Test Your Understanding on Previous Topics Learnt

A business buys inventory on credit for $500. It is allowed trade discount of 10% and cash discount of 4%. Which amount will be entered in the purchases account?

• $432

• $450

• $480

• $500

Goods returned to a supplier were entered in the supplier's appropriate journal. Which account should be debited in the supplier's general ledger?

• purchases

• returns inwards

• returns outwards

• sales

New shop fittings are bought on credit for $4000. Where this transaction entered first?

• cash book

• general journal

• purchases journal

• purchases ledger

What is the purpose of a trial balance?

• to calculate a provisional net profit for a financial year

• to confirm that the total of debit balances in the ledger agree with the total credit balances

• to confirm the cash book balance agrees with the bank statement balance

• to show the assets and liabilities of a business at a certain date

Which error prevents a trial balance from balancing?

• completely omitting an entry

• debiting A. Brown instead of B. Brown

• debiting purchases instead of motor vehicles

• making an entry in one account only

Which entry records a cheque paid to a supplier for goods bought on credit?

• Debit bank account, credit trade payable account

• Debit bank account, credit purchases account

• Debit trade payable account, credit bank account

• Debit purchases account, credit bank account

Amina sells goods to Yasmin on credit. They are found to be damaged. Which document will Amina then send to Yasmin?

• copy invoice

• credit note

• debit note

• statement of account

Maurice sends faulty goods back to James. In which book of prime entry would James record this transaction?

• general journal

• purchases returns journal

• sales journa

• sales returns journal

The trial balance of J. Brown failed to agree. A cheque for the purchase of a car had been debited to motor expenses. How would this error be corrected?

• Debit Motor expenses, Credit Suspense

• Debit Motor vehicles, Credit Motor expenses

• Debit Motor vehicles, Credit Suspense

• Debit Suspense, Credit Motor vehicles

Which is both a book of prime entry and a ledger account?

• cash book

• general journal

• purchases journal

• sales journal