Mrs Snows Knowledge Test

Question 1

What is a sales journal

Answer 1

The sales journal lists all of the invoices for credit sales

Question 2

What is a purchase journal

Answer 2

The purchase journal lists all of the invoices for credit purchases

Question 3

What is the sales returns journal?

Answer 3

The sales returns journal lists all of the credit notes issued by the business. It is also called the returns in journal.

Question 4

What is the purchase returns journal?

Answer 4

The purchase returns journal lists all of the credit notes received by the business. It is also called the returns journal

Question 5

What is a cash book?

Answer 5

The cash book is used to record bank receipts and bank payments, as well as cash discounts allowed and received.

Question 6

What is the left side of the cash book is used to record?

Answer 6

➢ A positive bank balance at the start of the month
➢ Amounts received by the business (e.g. from customers)
➢ Cash discount allowed to customers who have paid quickly

Question 7

What is the right side of the cash book is used to record?

Answer 7

➢ A negative bank balance at the start of the month
➢ Amounts paid by the business (e.g. to suppliers)
➢ Cash discount received from suppliers for quick payment

Question 8

What is a receivable ledger?

Answer 8

The receivable ledger includes T-Accounts for each credit customer. For each customer, it shows invoices, credit notes, payments, discounts and the amount owed by that customer.

Question 9

What is a payable ledger?

Answer 9

The payable ledger includes T-Accounts for each credit supplier. For each supplier, it shows invoices, credit notes, payments, discounts and the amount owed to that supplier.

Question 10

What is the general ledger?

Answer 10

The general ledger includes T-Accounts for every item that will appear in the financial statements (e.g. ‘Revenue’, ‘Purchases’ etc.)

Question 11

Each invoice or credit note will be entered in one of the books of prime entry:

Answer 11

Sales Journal, Purchases Journal, Sales Returns Journal or Purchases Returns Journal.

Question 12

Each invoice or credit note will also be entered…

Answer 12

the receivables ledger or the payables ledger.

Question 13

What are the relevant sections in the general ledger?

Answer 13

‘Revenue’, ‘Purchases’, ‘Sales returns’ or ‘Purchase returns’