Chapter 2

Question 1

If the total of Subsidiary Ledger is higher than the total of the RLCA what are the two possible reasons for this?

Answer 1

Sales Returns and Discounted Allowed may have been omitted from the Sub ledger

Question 2

If the total of RLCA is higher than the total of the Subsidiary Ledger what are the two possible reasons for this?

Answer 2

Sales Returns and Discounts Allowed may have been entered in twice in the Sub Ledger

Question 3

If the total of PLCA is higher than the total of the Subsidiary Ledger what are the two possible reasons for this?

Answer 3

Purchase/Goods Returned and Discounts Received may have been entered twice in the Sub Ledger

Question 4

If the total of Subsidiary Ledger is higher than the PLCA what are the two possible reasons for this?

Answer 4

Purchase / Goods Returned and Discounted Received may have been omitted from the Sub Ledger

Question 5

What can the RLCA contain what on the credit side?

Answer 5

Sales Returns
Cash from Receivable
Discounts Allowed
Irrecoverable Debt written off
Contra with Payables Ledger
Balance C/D

Question 6

What can the RLCA contain on the debit side?

Answer 6

Balance B/D
Sales (per sales day book)

Question 7

What can the PLCA contain on the credit side?

Answer 7

Balance B/D
Purchases (per purchase day book)

Question 8

What can the PLCA contain on the debit side?

Answer 8

Payments made to suppliers (per cash book)
Purchase/Goods Returned
Discounted Received
Contra with Receivables Ledger
Balance C/D

Question 9

What is the double entry for Irrecoverable Debt

Answer 9

Debit Irrecoverable Debt
Credit RLCA

Question 10

After 6 months what is the double entry for Irrecoverable Debt (reclaiming VAT)

Answer 10

Debit Irrecoverable Debt (NET)
Debit VAT Control Account (VAT)
Credit RLCA (Gross)

Question 11

What is the double entry for Contra?

Answer 11

Debit Payables (PLCA)
Credit Receivables (RLCA)

Question 12

When is Aged Trade Receivables Analysis used?

Answer 12

When chasing customers for outstanding balances

Question 13

What is on the Debit side of the VAT Control Account

Answer 13

VAT on credit/cash purchases
VAT on sales returns
VAT on irrecoverable debt
VAT on Discounts Allowed
VAT on petty cash expenses paid
VAT paid to HMRC during the period
VAT balance brought forward, due FROM HMRC

Question 14

What is on the Credit side of the VAT Control Account

Answer 14

VAT on credit/cash sales
VAT on purchase returns
VAT on Discounts Received
VAT Refund received from HMRC
VAT balance brought forward, owed TO HMRC

Question 15

Dbl entry for accounting the VAT balance to tax authorities (owe HMRC)

Answer 15

Debit - VAT control Account
Credit - Bank

Question 16

Dbl entry for accounting VAT balance from the tax authorities (HMRC owe the business)

Answer 16

Debit - Bank
Credit - VAT control Account