Accountancy MCQs
Topic Notes: Accountancy
General Description
Plato
- Biography: Ancient Greek philosopher (427–347 BCE), student of Socrates and teacher of Aristotle, founder of the Academy in Athens.
- Important Ideas:
- Theory of Forms
- Philosopher-King
- Ideal State
1
On which side of the creditor control account should a discount received be recorded?
Answer:
Debit side
In a creditor control account, the balance represents the amount owed to suppliers. When a discount is received, the liability to the creditor decreases. Since liabilities have a credit balance, a decrease in liability is recorded on the debit side of the account.
2
In which ledger would the account of a specific supplier be maintained?
Answer:
Purchases ledger
The purchases ledger, also known as the creditors ledger, is a subsidiary ledger that contains individual accounts for each supplier from whom goods or services are purchased on credit. This allows the business to track the balance owed to each specific vendor.
3
Which of the following transactions is recorded on the credit side of a Trade Payables Ledger Control account?
Answer:
goods purchased
The Trade Payables Ledger Control account represents the total liability owed to suppliers. Credit purchases increase the liability, so they are recorded on the credit side. Conversely, payments, discounts received, and purchase returns decrease the liability and are recorded on the debit side.
4
Given a creditor balance of $1,000 on Jan 1, 2012, an ending balance of $2,000 on Dec 31, 2012, and payments of $500 made during the year, what is the total amount of purchases?
Answer:
1500
To calculate purchases, use the formula: Ending Balance = Opening Balance + Purchases - Payments. Plugging in the values: 2000 = 1000 + Purchases - 500. This simplifies to 2000 = 500 + Purchases. Solving for Purchases gives 2000 - 500 = 1500. Thus, the total purchases made during the year amount to $1,500.
5
On which side of the creditor control account is the total of the purchases return recorded?
Answer:
Debit side
A creditor control account represents the total amount owed to suppliers. Since a purchase return reduces the liability owed to the creditor, it is recorded on the debit side of the creditor control account, reflecting a decrease in the balance.
6
Which of the following items would not be recorded in a purchases ledger control account?
Answer:
Balance of money owing by customers at start of period
A purchases ledger control account tracks liabilities owed to suppliers. Balances owed by customers are recorded in the sales ledger control account, not the purchases ledger. Therefore, customer balances are irrelevant to the purchases ledger control account.
7
Which term is commonly used to refer to the creditor's ledger?
Answer:
Both (a) and (b)
The creditor's ledger, also known as the purchase ledger or supplier's ledger, is a subsidiary ledger that records all transactions related to individual suppliers from whom goods or services are purchased on credit. It tracks the amounts owed to each specific creditor, ensuring that the business maintains accurate records of its accounts payable obligations.
8
If a contra entry of $1,000 between the sales ledger and the purchase ledger was omitted from the creditor control account, what is the required adjustment?
Answer:
$1000 should be debited
A contra entry between sales and purchase ledgers reduces the balance owed to creditors. Since a creditor control account normally has a credit balance, reducing this liability requires a debit entry. Therefore, omitting this transaction means the creditor control account is overstated, and a debit of $1,000 is necessary to correct it.
9
Given a creditor control account with Bank payments of $100, Purchases of $200, Discount received of $100, and a closing balance (c/d) of $300, what is the opening balance (b/d)?
Answer:
300
The creditor control account follows the logic: Opening Balance + Purchases = Payments + Discounts + Closing Balance. Let X be the opening balance. X + 200 = 100 + 100 + 300. X + 200 = 500. X = 300. Thus, the opening balance brought down is $300.
10
Which of the following statements accurately describes the terminology used for a creditor control account?
Answer:
Both (A) and (B)
A creditor control account tracks the total amount owed to suppliers. It is interchangeably referred to as an accounts payable control account or a purchase ledger control account, as it summarizes the individual balances found in the purchase ledger.