FAPS Lesson 1 - Plenary

When goods are purchased from a supplier with an agreement for payment to take place at a later date, this is known as a:

• Cash transaction

• Credit transaction

If a business makes a sale on credit to a customer. The double-entry bookkeeping transaction to record this will be to ​ (a)   ​the ​ (b)   account and to ​ (c)   the ​ (d)  

• debit
• receivables ledger control
• credit
• sales revenue
• payables ledger control
• purchases
• bank
• bank overdraft

Match the following transaction to the correct general ledger classification

• Asset

• Cash injection (from owner) to the business

• Capital

• Purchase of a vehicle

• Income

• Fuel for vehicles

• Expense

• Use of a business bank overdraft

• Liability

• Sales revenue

Match the following descriptions of errors to the type of error

• A purchase of stationery for £35 from the bank has been entered as £53 for both accounts

• Error of original entry

• A cash sale has been entered as a debit to the cash sale account and a credit to the bank account

• Error of omission

• Goods sold on credit to AJ Hammond have been entered as a debit to AH Hammonds' account

• Error of commission

• An invoice for rent that has been paid was not included in the accounting records

• Reversal of entries

• Fuel for delivery vehicles has been entered into the vehicles (at cost) account

• Error of principle

When constructing an extended trial balance (ETB), we would normally expect the capital account to have a ​ ​ (a)   balance and the drawings account to have a ​ (b)   balance

• credit
• debit

Highlight those accounts that will be shown in the statement of profit or loss in green and the statement of financial position in blue

Note: PLCA is trade payables and SLCA is trade receivables

A company has extracted the extended trial balance prior to the end of year final accounts preparation.

At present, for the statement of profit or loss columns, the total debit side is £200,000 and the total credit side is £210,000.

What is the profit or loss for the year?

• £10,000 profit

• £10,000 loss

• £200,000 profit

• £210,000 profit

The calculate profit or loss for the year, the calculation is as follows:

• Sales revenue add purchases

• Assets minus liabilities

• Opening inventory minus closing inventory

• Income minus expenses