Recording Financial Transactions

Question 1

A business paid out £12,450 in net wages to its employees. In respect of these wages, the following amounts were presented int he statement of financial position.
PAYE payable - £2480
National Insurance payable
- employee’s £1350
- employer’s £1500

No other deductions were made.

Employees’ gross wages before deductions were:
A) £12,450
B) £27,450
C) £16,280
D) £17,780

Answer 1

C) £16,280

The PAYE and employees’ NI would have been deducted from gross salary before paying net wages to the employees. We must therefore add these back to th enet wages to calculate gross wages: 12,450 + 2,480 + 1,350 = 16,280.

Question 2

Which of the following is a source document that would be recorded in an entity’s cloud-based accounting software?
A)Debit note
B)Credit note
C)Sales order
D)Purchase order

Answer 2

B)Credit note

A credit note is a source document that requires recording in the cloud-based accounting software. The others are all documents used by businesses but are not source documents.