all reduce the SLCA balance.

Question 5

An error of transposition occurs when:

Accepted Answer

Two digits in an amount are accidentally reversed (e.g., £54 posted as £45)

Answer

A transposition error occurs when the digits within a number are reversed or swapped — for example, posting £73 instead of £37. The difference is always divisible by 9.

AAT Level 3 Practice Test

AAT Level 3 Practice Test

AAT L3 Advanced Bookkeeping 5