Module 1

Question 1

What is an Expense?

DR or CR?

Answer 1

DR

Question 2

A discount given by the seller to encourage the buyer to purchase large amounts?

Answer 2

Bulk

Question 3

What is a Credit payment?

Answer 3

The person buying the goods or services is given a period of time to pay.
(They are called a Trade Receivable).

Question 4

What is the Accounting Equation?

Answer 4

Assets - Liabilities = Capital

Question 5

A discount offered on the invoice if payment is made within a specified timescale?

Answer 5

Prompt Payment Discount

Question 6

What is a Liability?

DR or CR?

Answer 6

CR

Question 7

How do you work out the VAT amount from the Gross?

Answer 7

Gross Amount / 1.2 * 0.2

Question 8

What is an Asset?

DR or CR?

Answer 8

DR

Question 9

A discount given by the seller to certain ‘good or regular’ customers to encourage them to keep buying from you?

Answer 9

Trade

Question 10

You always round Vat…?

Answer 10

Down

Question 11

What is a Cash Transaction?

Answer 11

An immediate payment for goods or services they are purchasing. (Payment can still be by cheque or card).

Question 12

The Sales Day Book is a Book of Prime Entry.

Answer 12

True.

Question 13

The Sales Returns Day Book is a Ledger.

Answer 13

False.

Question 14

What goes in the Sales Day Book?

Answer 14

All the invoices we raise for our credit sales customers (Trade Receivables).

Question 15

What goes in the Sales Returns Day Book?

Answer 15

All the credit notes we raise for our credit customers (Trade Receivables).

Question 16

What goes in our Purchase Day Book?

Answer 16

All the invoices we receive from our suppliers for our credit purchases (Trade Payables).

Question 17

What goes in our Purchase Returns Day Book?

Answer 17

All the credit notes we receive from our credit suppliers (Trade Payables).

Question 18

What goes in our Discounts Allowed Day Book?

Answer 18

The credit notes we WOULD issue after we’ve received a payment from a Trade Receivable which includes a PPD.

Question 19

What goes in our Discounts Received Day Book?

Answer 19

The credit notes we would receive after we have made a payment which includes a PPD.

Question 20

What does a Statement of Profit or Loss summarise?

Answer 20

The Total Revenue (Income) and expenses (outgoings) and deducts one from the other to show the resulting profit or loss.

Question 21

What does a Statement of Financial Position summarise?

Answer 21

In effect a list of the assets and liabilities of a business at a specific date - often referred to as a balance sheet.

Question 22

What is Capital?

Answer 22

The amount the owner has invested in the business and is therefore a special type of liability. The business owes the owner this money.

Question 23

Capital Expenditure …

Answer 23

Money spent on purchasing or improving non-current assets.

Question 24

Revenue Expenditure…

Answer 24

Money spent in the day to day running if the business.

Question 25

Capital Income…

Answer 25

Money received from ‘one off’ (irregular) transactions.

Question 26

Revenue Income…

Answer 26

Money received in the day to day running of the business.

Question 27

DEAD CLIC

Answer 27

D ebits
E xpenses
A ssets
D rawings

C redits
L iabilities
I ncome
C apital

Question 28

What are the subsidiary ledgers?

Answer 28

Sales Ledger
And
Purchase Ledger

Question 29

What does the Sales Ledger contain?

Answer 29

It holds the individual T accounts for each customer.

Question 30

What does the Purchase Ledger contain?

Answer 30

It holds the individual T accounts for each supplier.

Question 31

Where do the SLCA and PLCA live?

Answer 31

In the General Ledger.

Question 32

What goes in BOTH total boxes when balancing an account?

Answer 32

The largest total figure, whether it is a DR or CR.

Question 33

What gets ‘carried down’ when balancing an account and on which side?

Answer 33

The total figure - the total of the lesser column.

On the side of the lesser column.

Question 34

What gets ‘brought down’ when balancing an account and on which side?

Answer 34

The total figure - the total of the lesser column.

On the side of the bigger column.