PRINCIPLES OF BOOKKEEPING CONTROLS WORKBOOK

PRINCIPLES OF
BOOKKEEPING
PRINCIPLES OF
CONTROLS BOOKKEEPING
WORKBOOK CONTROLS
This book has been written to provide practice assessment material
for the Unit ‘Principles of Bookkeeping Controls’ which is mandatory WORKBOOK
for the Q2022 AAT Level 2 Certificate in Accounting.

The book contains Chapter Activities and Practice Assessments

which will enable the student to gain confidence in tackling the AAT
Computer Based Assessment. Answers are also provided in this text.

This practical workbook should be used in combination with the

Osborne Books ‘Principles of Bookkeeping Controls Tutorial’ which
contains explanatory text and further practice questions.

SUPPORT
AS YOU
LEARN
ISBN 978-1-911198-53-6
DAVID COX
MICHAEL FARDON

email: books@osbornebooks.co.uk
9 781911 198536 www.osbornebooks.co.uk
Principles of
Bookkeeping
Controls
Workbook

David Cox
Michael Fardon
© David Cox, Michael Fardon, 2021, 2023, 2024.

All rights reserved. No part of this publication may be reproduced, stored in a

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ISBN 978-1-911198-53-6
 Introduction

Chapter activities
1 Payment methods 2

2 Payment methods and the bank account balance 7

3 Bank reconciliation statements 11

4 Use of control accounts 16

5 The journal 29

6 The trial balance 34

7 Correction of errors 40

Answers to chapter activities 53

Practice assessments – tasks

Practice assessment 1 79

Practice assessment 2 95

Practice assessment 3 111

Answers to practice assessments

Practice assessment 1 129

Practice assessment 2 137

Practice assessment 3 145

Qualifications covered

This book has been written specifically to cover the Unit ‘Principles of
Bookkeeping Controls’ which is mandatory for the following qualifications:
AAT Level 2 Certificate in Accounting
AAT Level 2 Certificate in Bookkeeping
AAT Certificate in Accounting – SCQF Level 6

This book contains Chapter Activities which provide extra practice material
in addition to the activities included in the Osborne Books Tutorial text, and
Practice Assessments to prepare the student for the computer based
assessments. The latter are based directly on the structure, style and
content of the sample assessment material provided by the AAT at
www.aat.org.uk.
Suggested answers to the Chapter Activities and Practice Assessments are
set out in this book.

Osborne Study and Revision Materials

Additional materials, tailored to the needs of students studying this unit and
revising for the assessment, include:
■ Tutorials: paperback books with practice activities
■ Wise Guides: pocket-sized spiral bound revision cards
■ Student Zone: access to Osborne Books online resources
■ Osborne Books App: Osborne Books ebooks for mobiles and tablets
Visit www.osbornebooks.co.uk for details of study and revision resources
and access to online material.
Chapter
activities
2 principles of bookkee ping controls workbo ok

1.1 Cash may be used as a form of payment in which two of the following situations?

(a) Employee wages

(b) BACS transfers

(c) The petty cash system

(d) Payment using Chip and PIN

1.2 If you are asked to make a payment by post, you are most likely to use which one of the following
methods?

(a) CHAPS

(b) Cheque

(c) Direct debit

(d) ‘Tap and go’ debit card

 chapter ac tivities 3

1.3 Draw lines connecting the four methods of payment listed on the left with the correct descriptions
in the boxes on the right.

enables the card holder to make

debit card
payment on a monthly basis

takes the payment direct from the

direct debit
customer’s bank account

regular (fixed date, same amount)

standing order payments set up with the bank by the
business sending the money

variable date and amount BACS

payments, set up by the business
credit card
receiving the payments through its
bank

1.4 For a cheque to be a valid method of payment it has to comply with certain conditions. Indicate in
the table below whether the following statements are true or false.

Statement True False

(a) A cheque has to be dated within seven days of making the

payment

(b) A cheque has to be signed by the person making

payment

(c) A cheque has to be signed by the person paying it into

the bank

(d) A cheque has to be paid in within a month of the date

written on the top of the cheque
4 principles of bookkee ping controls workbo ok

1.5 Complete the text below by using the appropriate words from the following list:

standing order direct debit

receiver’s bank variable amounts

payer’s bank

A is set up by the and

used to make fixed date payments for the same amount through the banking system.

A enables

to be taken from the payer’s account and the payments are deducted through the

1.6 You are running a business and have just signed a lease on a rented office. You are incurring
various expenses in connection with the office. Which method of payment from the list provided at
the end of the question would you choose as the best to use in the situations listed below? Enter
the number of the most appropriate payment option in the table below.

Option
number
(a) Paying rent for the office at a fixed amount of £750 a month

(b) Paying insurance premium of £2,000 which increases every year

(c) Buying office furniture for £1,200 from a local superstore

(d) Paying solicitors fees of £500 plus VAT in connection with lease

(e) Buying a travel card for £30 at the local railway station

List of payment options – enter the option number in the appropriate box in the table above.

1 ‘tap and go’ debit card

2 business credit card

3 direct debit

4 Faster Payment

5 standing order
 chapter ac tivities 5

1.7 You work in the accounts department of J M Supplies Ltd and check payments received from
customers. The payments include cheques.

(a) You are to identify three errors on the cheque shown below. Write down the errors in the
table below.

Southern Bank PLC date 2 June 97-76-54

Mereford Branch
16 Broad Street, Mereford MR1 7TR

Pay J M Supplies Ltd

Account payee only

only

Four hundred pounds only

£ 420.00
T WITT TRADING LTD

Director
123456 977654 12963455

Error 1

Error 2

Error 3

(b) What action would you take when you had discovered the errors?

(a) Correct the errors yourself and pay the cheque into the bank

(b) Contact T Witt Trading Ltd and ask for a new cheque to be issued

(c) Pay the cheque into the bank and hope that the errors will not be
noticed
6 principles of bookkee ping controls workbo ok

1.8 Select the most appropriate payment method for each of the following descriptions:

Description Payment method

An instruction in writing signed by the bank’s customer telling

the bank to pay a one-off amount to a named person

A card issued on a ‘buy now and pay later’ basis; payment is

made monthly in full or in part

A variable date and amount payment, set up by the business

receiving the payments

A paper-based document issued by a bank and used for high

value payments

Choose from the following payment methods – do not use each more than once:
• BACS

• Bank draft

• Cash

• CHAPS

• Cheque

• Credit card

• Debit card

• Direct debit

• Standing order
 chapter ac tivities 7

2.1 Money paid into the bank account of a business earlier rather than later improves which three of
the following options?

(a) The solvency of the business

(b) The amount of VAT payable to HM Revenue & Customs (HMRC)

(c) The reputation of the business in the community

(d) Keeping bank charges to a minimum

(e) Keeping interest on overdrafts to a minimum

2.2 Good practice in the management of the bank account of a business should involve which three of
the following options?

(a) Keeping the bank account in credit whenever possible

(b) Paying in cheques received as late as possible

(c) Encouraging customers to pay by Faster Payment

(d) Paying wages in cash rather than by BACS credit

(e) Paying the business insurance costs by monthly standing order rather than
in one payment at the beginning of the period of insurance
8 principles of bookkee ping controls workbo ok

2.3 It is important to appreciate that a ‘credit balance’ and a ‘debit balance’ mean opposite things when
used by:

(a) a business describing the bank account in its cash book

(b) its bank describing the account held by the business and as shown on the bank statement
from the bank

Complete the table below indicating in the column on the right whether the situation will result in a
debit or credit entry.

Situation Debit or
Credit?

(a) A receipt paid into the bank account as shown in the cash book of
the business

(b) A receipt paid into the bank account as shown on the bank
statement

(c) A payment out of the bank account as shown in the cash book of
the business

(d) A payment out of the bank account as shown on the bank

statement

2.4 Which three of the payment methods below will reduce the balance of the payer’s bank account
on the day that the payment is made?

Tick the appropriate options.

(a) Faster Payment

(b) Cheque posted to a supplier

(c) CHAPS

(d) Bank draft

(e) Credit card

 chapter ac tivities 9

2.5 Which two of the payment methods listed below will not reduce the balance of the payer’s bank
account on the day that the payment is made?

Tick the appropriate options.

(a) Cheque paid in at a different bank

(b) Bank draft

(c) Cash wages

(d) Credit card

(e) Standing order

2.6 Draw lines connecting the four methods of payment listed on the left with the appropriate period of
time it will normally take for the amount to be deducted from the bank account of the payer.

cash withdrawal
Amount deducted from the bank
account on the same day

faster payment

CHAPS
Amount deducted from the bank
account several days later

cheque sent by
post
10 principles of bookkee ping controls workbo ok

2.7 A business receives an invoice from a supplier. The invoice terms are payment within 30 days of
the invoice date. There is no prompt payment discount offered. The invoice includes the bank
account details of the supplier and payment by electronic transfer is requested.
In order to keep the bank account balance as high as it can for as long as possible, the business
will adopt its normal practice and pay the invoice by Faster Payment.
Which one of the three options shown below should the business choose to pay the invoice?

(a) Pay the invoice in the week after it has been received

(b) Pay the invoice so that it reaches the supplier’s bank as late as possible
within the 30 day period

(c) Pay the invoice as soon as a chaser for non-payment is received from the
supplier after the 30 day period has elapsed

2.8 (a) Identify which one of the following statements is true.

Statement
It is good practice to pay cheques received during the month into the bank
account at the end of the month
A bank overdraft should be arranged in advance of being required
A bank does not make a charge when it has to return unpaid cheques that
its customer has issued

(b) Identify whether each of the following statements is true or false.

Statement True False

A cheque paid in at a different bank or branch from the cheque
issuer will be deducted from the issuer’s account one working
day later
A payment made by debit card is normally deducted from the
bank account on the same working day
A CHAPS electronic bank transfer is deducted from the
sender’s bank account on the day that the transfer is made
 chapter ac tivities 11

3.1 Upon receipt of a bank statement, which one of the following must be written into the firm’s cash
book?

(a) Payment debited in error by the bank

(b) Unpresented cheques

(c) Electronic transfers from customers

(d) Outstanding lodgements

3.2 A firm’s bank statement shows an overdraft of £600. Unpresented cheques total £250; outstanding
lodgements total £1,000. What is the balance at bank shown by the cash book?

(a) £150 debit

(b) £650 debit

(c) £250 credit

(d) £150 credit

12 principles of bookkee ping controls workbo ok

3.3 Show whether the following statements are true or false.

Statement True False

(a) Some differences between the bank statement and the cash
book are described as timing differences – these are not
corrected in the cash book

(b) A trade receivable’s cheque is unpaid – the amount of the

unpaid cheque must be recorded in cash book on the debit
side

(c) In a bank reconciliation statement which starts with the

closing bank statement balance, unpresented cheques are
deducted

(d) The opening cash book balance at bank will always be the
same as the opening bank statement balance

3.4 Complete the following text by choosing the correct words from the boxes below and entering them
in the boxes in the text.

cash book bank statement ledger error

discrepancy fraud regular daily

timing date independent similarity

It is important to reconcile the cash book to the

on a basis.

The bank statement provides an accounting

record and helps to prevent .

It also highlights any differences and explains

why there is a between the closing bank statement

balance and the closing balance.

 chapter ac tivities 13

3.5 The bank statement and cash book of Garvey Ltd for the month of June are shown below.

BANK STATEMENT
Date Details Paid out Paid in Balance
20-4 £ £ £
01 Jun Balance b/f 2,685 C
02 Jun Cheque 784342 855 1,830 C
07 Jun BACS credit: P Parker 1,525 3,355 C
08 Jun Cheque 784344 697 2,658 C
10 Jun Cheque 784345 1,922 736 C
14 Jun Counter credit 2,607 3,343 C
15 Jun Cheque 784343 412 2,931 C
18 Jun BACS credit: Watson Ltd 2,109 5,040 C
24 Jun Direct debit: First Electric 112 4,928 C
24 Jun Cheque 784347 1,181 3,747 C
25 Jun Bank charges 45 3,702 C
28 Jun Cheque 784348 594 3,108 C

D = Debit C = Credit

CASH BOOK
Date Details Bank Date Cheque Details Bank
20-4 £ 20-4 number £

1 Jun Balance b/f 1,830 3 Jun 784343 Gladysz & Co 412

5 Jun P Parker 1,525 3 Jun 784344 Daley Ltd 697

10 Jun Dunlevy Ltd 2,607 3 Jun 784345 Ward & Lamb 1,922

25 Jun Corline Traders 1,433 12 Jun 784346 Hendrie Stores 692

28 Jun Moss & Co 786 12 Jun 784347 McCabes 1,181

12 Jun 784348 Rehman Ltd 594

24 Jun First Electric 112

29 Jun 784349 Hannaford & Co 764

30 Jun Balance c/d 1,807

14 principles of bookkee ping controls workbo ok

You are to update the cash book and to prepare a bank reconciliation statement at 30 June 20-8.

Cash book Debit Credit

£ £

Closing balance b/d

Adjustments:

Adjusted balance c/d

Bank reconciliation £

Closing bank statement balance 3,108

Less unpresented cheques:

Add outstanding lodgements:

Adjusted closing cash book balance

Select your entries from the following list: Bank charges, Corline Traders, Daley Ltd, Dunlevy Ltd,
First Electric, Gladysz & Co, Hannaford & Co, Hendrie Stores, McCabes, Moss & Co, P Parker,
Rehman Ltd, Ward & Lamb, Watson Ltd.
 chapter ac tivities 15

3.6 Complete the following text by choosing the correct words from the boxes below and entering them
in the boxes in the text.

cash book timing differences bank errors

security reconciliation authorised

The bank explains any difference between the closing

balance in the and the closing balance at the

It highlights any and .

Access to bank records should be restricted to

employees to safeguard the of payments and receipts.

3.7 Identify whether each of the following statements is true or false.

Statement True False

Unpresented cheques and outstanding lodgements are examples of
timing differences
Bank charges shown on the bank statement are recorded on the debit
side of the cash book
The opening cash book balance is always the same as the opening
bank statement balance
16 principles of bookkee ping controls workbo ok

4.1 You have the following information for the month:

• customer balances at start of month £25,685

• credit sales £18,732
• sales returns £876
• money received from customers £17,455
• discounts allowed £227
• irrecoverable debt written off £175
What is the figure for customer balances at the end of the month?

(a) £23,130

(b) £25,684

(c) £25,686

(d) £26,034

4.2 You have the following information for the month:

• supplier balances at start of month £13,278

• credit purchases £9,584
• purchases returns £821
• money paid to suppliers £10,058
• discounts received £247

What is the figure for supplier balances at the end of the month?

(a) £12,230

(b) £13,378

(c) £11,736

(d) £14,820
 chapter ac tivities 17

4.3 You have the following information for the month:

• balance of VAT account at start of month £2,380 credit

• VAT from sales day book £1,420
• VAT from purchases day book £1,030
• VAT from discounts allowed day book £35
• VAT from sales returns day book £223
• VAT from purchases returns day book £185
• VAT from discounts received day book £22
• VAT from cash sales £570

What is the balance of VAT account at the end of the month?

(a) £1,471 debit

(b) £1,471 credit

(c) £3,289 debit

(d) £3,289 credit

4.4 (a) The following is a summary of transactions with credit customers during the month of July.

Show by ticking the appropriate column whether each entry will be a debit or credit in the
receivables ledger control account in the general ledger.

Receivables ledger control account

Details Amount Debit Credit

£

Balance owing from credit customers at 1 July 7,298

Money received from credit customers 6,450

Discounts allowed 75

Goods sold to credit customers 14,774

Goods returned by credit customers 501

Journal credit to correct an error 89

18 principles of bookkee ping controls workbo ok

(b) The following is a summary of transactions with credit suppliers during the month of July.

Show by ticking the appropriate column whether each entry will be a debit or credit in the
payables ledger control account in the general ledger.

Payables ledger control account

Details Amount Debit Credit

£

Balance owing to credit suppliers at 1 July 2,299

Money paid to credit suppliers 2,276

Discounts received 23

Goods purchased from credit suppliers 5,113

Goods returned to credit suppliers 108

At the beginning of September the following balances were in the receivables ledger:

Credit customers Balances

Amount Debit/credit
£

J Stone 1,992 Debit

Murray Ltd 2,464 Debit

Parton & Co 320 Credit

Davies Ltd 411 Debit

Carpenter Ltd 2,569 Debit

King & Co 1,945 Debit

(c) What should the balance of the receivables ledger control account be on 1 September in
order for it to reconcile with the total of the balances in the receivables ledger?

Balance

(a) Debit balance of £9,701

(b) Credit balance of £9,701

(c) Debit balance of £9,061

(d) Credit balance of £9,061

 chapter ac tivities 19

(d) Show whether the following statements are true or false.

True False

(a) If an irrecoverable debt is not written off in the

receivables ledger control account, the balance on the
account will be lower than it should be

(b) The balance of the payables ledger control account

should agree with the total of the aged trade payables
analysis

(c) Reconciliation of the receivables ledger control

account highlights any differences between the
subsidiary ledger total and the control account
balance
20 principles of bookkee ping controls workbo ok

4.5 You work as an accounts assistant for Tilsley Trading. Today you are working on the payables
ledger control account and payables ledger.

A summary of transactions with credit suppliers during the month of June is shown below.

(a) Show whether each entry will be a debit or a credit in the payables ledger control account in
the general ledger.

Details Amount Debit Credit

£

Balance of credit suppliers at 1 June 35,106

Purchases from credit suppliers 20,354

Payments made to credit suppliers 19,062

Discounts received 289

Goods returned to credit suppliers 1,374

(b) What will be the balance brought down on 1 July on the above account?

(a) Dr £34,735

(b) Cr £34,735

(c) Dr £35,477

(d) Cr £35,477

(e) Dr £35,313

(f) Cr £35,313

The following credit balances were in the payables ledger on 1 July.

£
Cockerill Ltd 9,262
Darnbrook & Co 3,495
M Warren 5,724
De Graaf Ltd 6,098
Hannaford Trading 4,477
Quesne plc 5,386
 chapter ac tivities 21

(c) Reconcile the balances shown above with the payables ledger control account balance
calculated in part (b).

Balance on payables ledger control account at 1 July

Total of the payables ledger balances at 1 July

Difference

(d) What may have caused the difference you calculated in part (c)?

(a) An amount for discounts received was entered twice in the payables
ledger control account

(b) A credit note was not entered in the payables ledger control account

(c) A credit note was not entered in the payables ledger

(d) An amount for discounts received was not entered in the payables
ledger
22 principles of bookkee ping controls workbo ok

4.6 You work as an Accounts Assistant for Wyvern Windows. Today you are working on the
receivables ledger control account and receivables ledger. A summary of transactions with credit
customers during the month of April is shown below.

(a) Show whether each entry will be a debit or a credit in the receivables ledger control account
in the general ledger.

Details Amount Debit Credit

£

Balance of credit customers at 1 April 18,392

Goods sold to credit customers 6,874

Money received from credit customers 8,937

Discounts allowed 154

Goods returned by credit customers 529

(b) What will be the balance brought down on 1 May on the above account?

(a) Dr £17,012

(b) Cr £17,012

(c) Dr £15,646

(d) Cr £15,646

(e) Dr £21,138

(f) Cr £21,138

The following debit balances were in the receivables ledger on 1 May.

£
Hamilton Ltd 3,486
Gusson & Co 1,089
Palgrave Supplies 2,627
Ikpusu & Co 4,321
Lorenz Ltd 747
McDiarmid plc 3,961
 chapter ac tivities 23

(c) Reconcile the balances shown above with the receivables ledger control account balance
calculated in part (b).

Balance on receivables ledger control account at 1 May

Total of the receivables ledger balances at 1 May

Difference

(d) What may have caused the difference you calculated in part (c)?

(a) An invoice was entered twice in the receivables ledger

(b) A credit note was entered twice in the receivables ledger

(c) A credit note was not entered in the receivables ledger control
account

(d) An amount of discounts allowed was not entered in the receivables

ledger control account

(e) Tick two of the following statements that are true.

(a) Reconciliation of the payables ledger control account assures

managers that the amount showing as outstanding to suppliers is
correct

(b) The balance of the payables ledger control account should agree
with the total of the balances in the receivables ledger

(c) The balance of the receivables ledger control account should agree
with the total of the aged trade payables analysis

(d) Reconciliation of the receivables ledger control account highlights

any differences between the subsidiary ledger total and the control
account balance
24 principles of bookkee ping controls workbo ok

4.7 You work as an Accounts Assistant for Craven Cottages Ltd. Today you are working on the VAT
control account.

The following figures have been taken from Craven Cottages’ books of prime entry:

Totals for quarter

Sales day book Purchases day book
Net £68,800 Net £35,000
VAT £13,760 VAT £7,000
Total £82,560 Total £42,000

Sales returns day book Purchases returns day book

Net £2,240 Net £1,640
VAT £448 VAT £328
Total £2,688 Total £1,968

Cash book: cash-sales Discounts allowed day book

Net £2,840 Net £600
VAT £568 VAT £120
Total £3,408 Total £720

(a) What will be the entries in the VAT control account to record the VAT transactions in the
quarter?

Select your entries for the details columns from the following list: Cash sales, Discounts
allowed, Discounts allowed day book, Purchases, Purchases day book, Purchases returns,
Purchases returns day book, Sales, Sales day book, Sales returns, Sales returns day book,
Value Added Tax.

VAT control account

Details Amount Details Amount

£ £

(b) The VAT Return has been completed and shows an amount owing to HM Revenue &
Customs of £6,432.

Is the VAT Return correct?

Yes
No
 chapter ac tivities 25

4.8 The following is a list of the VAT totals from the books of prime entry of a business:

Books of prime entry VAT totals for quarter

£
Sales day book 14,800
Purchases day book 9,080
Sales returns day book 368
Purchases returns day book 248
Cash book: cash sales 376

Other VAT items for the quarter are as follows:

VAT on petty cash payments 17

VAT on irrecoverable debts written off 108
VAT on purchase of computer equipment 575
VAT paid to HMRC 9,804

(a) What will be the entries in the VAT control account to record the VAT transactions in the
quarter?

Select your entries for the details column from the following list: Bank, Cash sales,
Computer equipment, Irrecoverable debts, Petty cash, Purchases, Purchases day book,
Purchases returns, Purchases returns day book, Sales, Sales day book, Sales returns,
Sales returns day book, VAT.

VAT control account

Details Amount Details Amount

£ £
Balance b/f 9,804

(b) The VAT Return has been completed and shows an amount owing to HM Revenue &
Customs of £5,276.

Is the VAT Return correct?

Yes
No
26 principles of bookkee ping controls workbo ok

(c) Show whether the following statements are true or false.

True False

(a) The VAT control account is used to calculate how

much VAT is due to, or sometimes from,
HM Revenue & Customs

(b) A debit balance on the VAT control account

indicates that the business is due a refund from
HM Revenue & Customs

(c) A bank payment of VAT due to HM Revenue &

Customs will be entered as a debit in the VAT
control account

4.9 The following is a record of the VAT values in the books of prime entry of a business:

£
VAT from Sales day book 17,080
VAT from Sales returns day book 280
VAT from Purchases day book 9,800
VAT from Purchases returns day book 760
VAT from Discounts received day book 120
VAT from Cash book (VAT on cash sales) 192
VAT on petty cash payments 9
VAT on irrecoverable debt written off 82
VAT on purchase of studio equipment 400
VAT paid to HMRC 6,536

(a) What will be the entries in the VAT control account to record the VAT transactions in the
quarter?

Select your entries for the details columns from the following list: Bank, Cash book,
Discounts received, Discounts received day book, Irrecoverable debts, Petty cash,
Purchases, Purchases returns, Sales, Sales returns, Studio equipment, VAT.
 chapter ac tivities 27

VAT control account

Details Amount Details Amount

£ £
Balance b/f 6,536

The VAT Return has been completed and shows an amount owing to HM Revenue &
Customs of £7,581.

(b) Is the VAT Return correct?

Yes
No

(c) Show whether the following statements are true or false.

True False

(a) VAT on purchases and expenses can only be

entered in the VAT account if the purchase
document bears the VAT registration number of the
supplier

(b) A bank receipt of a refund of VAT from HM Revenue

& Customs would be entered as a credit in the VAT
control account

(c) A bank payment of VAT due to HM Revenue &

Customs will be entered as a credit in the VAT
control account
28 principles of bookkee ping controls workbo ok

4.10 (a) Identify which one of the following statements is correct in relation to the payables ledger
control account.

Statement
An entry made in the wrong payables ledger account will be revealed by the
payables ledger control account
The gross figure from purchases returns day book is debited to payables
ledger control account
Discounts received are not recorded in payables ledger control account
A debit balance brought down on payables ledger control account indicates an
error in the bookkeeping system

You work in the accounts department of Morwenna Limited. Your manager asks you to prepare the
receivables ledger control account for August.

The following transactions have been recorded with credit customers during the month of August:

Transaction Amount
£
Balance owing from credit customers at 1 August 10,686
Sales 7,104
Bank receipts 6,397
Sales returns 121
Discounts allowed 205
Irrecoverable debts written off 176

(b) Complete the receivables ledger control account below for August, including the balance
carried down at the end of the month.

Receivables ledger control account

Details £ Details £
 chapter ac tivities 29

5.1 Which one of the following transactions will be recorded in the journal?

(a) Purchase of goods on credit

(b) Payroll transactions

(c) Goods returned by a credit customer

(d) Sale of goods for cash

5.2 Mohammed Pazir started in business on 1 February 20-4 with the following assets and liabilities:

£
Vehicle 6,500
Fixtures and fittings 2,800
Inventory 4,100
Cash 150
Bank 1,250
Loan from uncle 5,000

Use the form below to prepare Mohammed’s opening journal entry, showing clearly his capital at
1 February 20-4.

Date Details Reference Dr Cr

20-4 £ £

Journal entries to record the opening entries

of the new business.
30 principles of bookkee ping controls workbo ok

5.3 You are employed by Sachdev Supplies as an Accounts Assistant. Today the Accounts Supervisor
tells you that a credit customer, Lefroy Limited, has ceased trading, owing Sachdev Supplies £560
plus VAT at 20%.

(a) Record the journal entries needed in the general ledger to write off the net amount and the
VAT.

Select your account names from the following list: Irrecoverable debts, Lefroy Limited,
Payables ledger control, Purchases, Receivables ledger control, Sachdev Supplies, Sales,
Value Added Tax.

Account name Debit Credit

£ £

(b) Sachdev Supplies has started a new business, Sachdev Developments, and a new set of
accounts is to be opened. A partially completed journal to record the opening entries is
shown below.

Record the journal entries needed in the accounts in the general ledger of Sachdev
Developments to deal with the opening entries.

Account name Amount Debit Credit

£
Receivables ledger control 14,275
Payables ledger control 7,392
Inventory 4,107
Office equipment 10,400
Cash at bank 2,822
Rent and rates 4,086
Miscellaneous expenses 794
Wages 2,397
Loan from bank 6,250
Capital 25,239
Journal entries to record the opening entries of the new business
 chapter ac tivities 31

5.4 You are employed by Mullen Limited as an Accounts Assistant.

Mullen Limited pays its employees through the bank every month and maintains a wages control
account. A summary of last month’s payroll transactions is shown below.

Item £
Wages expense* 24,489
Income tax 2,510
Employer’s National Insurance contributions 1,105
Employees’ National Insurance contributions 965
Employer’s pension contributions 1,032
Employees’ pension contributions 1,032

*Tutorial note: Wages expense is the total cost of the payroll to the employer – that is, gross
wages of employees (before deductions) + employer’s NIC + employer’s pension contributions.

Show the journal entries needed to record:

• the wages expense

• the HM Revenue & Customs liability

• the net wages paid to employees

• the pension fund liability

Select your account names from the following list: Bank, Employees’ National Insurance,
Employer’s National Insurance, HM Revenue & Customs, Income tax, Net wages, Pension fund,
Wages control, Wages expense.

Journal to record the wages expense

Account name Debit Credit

£ £

Journal to record the HM Revenue & Customs liability

Account name Debit Credit

£ £
32 principles of bookkee ping controls workbo ok

Journal to record the net wages paid to employees

Account name Debit Credit

£ £

Journal to record the pension fund liability

Account name Debit Credit

£ £

5.5 Show which four of the following transactions would be entered in the journal.

(a) Bank loan repayment

(b) Irrecoverable debt written off

(c) Opening entries at start of business

(d) Payment of VAT owing to HMRC

(e) Payroll transactions

(f) Purchase of non-current assets

(g) Transfer of cash from cash sales to bank

5.6 Identify which two of the following situations are a correct use of the journal.

Situation
Tamsin wishes to write off a receivables account from receivables ledger as an
irrecoverable debt
Hanna has bought postage stamps, paying for them from petty cash
Imogen runs a furniture shop and she has sold furniture on credit to Wyvern Hotel
Ltd
Ernesto is setting up in business and is starting with capital of £10,000, office
equipment valued at £2,500 and cash in the bank of £7,500
 chapter ac tivities 33

5.7 A journal entry for payroll transactions is as follows:

31 March 20-6 Journal number: 81

Account Debit Credit Description
£ £
Wages expense 45,382 Gross pay
Bank 36,064 Net pay
Wages expense 5,106 Employer’s NIC*
HMRC 5,106 Employer’s NIC
HMRC 4,210 Employees’ NIC
HMRC 5,108 Income tax (PAYE)

* National Insurance Contributions

Prior to this journal entry, the balance of the HM Revenue & Customs account was debit £1,270.
Show the transactions to be recorded on the HM Revenue & Customs account, calculate the
balance carried down after these entries, and total both sides of the account (dates are not
required).

HM Revenue & Customs

Details £ Details £
Balance b/d 1,270
34 principles of bookkee ping controls workbo ok

6.1 Which one of the following accounts always has a credit balance?

(a) Drawings account

(b) Sales returns account

(c) Sales account

(d) Office equipment account

6.2 Which one of the following accounts always has a debit balance?

(a) Purchases returns account

(b) Receivables ledger control account

(c) Capital account

(d) Loan account

 chapter ac tivities 35

6.3 Prepare the initial trial balance of Kate Trelawney as at 31 March 20-2. She has omitted to open a
capital account. You are to fill in the missing figure in order to balance the trial balance.

£
Bank loan 3,650
Purchases 23,745
Vehicle 9,500
Sales 65,034
Bank (cash at bank) 2,162
Discounts allowed 317
Purchases returns 855
Receivables ledger control 7,045
Office equipment 5,450
Inventory at 1 April 20-1 4,381
Sales returns 1,624
Payables ledger control 4,736
Expenses 32,598
Discounts received 494
Capital ?
36 principles of bookkee ping controls workbo ok

6.4 You work as an accounts assistant for Wyvern Trading. The accounts supervisor has asked you to
work on preparing an initial trial balance as at 31 December 20-8. The supervisor has given you
the following list of balances to be transferred to the trial balance.

You are to place the figures in the debit or credit column, as appropriate, and to total each column.

Account name Amount Debit Credit

£ £ £
Bank (overdraft) 4,293
Loan from bank 12,500
Vehicles 25,500
Inventory 10,417
Petty cash 68
Capital 25,794
VAT owing to HM Revenue & Customs 1,496
Payables ledger control 12,794
Purchases 104,763
Purchases returns 2,681
Receivables ledger control 28,354
Sales 184,267
Sales returns 4,098
Discounts allowed 1,312
Discounts received 1,784
Wages 35,961
Telephone 3,474
Advertising 5,921
Insurance 3,084
Heating and lighting 2,477
Rent and rates 3,672
Postages 876
Miscellaneous expenses 545
Drawings 15,087
Totals –
 chapter ac tivities 37

6.5 You work as an accounts assistant for Highley Limited. The accounts supervisor has asked you to
work on preparing an initial trial balance as at 30 June 20-1. The supervisor has given you the
following list of balances to be transferred to the trial balance.

You are to place the figures in the debit or credit column, as appropriate, and to total each column.

Account name Amount Debit Credit

£ £ £
Sales 262,394
Sales returns 2,107
Receivables ledger control 33,844
Purchases 157,988
Purchases returns 1,745
Payables ledger control 17,311
Discount received 1,297
Discount allowed 845
Rent and rates 5,941
Advertising 6,088
Insurance 3,176
Wages 48,954
Heating and lighting 4,266
Postages and telephone 2,107
Miscellaneous expenses 632
Vehicles 28,400
Capital 48,756
Drawings 19,354
Office equipment 10,500
Inventory 16,246
Petty cash 150
Bank (cash at bank) 3,096
VAT owing to HM Revenue & Customs 3,721
Loan from bank 8,470
Totals –
38 principles of bookkee ping controls workbo ok

6.6 You are an accounts assistant at Dowson Trade Supplies.

Most of the ledger accounts have been closed off and the balances included in the trial balance at
31 July 20-6.

(a) You are to complete the remaining ledger accounts by inserting the balance carried down
on each account. Enter your answers to two decimal places.

Bank

20-6 Details £ 20-6 Details £

1 Jul Balance b/d 2,836.18 20 Jul Stationery 746.29

6 Jul Sales 5,107.29 25 Jul Purchases 3,846.32

31 Jul Receivables ledger 25,391.18 31 Jul Payables ledger control 21,234.96

control

31 Jul Balance c/d

Discounts allowed

20-6 Details £ 20-6 Details £

1 Jul Balance b/d 346.29

31 Jul Receivables ledger 108.33

control

31 July Balance c/d

Payables ledger control

20-6 Details £ 20-6 Details £

31 Jul Bank 21,234.96 1 Jul Balance b/d 30,384.32

14 Jul Purchases 6,107.85

31 Jul Balance c/d 28 Jul Purchases 3,209.96

 chapter ac tivities 39

VAT control

20-6 Details £ 20-6 Details £

31 Jul Purchases 2,318.40 1 Jul Balance b/d 1,608.96

31 Jul Sales 3,220.14

31 Jul Balance c/d

(b) Complete the trial balance by inserting the missing figures and calculating the totals for
each column. Enter your answers to two decimal places.

Item Debit Credit

£ £
Sales 122,831.15
Purchases 68,022.56
Bank
Discounts allowed
Wages and salaries 33,290.42
Office expenses 12,387.16
Payables ledger control
Receivables ledger control 22,147.18
VAT control
Totals
40 principles of bookkee ping controls workbo ok

7.1 Fill in the missing words from the following sentences, choosing from:

omission commission principle original entry reversal of entries compensating

(a) "You made an error of when you debited the cost of

diesel fuel for the van to Vans Account."

(b) "I've had an email from the accounts supervisor at Jones Limited concerning the statements
of account that we sent out the other day. She says that there is a sales invoice charged
that she knows nothing about. I wonder if it should be for T Jones' account and we have
made an error of ?"

(c) "There is a 'bad figure' on a purchases invoice – we have read it as £35 when it
should be £55. It has gone through our accounts wrongly so we have an error of
to put right."

(d) "Although the trial balance balanced last week, I've since found an error of £100 in the
calculation of the balance of sales account. We will need to check the other balances as I
think we may have a error."

(e) "Who was in charge of that trainee last week? He has entered the payment for the
electricity bill on the debit side of the bank and on the credit side of electricity – a
."

(f) "I found this purchase invoice from last week in amongst the copy statements. As we
haven't put it through the accounts we have an error of ."
 chapter ac tivities 41

7.2 Telephone expenses of £250 paid from the bank have been debited to the bank columns of the
cash book and credited to the telephone expenses account. Which one of the following entries will
correct the error?

Debit Credit

(a) Bank £250 Telephone expenses £250

(b) Telephone expenses £250 Bank £250

(c) Bank £500 Telephone expenses £500

(d) Telephone expenses £500 Bank £500

7.3 The trial balance of Tairo Traders does not balance. The debit column totals £220,472 and the
credit column totals £217,647.

(a) What entry will be made in the suspense account to balance the trial balance?

Account name Debit Credit

£ £

Suspense

(b) It is important to understand the effects of errors in a bookkeeping system.

Show which of the errors below will cause an imbalance in the trial balance by placing a tick
in the appropriate column for each error.

Error Will cause an Will not cause an

imbalance in the imbalance in the
trial balance trial balance
(a) The cost of diesel fuel, £50, has been
debited in the cash book and credited
to vehicles account
(b) A credit sale of £225 has not been
entered in the accounts
(c) The balance of wages account has
been calculated incorrectly
(d) A cash purchase of £85 has been
recorded in the cash book only
(e) The cost of stationery, £54, has been
recorded as £45 in the cash book and
stationery account
(f) Rent paid of £450 has been debited to
rent paid account and debited in the
cash book
42 principles of bookkee ping controls workbo ok

7.4 The initial trial balance of Merrett Marketing at 30 June 20-3 did not balance. The difference of
£424 was placed into a suspense account.

The error has been traced to the purchases day book as shown below.

Purchases day book

Date Details Invoice Total VAT Net

20-3 number £ £ £
30 Jun Downing Traders 2798 720 120 600
30 Jun Morwenna and Co M/2348 576 96 480
30 Jun Oades plc 4592 1,248 208 1,040

Totals 2,120 424 2,120

(a) Identify the error and record the journal entries needed in the general ledger to:

• remove the incorrect entry

• record the correct entry

• remove the suspense account balance

Select your account name from the following list: Downing Traders, Morwenna and Co,
Oades plc, Purchases, Purchases day book, Payables ledger control, Purchases returns,
Purchases returns day book, Sales, Sales day book, Receivables ledger control, Sales
returns, Sales returns day book, Suspense, Value Added Tax.

Journal to remove the incorrect entry

Account name Debit Credit

£ £

Journal to record the correct entry

Account name Debit Credit

£ £

Journal to remove the suspense account balance

Account name Debit Credit

£ £
 chapter ac tivities 43

An entry to record a bank payment of £525 for rent paid has been reversed.

(b) Record the journal entries needed in the general ledger to:

• remove the incorrect entry

• record the correct entry

Select your account names from the following list: Bank, Cash, Purchases, Payables ledger
control, Rent, Sales, Receivables ledger control, Suspense, Value Added Tax.

Journal to remove the incorrect entry

Account name Debit Credit

£ £

Journal to record the correct entry

Account name Debit Credit

£ £
44 principles of bookkee ping controls workbo ok

7.5 A direct debit for business rates of £609 has been entered in the accounts as £690.

(a) Record the journal entries needed in the general ledger to remove the incorrect entry.

Select your account names from the following list: Bank, Cash, Direct debit, Purchases,
Rates, Suspense.

Account name Debit Credit

£ £

(b) Record the journal entries needed in the general ledger to record the correct entry.

Select your account names from the following list: Bank, Cash, Direct debit, Purchases,
Rates, Suspense.

Account name Debit Credit

£ £
 chapter ac tivities 45

7.6 The trial balance of Fayer and Co included a suspense account. All the bookkeeping errors have
now been traced and the journal entries shown below have been recorded.

Journal entries

Account name Debit Credit

£ £
Office expenses 180
Office equipment 180

Sales returns 295

Suspense 295

Vehicle expenses 350

Suspense 350

As the accounts assistant at Fayer and Co, you are to show the journal entries in the general
ledger accounts. Dates are not required.

Select your entries for the details column from the following list: Balance b/f, Office equipment,
Office expenses, Sales returns, Suspense, Vehicle expenses.

Office expenses

Details Amount £ Details Amount £

Office equipment

Details Amount £ Details Amount £

46 principles of bookkee ping controls workbo ok

Sales returns

Details Amount £ Details Amount £

Suspense

Details Amount £ Details Amount £

Balance b/f 645

Vehicle expenses

Details Amount £ Details Amount £

7.7 The trial balance of Quaver Music included a suspense account. All the bookkeeping errors have
now been traced and the journal entries are shown below.

Account name Debit Credit

Sales 99
Suspense 99

Suspense 1,612
VAT 1,612

Bank interest paid 52

Bank charges 52

Show the journal entries in the general ledger accounts on the next page. Dates are not required.
Select your entries for the details column from: Bank charges, Bank interest paid, Sales,
Suspense.
 chapter ac tivities 47

Sales

Details Amount Details Amount

£ £

VAT

Details Amount Details Amount

£ £

Bank interest paid

Details Amount Details Amount

£ £

Bank charges

Details Amount Details Amount

£ £

Suspense

Details Amount Details Amount

£ £
Balance b/f 1,513
48 principles of bookkee ping controls workbo ok

7.8 On 30 June 20-9, Khela Krafts prepared an initial trial balance which did not balance, and a
suspense account was opened. On 1 July, journal entries were prepared to correct the errors that
had been found, and to clear the suspense account. The list of balances in the initial trial balance,
and the journal entries to correct the errors, are shown below and on the next page.

As the accounts assistant at Khela Krafts, you are to redraft the trial balance by placing the figures
in the debit or credit column. You should take into account the journal entries (on the next page)
which will clear the suspense account.

Balances on Balances at
Account name 30 June 20-9 1 July 20-9
£ Debit £ Credit £
Inventory 8,692
Receivables ledger control 12,347
Petty cash 84
Capital 15,287
Loan from bank 8,625
VAT owing to HM Revenue & Customs 2,733
Payables ledger control 8,421
Bank (cash at bank) 1,596
Sales 77,364
Sales returns 2,913
Purchases 40,467
Purchases returns 872
Wages 20,644
Advertising 2,397
Insurance 1,849
Heating and lighting 1,066
Rent and business rates 3,862
Vehicle expenses 2,035
Vehicles 15,400
Suspense account (credit balance) 50
Totals
 chapter ac tivities 49

Journal entries

Account name Debit Credit

£ £
Suspense 490
Purchases returns 490

Account name Debit Credit

£ £
Suspense 320
Vehicle expenses 320
Vehicle expenses 230
Suspense 230

Account name Debit Credit

£ £
Advertising 530
Suspense 530

7.9 The trial balance of Lizzie’s business has disclosed that there are errors.
(a) Identify which two of the following statements about suspense accounts are true.

Statement
A suspense account is created when errors are disclosed by the trial balance.
A suspense account can have either a debit balance or a credit balance.
When the debit side total of a trial balance is more than the credit side total, a
suspense is opened with a debit balance.
If the balance of receivables ledger control account does not agree with the
total balances from receivables ledger, the difference should be transferred to
suspense account.
50 principles of bookkee ping controls workbo ok

(b) Identify whether each of the errors described below would or would not be disclosed by the
trial balance.

Error Disclosed Not

disclosed

A cash purchase has not been recorded in the accounts

Payment for office expenses of £65 has been recorded in
both office expenses account and bank account as £56

7.10 Carissa and Hannah run a retail business. They use a manual accounting system and have
prepared a trial balance at the year-end. The trial balance shows total debits of £54,684 and total
credits of £53,897.

(a) What is the balance of suspense account in the trial balance?

This balance is (tick the answer):

Debit

Credit

Carissa and Hannah have identified the following errors:

Error 1: Rent received for April 20-6 of £850 was debited to bank account but was not recorded in
rent received account.

Error 2: The day book total of purchases for May 20-6 was £13,181. The amount entered in
purchases account in the general ledger was £13,118.

(b) Complete the table below with the account names required to show the debits and credits
that will be processed through the journal to clear suspense account.

31 May 20-6 Journal number 49

Account Debit Credit Description
£ £
850 Correction of error 1
850 Correction of error 1
63 Correction of error 2
63 Correction of error 2
 chapter ac tivities 51

7.11 You are an accounts assistant at Linton Trading. You are asked to redraft a trial balance after
some errors have been identified and the correcting journal entries have been made.

The initial list of balances for Linton Trading at 30 April 20-4 is:

Item £
Sales 78,242.99
Purchases 40,216.45
Discounts received 1,027.16
Bank 3,108.90
Office equipment 10,362.50
Receivables ledger control 24,595.13
Suspense 987.17

The errors have been identified and the following journal entries need to be processed:

Date: 30 April 20-4 Journal number: 087

Date Description Debit Credit
£ £
30 April Suspense 54.13 Discounts received not recorded in
discounts received account
30 April Discounts received 54.13 Discounts received not recorded in
discounts received account
30 April Purchases 1,041.30 Purchases of £520.65 recorded on
credit side of purchases account
30 April Suspense 1,041.30 Purchases of £520.65 recorded on
credit side of purchases account

You are to complete the adjusted trial balance by inserting the correct figures in either the debit or
credit column, and calculating the totals for each column.

Item Debit Credit

£ £
Sales
Purchases
Discounts received
Bank
Office equipment
Receivables ledger control
Totals
52 principles of bookkee ping controls workbo ok
Answers to
chapter
activities
54 principles of bookkee ping controls w o r k b o o k

1.1 (a) Employee wages

(c) The petty cash system

1.2 (b) Cheque

1.3

enables the card holder to make

debit card
payment on a monthly basis

takes the payment direct from the

direct debit
customer’s bank account

regular (fixed date, same amount)

standing order payments set up with the bank by the
business sending the money

variable date and amount BACS

payments, set up by the business
credit card
receiving the payments through its
bank

1.4 (a), (c) and (d) are false; (b) is true

1.5 A standing order is set up by the payer’s bank and used to make fixed date payments for the
same amount through the banking system.

A direct debit enables variable amounts to be taken from the payer’s account and the payments
are deducted through the receiver’s bank.
 answers to chap ter a ctivities 55

Option
1.6
number
(a) Paying rent for the office at a fixed amount of £750 a month 5

(b) Paying insurance premium of £2,000 which increases every year 3

(c) Buying office furniture for £1,200 from a local superstore 2

(d) Paying solicitors fees of £500 plus VAT in connection with lease 4

(e) Buying a travel card for £30 at the local railway station 1

1.7 (a) Error 1: The year is missing from the date

Error 2: The amount in words and figures is different

Error 3: The cheque has not been signed by the issuer

(b) (b) Contact T Witt Trading Ltd and ask for a new cheque to be issued

1.8

Payment method
Description

An instruction in writing signed by the bank’s customer telling Cheque

the bank to pay a one-off amount to a named person

A card issued on a ‘buy now and pay later’ basis; payment is Credit card
made monthly in full or in part

A variable date and amount payment, set up by the business Direct debit
receiving the payments

A paper-based document issued by a bank and used for high Bank draft
value payments
56 principles of bookkee ping controls w o r k b o o k

2.1 (a) The solvency of the business

(d) Keeping bank charges to a minimum

(e) Keeping interest on overdrafts to a minimum

2.2 (a) Keeping the bank account in credit whenever possible

(c) Encouraging customers to pay by Faster Payment

(e) Paying the business insurance costs by monthly standing order rather than in one payment
at the beginning of the period of insurance

2.3 (a) Debit

(b) Credit

(c) Credit

(d) Debit

2.4 (a) Faster Payment

(c) CHAPS

(d) Bank draft

2.5 (a) Cheque paid in at a different bank

(d) Credit card

 answers to chap ter a ctivities 57

2.6

cash withdrawal

Amount deducted from the bank

account on the same day

faster payment

CHAPS
Amount deducted from the bank
account several days later

cheque sent by
post

2.7 (b) Pay the invoice so that it reaches the supplier’s bank as late as possible within the 30 day
period

2.8 (a)
Statement
It is good practice to pay cheques received during the month into the bank
account at the end of the month
A bank overdraft should be arranged in advance of being required ✔
A bank does not make a charge when it has to return unpaid cheques that
its customer has issued

(b)
Statement True False
A cheque paid in at a different bank or branch from the cheque ✔
issuer will be deducted from the issuer’s account one working
day later
A payment made by debit card is normally deducted from the ✔
bank account on the same working day
A CHAPS electronic bank transfer is deducted from the ✔
sender’s bank account on the day that the transfer is made
58 principles of bookkee ping controls w o r k b o o k

3.1 (c) Electronic transfers from customers

3.2 (a) £150 debit

3.3 (a) and (c) true; (b) and (d) false

3.4 It is important to reconcile the cash book to the bank statement on a regular basis.

The bank statement provides an independent accounting record and helps to prevent fraud.
It also highlights any timing differences and explains why there is a discrepancy between the
closing bank statement balance and the closing cash book balance.

3.5
Cash book Debit Credit
£ £
Closing balance b/d 1,807
Adjustments:
Watson Ltd 2,109
Bank charges 45

Adjusted balance c/d 3,871

Bank reconciliation £
Closing bank statement balance 3,108
Less unpresented cheques:
Hendrie Stores 692
Hannaford & Co 764

Add outstanding lodgements:

Corline Traders 1,433
Moss & Co 786

Adjusted closing cash book balance 3,871

 answers to chap ter a ctivities 59

3.6 The bank reconciliation explains any difference between the closing balance in the cash book
and the closing balance at the bank.

It highlights any errors and timing differences.

Access to bank records should be restricted to authorised employees to safeguard the security of
payments and receipts.

3.7 Identify whether each of the following statements is true or false.

Statement True False

Unpresented cheques and outstanding lodgements are examples of ✔
timing differences
Bank charges shown on the bank statement are recorded on the debit ✔
side of the cash book
The opening cash book balance is always the same as the opening ✔
bank statement balance
60 principles of bookkee ping controls w o r k b o o k

4.1 (b) £25,684

4.2 (c) £11,736

4.3 (d) £3,289 credit

4.4 (a) Receivables ledger control account

Details Amount Debit Credit

£

Balance owing from credit customers at 1 July 7,298 ✔

Money received from credit customers 6,450 ✔

Discounts allowed 75 ✔

Goods sold to credit customers 14,774 ✔

Goods returned by credit customers 501 ✔

Journal credit to correct an error 89 ✔

(b) Payables ledger control account

Details Amount Debit Credit

£

Balance owing to credit suppliers at 1 July 2,299 ✔

Money paid to credit suppliers 2,276 ✔

Discounts received 23 ✔

Goods purchased from credit suppliers 5,113 ✔

Goods returned to credit suppliers 108 ✔

(c) (c) Debit balance of £9,061

(d) (a) is false; (b) and (c) are true.

 answers to chap ter a ctivities 61

4.5 (a)
Details Amount Debit Credit
£
Balance of credit suppliers at 1 June 35,106 ✔
Purchases from credit suppliers 20,354 ✔
Payments made to credit suppliers 19,062 ✔
Discounts received 289 ✔
Goods returned to credit suppliers 1,374 ✔

(b) (b) Cr £34,735

(c)
£
Balance on payables ledger control account at 1 July 34,735
Total of the payables ledger balances at 1 July 34,442
Difference 293

(d) (b) A credit note was not entered in the payables ledger control account

4.6 (a)
Details Amount Debit Credit
£
Balance of credit customers at 1 April 18,392 ✔
Goods sold to credit customers 6,874 ✔
Money received from credit customers 8,937 ✔
Discounts allowed 154 ✔
Goods returned by credit customers 529 ✔

(b) (c) Dr £15,646

(c)
£
Balance on receivables ledger control account at 1 May 15,646
Total of the receivables ledger balances at 1 May 16,231
Difference 585

(d) (a) An invoice was entered twice in the receivables ledger

(e) (a) and (d) are true

62 principles of bookkee ping controls w o r k b o o k

4.7 (a)

VAT control account

Details Amount Details Amount

£ £
Purchases 7,000 Sales 13,760
Sales returns 448 Purchases returns 328
Discounts allowed 120 Cash sales 568

(b) No

4.8 (a)

VAT control account

Details Amount Details Amount

£ £
Purchases 9,080 Balance b/f 9,804
Sales returns 368 Sales 14,800
Petty cash 17 Purchases returns 248
Irrecoverable debts 108 Cash sales 376
Computer equipment 575
Bank 9,804

(b) Yes

(c) All statements are true.

 answers to chap ter a ctivities 63

4.9 (a)

VAT control account

Details Amount Details Amount

£ £
Sales returns 280 Balance b/f 6,536
Purchases 9,800 Sales 17,080
Petty cash 9 Purchases returns 760
Irrecoverable debts 82 Discounts received 120
Studio equipment 400 Sales 192
Bank 6,536

(b) Yes

(c) (a) and (b) are true; (c) is false.

4.10 (a)
Statement
An entry made in the wrong payables ledger account will be revealed by the
payables ledger control account
The gross figure from purchases returns day book is debited to payables ✔
ledger control account
Discounts received are not recorded in payables ledger control account
A debit balance brought down on payables ledger control account indicates
an error in the bookkeeping system

(b)
Receivables ledger control account

Details £ Details £

Balance b/d 10,686 Bank 6,397

Sales 7,104 Sales returns 121

Discounts allowed 205

Irrecoverable debts 176

Balance c/d 10,891

64 principles of bookkee ping controls w o r k b o o k

5.1 (b) Payroll transactions

5.2
Date Details Reference Dr Cr
20-4 £ £
1 Feb Vehicle GL 6,500
Fixtures and fittings GL 2,800
Inventory GL 4,100
Cash CB 150
Bank CB 1,250
Loan from uncle GL 5,000
Capital GL 9,800
14,800 14,800

Journal entries to record the opening entries

of the new business.

5.3 (a)
Account name Debit Credit
£ £
Irrecoverable debts 560
Value Added Tax 112
Receivables ledger control 672
 answers to chap ter a ctivities 65

(b)
Account name Amount Debit Credit
£
Receivables ledger control 14,275 ✔
Payables ledger control 7,392 ✔
Inventory 4,107 ✔
Office equipment 10,400 ✔
Cash at bank 2,822 ✔
Rent and rates 4,086 ✔
Miscellaneous expenses 794 ✔
Wages 2,397 ✔
Loan from bank 6,250 ✔
Capital 25,239 ✔
Journal entries to record the opening entries of the new business

5.4 Journal to record the wages expense

Account name Debit Credit

£ £
Wages expense 24,489
Wages control 24,489

Journal to record the HM Revenue & Customs liability

Account name Debit Credit

£ £
Wages control 4,580
HM Revenue & Customs 4,580

Journal to record the net wages paid to employees

Account name Debit Credit

£ £
Wages control 17,845
Bank 17,845

Tutorial note: £24,489 – £2,510 – £1,105 – £965 – £1,032 – £1,032 = £17,845

66 principles of bookkee ping controls w o r k b o o k

Journal to record the pension fund liability

Account name Debit Credit

£ £
Wages control 2,064
Pension fund 2,064

5.5 (b), (c), (e) and (f)

5.6
Situation
Tamsin wishes to write off a receivables account from receivables ledger as an ✔
irrecoverable debt
Hanna has bought postage stamps, paying for them from petty cash
Imogen runs a furniture shop and she has sold furniture on credit to Wyvern Hotel
Ltd
Ernesto is setting up in business and is starting with capital of £10,000, office ✔
equipment valued at £2,500 and cash in the bank of £7,500

5.7
HM Revenue & Customs
Details £ Details £
Balance b/d 1,270 Employer’s NIC 5,106
Employees’ NIC 4,210
Balance c/d 13,154 Income tax (PAYE) 5,108
14,424 14,424
 answers to chap ter a ctivities 67

6.1 (c) Sales account

6.2 (b) Receivables ledger control account

6.3 Trial balance of Kate Trelawney as at 31 March 20-2

Dr Cr
Name of account £ £
Bank loan 3,650
Purchases 23,745
Vehicle 9,500
Sales 65,034
Bank (cash at bank) 2,162
Discounts allowed 317
Purchases returns 855
Receivables ledger control 7,045
Office equipment 5,450
Inventory at 1 April 20-1 4,381
Sales returns 1,624
Payables ledger control 4,736
Expenses 32,598
Discounts received 494
Capital (missing figure) 12,053
86,822 86,822
68 principles of bookkee ping controls w o r k b o o k

6.4
Account name Amount Debit Credit
£ £ £
Bank (overdraft) 4,293 4,293
Loan from bank 12,500 12,500
Vehicles 25,500 25,500
Inventory 10,417 10,417
Petty cash 68 68
Capital 25,794 25,794
VAT owing to HM Revenue & Customs 1,496 1,496
Payables ledger control 12,794 12,794
Purchases 104,763 104,763
Purchases returns 2,681 2,681
Receivables ledger control 28,354 28,354
Sales 184,267 184,267
Sales returns 4,098 4,098
Discount allowed 1,312 1,312
Discount received 1,784 1,784
Wages 35,961 35,961
Telephone 3,474 3,474
Advertising 5,921 5,921
Insurance 3,084 3,084
Heating and lighting 2,477 2,477
Rent and rates 3,672 3,672
Postages 876 876
Miscellaneous expenses 545 545
Drawings 15,087 15,087
Totals – 245,609 245,609
 answers to chap ter a ctivities 69

6.5
Account name Amount Debit Credit
£ £ £
Sales 262,394 262,394
Sales returns 2,107 2,107
Receivables ledger control 33,844 33,844
Purchases 157,988 157,988
Purchases returns 1,745 1,745
Payables ledger control 17,311 17,311
Discount received 1,297 1,297
Discount allowed 845 845
Rent and rates 5,941 5,941
Advertising 6,088 6,088
Insurance 3,176 3,176
Wages 48,954 48,954
Heating and lighting 4,266 4,266
Postages and telephone 2,107 2,107
Miscellaneous expenses 632 632
Vehicles 28,400 28,400
Capital 48,756 48,756
Drawings 19,354 19,354
Office equipment 10,500 10,500
Inventory 16,246 16,246
Petty cash 150 150
Bank (cash at bank) 3,096 3,096
VAT owing to HM Revenue & Customs 3,721 3,721
Loan from bank 8,470 8,470
Totals – 343,694 343,694
70 principles of bookkee ping controls w o r k b o o k

6.6 (a) Bank: £7,507.08

Discounts allowed: £454.62
Payables ledger control: £18,467.17
VAT control: £2,510.70

(b)
Item Debit Credit
£ £
Sales 122,831.15
Purchases 68,022.56
Bank 7,507.08
Discounts allowed 454.62
Wages and salaries 33,290.42
Office expenses 12,387.16
Payables ledger control 18,467.17
Receivables ledger control 22,147.18
VAT control 2,510.70
Totals 143,809.02 143,809.02
 answers to chap ter a ctivities 71

7.1 (a) Principle

(b) Commission

(c) Original entry

(d) Compensating

(e) Reversal of entries

(f) Omission

7.2

Debit Credit

(d) Telephone expenses £500 Bank £500

7.3 (a)
Account name Debit Credit
£ £

Suspense 2,825

(b) (c), (d) and (f) will cause an imbalance; (a), (b) and (e) will not.
72 principles of bookkee ping controls w o r k b o o k

7.4 (a) Journal to remove the incorrect entry

Account name Debit Credit

£ £
Payables ledger control 2,120

Journal to record the correct entry

Account name Debit Credit

£ £
Payables ledger control 2,544

Journal to remove the suspense account balance

Account name Debit Credit

£ £

Suspense 424

(b) Journal to remove the incorrect entry

Account name Debit Credit

£ £

Rent 525

Bank 525

Journal to record the correct entry

Account name Debit Credit

£ £
Rent 525

Bank 525
 answers to chap ter a ctivities 73

7.5 (a)
Account name Debit Credit
£ £
Bank 690

Rates 690

(b)
Account name Debit Credit
£ £
Rates 609

Bank 609
74 principles of bookkee ping controls w o r k b o o k

7.6

Office expenses

Details Amount £ Details Amount £

Office equipment 180

Office equipment

Details Amount £ Details Amount £

Office expenses 180

Sales returns

Details Amount £ Details Amount £

Suspense 295

Suspense

Details Amount £ Details Amount £

Balance b/f 645 Sales returns 295
Vehicle expenses 350

Vehicle expenses

Details Amount £ Details Amount £

Suspense 350
 answers to chap ter a ctivities 75

7.7

Sales

Details Amount Details Amount

£ £
Suspense 99

VAT

Details Amount Details Amount

£ £
Suspense 1,612

Bank interest paid

Details Amount Details Amount

£ £
Bank charges 52

Bank charges

Details Amount Details Amount

£ £
Bank interest paid 52

Suspense

Details Amount Details Amount

£ £
VAT 1,612 Balance b/f 1,513
Sales 99
76 principles of bookkee ping controls w o r k b o o k

7.8

Balances on Balances at
Account name 30 June 20-9 1 July 20-9
£ Debit £ Credit £
Inventory 8,692 8,692
Receivables ledger control 12,347 12,347
Petty cash 84 84
Capital 15,287 15,287
Loan from bank 8,625 8,625
VAT owing to HM Revenue & Customs 2,733 2,733
Payables ledger control 8,421 8,421
Bank (cash at bank) 1,596 1,596
Sales 77,364 77,364
Sales returns 2,913 2,913
Purchases 40,467 40,467
Purchases returns 872 1,362
Wages 20,644 20,644
Advertising 2,397 2,927
Insurance 1,849 1,849
Heating and lighting 1,066 1,066
Rent and business rates 3,862 3,862
Vehicle expenses 2,035 1,945
Vehicles 15,400 15,400
Suspense account (credit balance) 50 – –
Totals 113,792 113,792

7.9 (a)

Statement
A suspense account is created when errors are disclosed by the trial balance ✔
A suspense account can have either a debit balance or a credit balance ✔
When the debit side total of a trial balance is more than the credit side total, a
suspense is opened with a debit balance
If the balance of receivables ledger control account does not agree with the total
balances from receivables ledger, the difference should be transferred to
suspense account
 answers to chap ter a ctivities 77

(b)
Error Disclosed Not
disclosed

A cash purchase has not been recorded in the accounts ✔

Payment for office expenses of £65 has been recorded in ✔
both office expenses account and bank account as £56

7.10 (a) £787 Credit

(b)
31 May 20-6 Journal number 49
Account Debit Credit Description
£ £
Suspense 850 Correction of error 1
Rent received 850 Correction of error 1
Purchases 63 Correction of error 2
Suspense 63 Correction of error 2

Tutorial note: the difference of £63 has been entered here. An alternative treatment is to
take out the wrong figure of £13,118 (debit suspense; credit purchases) and then record the
correct figure of £13,181 (debit purchases; credit suspense). The effect is the same as the
net amount of £63 shown above.

7.11
Item Debit Credit
£ £
Sales 78,242.99
Purchases 41,257.75
Discounts received 1,081.29
Bank 3,108.90
Office equipment 10,362.50
Receivables ledger control 24,595.13
Totals 79,324.28 79,324.28
78 principles of bookkee ping controls w o r k b o o k
Practice
assessment 1
80 principles of bookkee ping controls w o r k b o o k

Assessment information

• This practice assessment contains 8 tasks and you should attempt to complete every task.

• Each task is independent. You will not need to refer to your answers from previous tasks.

• Read every task carefully to make sure you understand what is required.

• Where the date is relevant, it is given in the task data.

• Both minus signs and brackets can be used to indicate negative numbers unless task instructions
state otherwise.

• You must use a full stop to indicate a decimal point. For example, write 100.57 not 100,57 or
10057.

• You may use a comma to indicate a number in the thousands, but you don’t have to. For example,
10000 and 10,000 are both acceptable.

• Mathematical rounding should be applied where appropriate.

 practice assessmen t 1 81

Task 1

This task is about using control accounts.

A receivables ledger control account balance is shown in general ledger.

(a) Identify which one of the following statements is correct in relation to the receivables ledger control
account.

Statement

An entry made in the wrong receivables ledger account will be revealed by the
receivables ledger control account
The net figure from sales day book is debited to receivables ledger control account

Irrecoverable debts written off are not recorded in receivables ledger control
account
The balance of receivables ledger control account gives a total figure for the
amount owing by credit customers

You work in the accounts department of Hamid Limited. Your manager asks you to prepare the
VAT control account for July.

The following transactions have been recorded during the month of July:

Transaction Amount
£
VAT owing to HM Revenue & Customs at 1 July 1,585
VAT on sales 2,627
VAT on purchases 1,345
VAT on sales returns 205
VAT on purchases returns 286
VAT on discounts received 154
VAT on discounts allowed 122
VAT on cash sales 728
VAT payment made to HM Revenue & Customs 1,585
82 principles of bookkee ping controls w o r k b o o k

(b) Complete the VAT control account below for July, including the balance carried down at the end of
the month.

VAT control account

Details £ Details £
Balance b/d

Balance c/d

JP Limited has the following payables ledger control account.

Payables ledger control account

Date Details £ Date Details £

20-2 20-2

31 May Bank 28,460 1 May Balance b/d 6,240

31 May Purchases returns 1,045 31 May Purchases 32,680
31 May Discounts received 210
31 May Balance c/d

(c) What is the balance carried down on the payables ledger control account at 31 May 20-2?

£
 practice assessmen t 1 83

Task 2

This task is about reconciling control accounts.

The balance of the payables ledger control account will be used in the year-end trial balance. It is
important to reconcile this to the payables ledger.

(a) Identify which one of the following statements is a reason for completing this reconciliation.

Statement
Entries made in the wrong payables ledger accounts can be identified and
corrected
Differences between the payables ledger and payables ledger control account can
be identified and corrected
To check that irrecoverable debts have been recorded correctly in both the
payables ledger and the payables ledger control account
To ensure that payments made to credit suppliers are recorded correctly in the
cash book

You work in the accounts department of Greaves Limited. Your manager asks you to reconcile the
balance of receivables ledger control account to the customers report.

The customers report as at 30 June has been provided:

Customer name Reference Balance owed Payment terms

£ Days
Bird & Co BI002 1,344 30
Davenport Ltd DA001 2,897 30
Gomez Trading GO001 1,402 30
Mansi Ltd MA002 3,628 30
Paul & Paul PA001 7,809 30
Rooke & Co RO002 4,326 30
Tamayo Ltd TA001 2,873 30
Unwins UN001 1,649 30

(b) (i) If the receivables ledger control account reconciles with the receivables ledger, what will be
the balance?

£
84 principles of bookkee ping controls w o r k b o o k

The balance on the receivables ledger control account is £26,304.

(ii) Complete the following statement:

The receivables ledger control account balance is £ more/less [delete as

appropriate] than the receivables ledger.

(c) The payables ledger control account of Greaves Limited shows a balance of £20,345 but the
individual balances in payables ledger add up to £19,462.

Identify whether each of the following may explain the difference between the two balances.

Reason May explain Does not

difference explain
difference
A supplier invoice has been recorded twice in the
payables ledger
The amount for purchases returns has been omitted from
payables ledger control account
A supplier’s account balance has been understated when
totalling the payables ledger
A cash purchase has not been recorded in the payables
ledger
A supplier invoice has been recorded in the wrong
account in payables ledger
 practice assessmen t 1 85

Task 3

This task is about payment methods and reconciling the cash book to the bank statement.

(a) Select the most appropriate payment method for each of the following descriptions:

Description Payment method

A variable date and amount payment set up by the business
receiving the payments
A high value, same-day payment sent through the bank’s
computer systems
Simple method used to pay for low-value purchases without
using cards or electronic systems
A bank card payment method used for purchases and cash
withdrawals where payment is usually taken from the bank
account on the next working day

Choose from the following payment methods – do not use each more than once:

• BACS • Credit card

• Cash • Debit card
• CHAPS • Direct debit
• Cheque • Standing order

(b) A business is reconciling its bank statement to its cash book.

Identify which one of the following statements is true.

Statement
Direct debits paid by the bank are not recorded in the cash book
At the beginning of each month, the opening balances for the bank statement and
the cash book will always be the same
The bank reconciliation statement makes use of timing differences

(c) Identify whether each of the following statements is true or false.

Statement True False

The payments column of the bank statement should be checked for
automated payments that may have been missed in the cash book
Where the bank has made an error, the item and amount should not be
recorded in the cash book
When reconciling from the bank statement balance to the cash book
balance, unpresented cheques are added
86 principles of bookkee ping controls w o r k b o o k

Task 4

This task is about reconciling a bank statement with the cash book.

The cash book and bank statement for Rafael’s business for June 20-4 are shown below.

Cash book

Date Details £ Date Cheque Details £

20-4 20-4 number

1 June Balance b/d 13,769 1 June 111043 Prime kitchens 10,000

26 June Britten & Bond 175 2 June 111044 Long and Lane 80

27 June Macklin Ltd 950 10 June 111045 BLH Ltd 795

29 June Randle Fitments 300 11 June 111046 MVR Ltd 652

12 June 111047 Fairfield Ltd 2,500

18 June 111048 Makin and King 450

19 June LMBC 150

30 June Balance c/d 567

Bank statement
Date Description Paid out Paid in Balance
20-4 £ £ £
01 June Balance 15,189 C
03 June Cheque 111043 10,000 5,189 C
04 June Cheque 111042 1,420 3,769 C
05 June Cheque 111044 80 3,689 C
14 June Cheque 111047 2,500 1,189 C
16 June BACS Credit: Cairns and Co 571 1,760 C
18 June Cheque 111045 795 965 C
19 June Direct Debit: LMBC 150 815 C
28 June Macklin Ltd 950 1,765 C
29 June Direct Debit: Insurance Direct 850 915 C
30 June Bank charges 88 827 C
30 June Britten & Bond 175 1,002 C
D = Debit C = Credit
 practice assessmen t 1 87

Update the cash book and prepare a bank reconciliation statement at 30 June 20-4.

Select your entries from the following list: Balance b/d, Balance c/d, Bank charges, BLH Ltd,
Britten & Bond, Cairns and Co, Fairfield Ltd, Insurance Direct, LMBC, Long and Lane, Macklin Ltd,
Makin and King, MVR Ltd, Prime Kitchens, Randle Fitments.

Cash book Debit Credit

£ £

Closing balance b/d 567

Adjustments:

Adjusted balance c/d

Bank reconciliation £

Closing bank statement balance 1,002

Less unpresented cheques:

Add outstanding lodgements:

Adjusted closing cash book balance

88 principles of bookkee ping controls w o r k b o o k

Task 5

This task is about using the journal.

(a) Identify which two of the following situations are a correct use of the journal.

Situation

Lottie has found an error in the accounting system and wishes to process a journal
entry to show how she has corrected the error
Alice’s business has had an excellent week for sales. She wants to record this
success through a journal entry
To increase his capital Ernesto is putting his car into the business. As this is a ‘one-
off’ transaction, he wants to process it through a journal entry
Blanca has arranged a bank overdraft of £5,000 and her bookkeeper wants to process
this through a journal entry

(b) A journal entry for payroll transactions is as follows:

30 April 20-1 Journal number: 68

Account name Debit Credit Description

£ £

Wages expense 36,451 Gross pay

Bank 30,877 Net pay

Wages expense 2,324 Employer’s NIC*

HMRC 2,324 Employer’s NIC

HMRC 2,109 Employees’ NIC

HMRC 3,465 Income tax (PAYE)

* National Insurance Contributions

Prior to this journal entry, the balance of the HM Revenue & Customs account was debit £255.

After the journal entry is processed, what will be the revised balance owing to HM Revenue &
Customs?

£
 practice assessmen t 1 89

The following invoice has been outstanding for more than six months, and today, 15 December
20-3, Isla wishes to write off the amount as an irrecoverable debt.

Isla’s Interiors Ltd

27 Lovell Street, Eveshore EV2 1GH
VAT no 451623031

10 April 20-3 Invoice no: 4687

To: Bill’s Decorating

18 Tendring Avenue
Eveshore
EV3 9AQ

£
10 Rolls Wallpaper (design XX3) at £20 per roll 200.00
VAT at 20% 40.00
Total 240.00

Terms: net monthly

(c) Complete the journal entry below to record the write off of the irrecoverable debt.

15 December 20-3 Journal number: 69

Account name Debit Credit Description

£ £

Write off: irrecoverable debt

Write off: irrecoverable debt

Write off: irrecoverable debt

Select your account names from the following list: Bill’s Decorating, Irrecoverable debts, Isla’s
Interiors Ltd, Payables ledger control, Purchases, Receivables ledger control, Sales, Value Added
Tax.
90 principles of bookkee ping controls w o r k b o o k

Task 6

This task is about using the journal to correct errors.

The trial balance of Kelly’s business has disclosed that there are errors – the amount of the imbalance is
placed in a suspense account.

(a) Identify which two of the following statements about suspense accounts are true.

Statement

When errors are disclosed by a trial balance, it is balanced by opening a suspense

account for the difference
A suspense account always has a debit balance

All errors found within the bookkeeping system are corrected by processing a
journal entry, one part of which is an entry for suspense account
Once errors have been corrected, suspense account has a nil balance and the trial
balance can be redrafted

(b) Identify whether each of the errors described below would or would not be disclosed by the trial
balance.

Error Disclosed Not disclosed

The cost of fuel for vehicles has been debited to vehicles
account
Stationery expenses paid from the bank have been debited to
both stationery account and bank account

(c) Amy and Ben run a retail business. They use a manual accounting system and have prepared a
trial balance at the year-end. The trial balance shows total debits of £35,622 and total credits of
£36,341.

Amy and Ben have identified the following errors:

Error 1: Business rates paid for August 20-4 of £755 were credited to bank account but were not
recorded in business rates account.
Error 2: The day book total of purchases returns for September 20-4 was £684. The amount
entered in purchases returns account in the general ledger was £648.
(i) What is the balance of suspense account in the trial balance?

This balance is (tick the answer):

Debit

Credit
 practice assessmen t 1 91

(ii) Complete the table below with the account names required to show the debits and credits that will
be processed through the journal to clear suspense account.

30 September 20-4 Journal number: 175

Account name Debit Credit Description

£ £
755 Correction of error 1
755 Correction of error 1
36 Correction of error 2
36 Correction of error 2

Select your account names from the following list: Balance b/d, Balance c/d, Business rates,
Payables ledger control, Purchases, Purchases returns, Receivables ledger control, Sales, Sales
returns, Suspense.

Task 7

This task is about extracting a trial balance.

You work in the accounts department at Wickham Limited.

Most of the ledger accounts have been closed off and the balances included in the trial balance at 31 July
20-7.

(a) You are to complete the remaining ledger accounts by inserting the balance carried down on each
account. Enter your answers to two decimal places.

Bank
20-7 Details £ 20-7 Details £
1 Jul Balance b/d 1,532.98 20 Jul Stationery 846.95
6 Jul Sales 2,405.33 25 Jul Purchases 5,176.27
31 Jul Receivables ledger control 8,274.19 31 Jul Payables ledger control 7,465.32
31 Jul Balance c/d

Discounts received
20-7 Details £ 20-7 Details £
1 Jul Balance b/d 544.63
31 Jul Payables ledger control 86.48
31 July Balance c/d
92 principles of bookkee ping controls w o r k b o o k

Receivables ledger control

20-7 Details £ 20-7 Details £
1 Jul Balance b/d 20,353.54 31 Jul Bank 8,274.19
14 Jul Sales 6,487.29
28 Jul Sales 5,074.68 31 Jul Balance c/d

VAT control
20-7 Details £ 20-7 Details £
31 Jul Purchases 1,542.61 1 Jul Balance b/d 978.65
31 Jul Sales 2,327.88
31 Jul Balance c/d

(b) Complete the trial balance by inserting the missing figures and calculating the total for each
column. Enter your answers to two decimal places.

Item Debit Credit

£ £
Sales 75,591.20
Purchases 60,417.74
Bank
Discounts allowed 1,405.19
Discounts received
Stationery 6,045.18
Payables ledger control 12,247.16
Receivables ledger control
VAT
Totals
 practice assessmen t 1 93

Task 8

This task is about redrafting a trial balance.

You work in the accounts department at Sutton Supplies. You have been asked to redraft a trial balance
after some errors have been identified and the correcting journal entries have been made.

The initial list of balances for Sutton Supplies at 31 March 20-1 is:

Item £
Sales 86,470.08
Purchases 65,398.34
Discounts allowed 385.62
Bank debit 12,205.75
Vehicles 28,098.17
Payables ledger control 16,522.84
Suspense credit 3,094.96

The errors have been identified and the following journal entries need to be processed:

Date: 31 March 20-1 Journal number: 105

Date Description Debit Credit

£ £

31 March Discounts allowed 45.80 Discounts allowed not recorded in

discounts allowed account

31 March Suspense 45.80 Discounts allowed not recorded in

discounts allowed account

31 March Suspense 3,140.76 Sales of £1,570.38 recorded on debit

side of sales account

31 March Sales 3,140.76 Sales of £1,570.38 recorded on debit

side of sales account
94 principles of bookkee ping controls w o r k b o o k

You are to complete the adjusted trial balance by inserting the correct figures in either the debit or credit
column, and calculating the totals for each column.

Item Debit Credit

£ £
Sales
Purchases
Discounts allowed
Bank
Vehicles
Payables ledger control
Totals
Practice
assessment 2
96 principles of bookkee ping controls w o r k b o o k

Assessment information

• This practice assessment contains 8 tasks and you should attempt to complete every task.

• Each task is independent. You will not need to refer to your answers from previous tasks.

• Read every task carefully to make sure you understand what is required.

• Where the date is relevant, it is given in the task data.

• Both minus signs and brackets can be used to indicate negative numbers unless task instructions
state otherwise.

• You must use a full stop to indicate a decimal point. For example, write 100.57 not 100,57 or
10057.

• You may use a comma to indicate a number in the thousands, but you don’t have to. For example,
10000 and 10,000 are both acceptable.

• Mathematical rounding should be applied where appropriate.

 practice assessmen t 2 97

Task 1

This task is about using control accounts.

A VAT control account balance is shown in general ledger.

(a) Identify which one of the following statements is correct in relation to the VAT control account.

Statement

VAT on purchases returns is debited to VAT control account

VAT on discounts received is credited to VAT control account

The amount of VAT paid to HMRC is credited to VAT control account

A debit balance on VAT control account shows how much VAT is owing to HMRC

You work in the accounts department of Elend Limited. Your manager asks you to prepare the
receivables ledger control account for July 20-2.

The following information is available for the month of July:

Details Amount
£
Customer balances at 1 July 28,392
Goods sold to credit customers 21,068
Goods returned by credit customers 1,096
Goods sold to cash customers 3,046
Money received from credit customers 22,362
Discounts allowed 492
Irrecoverable debts written off 341
98 principles of bookkee ping controls w o r k b o o k

(b) Complete the receivables ledger control account below for July, including the balance carried down
at the end of the month.

Receivables ledger control account

Details £ Details £
Balance b/d

Balance c/d

Elend Limited has the following payables ledger control account for July 20-2.

Payables ledger control account

Date Details £ Date Details £

20-2 20-2

31 July Bank 10,357 1 July Balance b/d 12,054

31 July Purchases returns 2,089 31 July Purchases 15,975
31 July Discounts received 311
31 July Balance c/d

(c) What is the balance carried down on the payables ledger control account at 31 July 20-2?

£
 practice assessmen t 2 99

Task 2

This task is about reconciling control accounts.

The balance of the receivables ledger control account will be used in the year-end trial balance. It is
important to reconcile this to the receivables ledger.

(a) Identify which one of the following statements is a reason for completing this reconciliation.

Statement
Entries made in the wrong receivables ledger accounts can be identified and
corrected
Differences between the receivables ledger and receivables ledger control account
can be identified and corrected
To check that goods sold to cash customers have been recorded correctly in both
the receivables ledger and the receivables ledger control account
To ensure that receipts from credit customers are recorded correctly in the cash
book

You work in the accounts department of Lukac Limited. Your manager asks you to reconcile the
balance of payables ledger control account to the suppliers report.

The suppliers report as at 30 September has been provided:

Customer name Reference Balance owed

£
Albei & Co AL001 2,104
Dowson Ltd DO001 1,508
Farr Trading FA001 696
Manners Ltd MA001 1,054
Oxley Trading OX001 248
Patel & Co PA001 797
Santos Ltd SA001 3,045
Stanton Ltd ST001 1,722

(b) (i) If the payables ledger control account reconciles with the payables ledger, what will be the
balance?

£
100 principles of bookkee ping controls w o r k b o o k

The balance on the payables ledger control account is £11,068.

(ii) Complete the following statement:

The payables ledger control account balance is £ more/less [delete as

appropriate] than the payables ledger.

(c) The receivables ledger control account of Lukac Limited shows a balance of £18,475 but the
individual balances in receivables ledger add up to £17,348.

Identify whether each of the following may explain the difference between the two balances.

Reason May explain Does not

difference explain
difference
A customer invoice has been recorded twice in the
receivables ledger
The amount for sales returns has been omitted from
receivables ledger control account
A customer’s account balance has been overstated when
totalling the receivables ledger
A cash sale has not been recorded in the receivables
ledger
A customer invoice has been recorded in the wrong
account in receivables ledger
 practice assessmen t 2 101

Task 3

This task is about payment methods and reconciling the cash book to the bank statement.

(a) Select the most appropriate payment method for each of the following descriptions:

Description Payment method

Regular fixed date payments for the same amount set up
with the bank by the business sending the money
Computer-based direct payments between bank accounts
with a three day clearance
An instruction in writing, signed by the bank’s customer,
telling the bank to pay a one-off amount to a named person
A card issued on a ‘buy now and pay later’ basis and for
cash withdrawals; payment is made monthly in full or in part

Choose from the following payment methods – do not use each more than once:

• BACS • Credit card

• Cash • Debit card
• CHAPS • Direct debit
• Cheque • Standing order

(b) A business is reconciling its bank statement to its cash book.

Identify which one of the following statements is true.

Statement
Unpresented cheques are timing differences which need to be deducted in the
cash book
A completed bank reconciliation statement proves that there are no errors in the
accounting system
Faster Payments receipts shown on the bank statement need to be recorded in
the cash book

(c) Identify whether each of the following statements is true or false.

Statement True False

A direct debit payment recorded on the bank statement but not in the cash
book is deducted on the bank reconciliation statement
Outstanding lodgements are amounts paid into the bank but not yet
recorded on the bank statement
A credit balance on a bank statement is a debit balance in a business cash
book
102 principles of bookkee ping controls w o r k b o o k

Task 4

This task is about reconciling a bank statement with the cash book.

The cash book and bank statement for Imogen’s business for May 20-2 are shown below.

Cash book

Date Details £ Date Cheque Details £

20-2 20-2 number

1 May Balance b/d 177 1 May 114118 Harrop & Co 395

5 May Cottle Ltd 4,806 10 May 114119 Farr Ltd 2,218

20 May W Waugh 2,108 20 May 114120 Bradnock Traders 1,036

29 May Pardo Ltd 1,746 20 May 114121 Paxtons 1,427

30 May Torre & Co 542 21 May 114122 Filiaps Ltd 798

21 May Wyvern Council 235

Balance c/d 3,270

Bank statement
Date Description Paid out Paid in Balance
20-2 £ £ £
01 May Balance 1,487 C
04 May Cheque 114118 395 1,092 C
05 May Cheque 114117 1,310 218 D
05 May BACS Credit: Cottle Ltd 4,806 4,588 C
18 May Cheque 114119 2,218 2,370 C
21 May Direct Debit: Wyvern Council 235 2,135 C
21 May BACS Credit: Bayer Ltd 1,095 3,230 C
21 May BACS Credit: Allen plc 2,786 6,016 C
22 May Direct Debit: JA Finance 592 5,424 C
22 May Cheque 114121 1,427 3,997 C
24 May Cheque: W Waugh 2,108 6,105 C
28 May Bank charges 45 6,060 C
D = Debit C = Credit
 practice assessmen t 2 103

Update the cash book and prepare a bank reconciliation statement at 31 May 20-2.

Select your entries from the following list: Allen plc, Balance b/d, Balance c/d, Bank charges, Bayer
Ltd, Bradnock Traders, Cottle Ltd, Farr Ltd, Filiaps Ltd, Harrop & Co, JA Finance, Pardo Ltd,
Paxtons, Torre & Co, W Waugh, Wyvern Council.

Cash book Debit Credit

£ £

Closing balance b/d 3,270

Adjustments:

Adjusted balance c/d

Bank reconciliation £

Closing bank statement balance 6,060

Less unpresented cheques:

Add outstanding lodgements:

Adjusted closing cash book balance

104 principles of bookkee ping controls w o r k b o o k

Task 5

This task is about using the journal.

(a) Identify which two of the following situations are a correct use of the journal.

Situation

Arthur has a new bookkeeper who has prepared the monthly payroll transactions

Alexandra runs a delicatessen and she has bought goods for resale on credit from
Kernow Cheese Ltd

Emma has taken cash drawings from her business

Faye’s bookkeeper has found an error in the accounts which needs to be corrected

(b) Jon is setting up in business and has asked you to prepare his opening journal entry. He is starting
his business with cash £250, bank £4,500, inventory £2,500, office equipment £2,850, payables
£725.

Complete the opening journal entry for his business as at 1 May 20-6.

1 May 20-6 Journal number: 001

Account name Debit Credit
£ £

Totals
 practice assessmen t 2 105

(c) The following invoice has been outstanding for more than six months, and today, 10 December
20-2, Lena wishes to make a journal entry to write off the amount as an irrecoverable debt.

Lena’s Lighting Supplies

18 High Street, Wyvern WV1 7PP
VAT no 457321849

4 March 20-2 Invoice no: 3471

To: Oxley Electricians

22 London Road
Wyvern
WV2 3QR

£
2 ‘Olympus’ light fittings at £125 each 250.00
VAT at 20% 50.00
Total 300.00

Terms: net monthly

Prior to writing off this debt, the balance of irrecoverable debts account was debit £295.

After the journal entry is processed, what will be the revised balance on irrecoverable debts
account? Indicate whether the revised balance is debit or credit.

£ Debit/ /Credit
Debit Credit
106 principles of bookkee ping controls w o r k b o o k

Task 6

This task is about using the journal to correct errors.

The trial balance of Eve’s business has disclosed that there are errors – the amount of the imbalance is
placed in a suspense account.

(a) Identify which two of the following statements about suspense accounts are true.

Statement

When the debit side total of a trial balance is more than the credit side total, a
suspense account is opened with a debit balance
The correction of errors not disclosed by the trial balance are recorded through
suspense account
After errors disclosed by the trial balance have been corrected, a redrafted trial
balance will show that suspense has been cleared
A suspense account can have either a debit balance or a credit balance

(b) Identify whether each of the errors described below would or would not be disclosed by the trial
balance.

Error Disclosed Not disclosed

Fuel for vehicles of £55 has been debited to vehicles account
Rent paid account has been overcast by £100

(c) Olga and Nisha run a retail business. They use a manual accounting system and have prepared a
year-end trial balance at 30 April 20-5. The trial balance shows total debits of £42,854 and total
credits of £42,095.

Olga and Nisha have identified the following errors:

Error 1: Rent received of £750 (no VAT) for April 20-5 has been entered in bank account but was
not recorded in rent received account.

Error 2: The day book total of sales returns for April 20-5 was £512. The amount entered in sales
returns account in the general ledger was £521.

(i) What is the balance of suspense account in the trial balance?

This balance is (tick the answer):

Debit

Credit
 practice assessmen t 2 107

(ii) Complete the table below with the account names required to show the debits and credits that will
be processed through the journal to clear suspense account.

30 April 20-5 Journal number: 314

Account name Debit Credit Description

£ £
Correction of error 1
Correction of error 1
Correction of error 2
Correction of error 2

Select your account names from the following list: Balance b/d, Balance c/d, Payables ledger
control, Purchases, Purchases returns, Receivables ledger control, Rent received, Sales, Sales
returns, Suspense.

Task 7

This task is about extracting a trial balance.

You work in the accounts department at Chazel Limited.

Most of the ledger accounts have been closed off and the balances included in the year-end trial balance
at 30 June 20-8.

(a) You are to complete the remaining ledger accounts by inserting the balance carried down on each
account. Enter your answers to two decimal places.

Bank
20-8 Details £ 20-8 Details £
1 Jun Balance b/d 856.92 15 Jun Office expenses 2,528.88
30 Jun Capital 5,210.63 20 Jun Purchases 3,045.22
30 Jun Receivables ledger control 18,428.15 30 Jun Payables ledger control 10,247.91
30 Jun Balance c/d

Office expenses
20-8 Details £ 20-8 Details £
1 Jun Balance b/d 10,504.68
15 Jun Bank 2,107.40
30 Jun Balance c/d
108 principles of bookkee ping controls w o r k b o o k

Payables ledger control

20-8 Details £ 20-8 Details £
30 Jun Bank 10,247.91 1 Jun Balance b/d 18,328.14
10 Jun Purchases 5,329.02
30 Jun Balance c/d 28 Jun Purchases 7,063.14

Capital
20-8 Details £ 20-8 Details £
30 Jun Bank 1,810.95 1 Jun Balance b/d 13,715.88
30 Jun Balance c/d

(b) Complete the trial balance by inserting the missing figures and calculating the total for each
column. Enter your answers to two decimal places.

Item Debit Credit

£ £
Sales 115,350.13
Purchases 86,024.28
Bank
Discounts allowed 828.44
Capital
Office expenses
Payables ledger control
Receivables ledger control 42,106.11
VAT 2,517.15
Totals
 practice assessmen t 2 109

Task 8

This task is about redrafting a trial balance.

You work in the accounts department at Excel Electrical Supplies. You have been asked to redraft a trial
balance after some errors have been identified and the correcting journal entries have been made.

The initial list of balances for Excel Electrical Supplies at 30 September 20-4 is:

Item £
Sales 75,292.84
Purchases 66,810.13
Sales returns 680.20
Bank debit 11,266.95
Receivables ledger control 25,271.16
Payables ledger control 20,310.18
Capital 8,310.69
Suspense credit 114.73

The errors have been identified and the following journal entries need to be processed:

Date: 30 September 20-1 Journal number: 86

Date Description Debit Credit

£ £

30 Sept Suspense 445.13 Sales not recorded in sales account

30 Sept Sales 445.13 Sales not recorded in sales account

30 Sept Sales returns 330.40 Sales returns of £165.20 recorded on

credit side of sales returns account

30 Sept Suspense 330.40 Sales returns of £165.20 recorded on

credit side of sales returns account
110 principles of bookkee ping controls w o r k b o o k

You are to complete the adjusted trial balance by inserting the correct figures in either the debit or credit
column, and calculating the totals for each column.

Item Debit Credit

£ £
Sales
Purchases
Sales returns
Bank
Receivables ledger control
Payables ledger control
Capital
Totals
Practice
assessment 3
112 principles of bookkee ping controls w o r k b o o k

Assessment information

• This practice assessment contains 8 tasks and you should attempt to complete every task.

• Each task is independent. You will not need to refer to your answers from previous tasks.

• Read every task carefully to make sure you understand what is required.

• Where the date is relevant, it is given in the task data.

• Both minus signs and brackets can be used to indicate negative numbers unless task instructions
state otherwise.

• You must use a full stop to indicate a decimal point. For example, write 100.57 not 100,57 or
10057.

• You may use a comma to indicate a number in the thousands, but you don’t have to. For example,
10000 and 10,000 are both acceptable.

• Mathematical rounding should be applied where appropriate.

 practice assessmen t 3 113

Task 1

This task is about using control accounts.

(a) Identify whether each of the following statements is true or false.

Statement True False

A debit balance on VAT control account shows how much is due from
HMRC
Discounts received is recorded on the credit side of payables ledger control
account

(b) You are an Accounts Assistant at Wembley Wines Ltd. Today you are working on the control
accounts.

The balance of receivables ledger control account at 1 April 20-2 is £15,043.

You have printed a report for April from the accounting system with the following information:

Details: April 20-2 Total VAT Net

£ £ £
Sales day book 14,448 2,408 12,040
Sales returns day book 1,116 186 930
Discounts allowed day book 252 42 210
Bank – receipts from credit customers 13,200

Complete the table below for the month to show the entries in the receivables ledger control
account and the balance at 30 April. Ensure numbers are included in either the debit or credit
column.

Receivables ledger control Debit Credit

£ £
1 April 20-2 Balance b/d
Sales day book
Sales returns day book
Discounts allowed day book
Bank – receipts from credit customers
30 April 20-2 Balance c/d
114 principles of bookkee ping controls w o r k b o o k

The balance of VAT control account at 1 April 20-2 is £2,346 credit.

You have printed a report for April from the accounting system with the following information:

Details: April 20-2 Total

£
VAT on sales 2,408
VAT on purchases 1,743
VAT on discounts allowed 42
VAT on sales returns 186
Bank – payment to HMRC 1,027

During the month there were no purchases returns, no discounts received, and no cash sales or
purchases.

Calculate the balance brought down on the VAT control account at 1 May 20-2.

£ Debit Credit
 practice assessmen t 3 115

Task 2

This task is about reconciling control accounts.

(a) Complete the following statements about control accounts by selecting the correct options to
complete the gaps.

An entry made in the wrong receivables ledger account …..……[GAP 1]………… be revealed

by the receivables ledger control account.

Reconciling the payables ledger control account to the payables ledger could reveal errors in

…………………[GAP 2]……………………

GAP 1 OPTIONS GAP 2 OPTIONS

will payables ledger only
will not payables ledger control account only
both payables ledger and payables ledger control account

(b) You are an Accounts Assistant at Nord Foods Ltd.

The following supplier accounts make up the payables ledger at 1 September 20-6.

Brocken Ltd

Details Amount Details Amount

£ £

Balance b/d 7,328

Annan plc

Details Amount Details Amount

£ £

Balance b/d 4,111

116 principles of bookkee ping controls w o r k b o o k

Elend & Sons

Details Amount Details Amount

£ £

Balance b/d 384

White and Hart

Details Amount Details Amount

£ £

Balance b/d 5,176

(i) What is the total of the balances in the payables ledger at 1 September 20-6?

(ii) The balance on the payables ledger control account on 1 September 20-6 is £15,646.

What is the difference between the balance on the payables ledger control account and the
total of the balances in the payables ledger?

(iii) Which two of the reasons below could explain the difference you calculated in (ii)?

Reasons
Purchases were entered twice in a supplier’s account in the payables ledger
Purchases returns were not entered in the payables ledger control account
Purchases returns were entered twice in a supplier’s account in the payables
ledger
Discounts received were not entered in the payables ledger control account
A bank payment to a supplier was entered into the wrong supplier’s account in
the payables ledger
A bank payment to a supplier was entered twice in the payables ledger control
account
 practice assessmen t 3 117

Task 3

This task is about payment methods and reconciling the cash book to the bank statement.

(a) Identify whether the following payment methods are debited to the bank account immediately
(same day) or at a later date.

Payment method Immediate Later date

Faster payment
Debit card

(b) Identify the type of difference between the cash book and the bank statement for each of the
descriptions below.

Description Difference
A cheque from a customer, which was entered in the cash book and
paid into the bank last week, has been returned
Cheques to suppliers have been recorded in the cash book, but are
not yet shown on the bank statement
The monthly payment for business rates has been made
automatically by the bank
Cash and cheques from customers were recorded in the cash book
and paid into the bank today, but are not yet shown on the bank
statement

Choose your differences from the following options:

Outstanding lodgements
Unpresented cheques
Unpaid cheques
Direct debit
Bank charges
Counter credit

(c) Identify whether the following adjustments will need to be made in the cash book or the bank
reconciliation statement.

Adjustment Cash book Bank reconciliation

Bank charges are deducted on the bank statement
Cash sales recorded in the cash book are not shown on
the bank statement
118 principles of bookkee ping controls w o r k b o o k

Task 4

This task is about reconciling a bank statement with the cash book.

The cash book and bank statement for Holly’s business for September 20-4 are shown below.

Cash book

Date Details £ Date Cheque Details £

20-4 20-4 number

4 Sep Green & Co 2,307 1 Sep Balance b/d 1,376

13 Sep Peer Prints 653 6 Sep 112002 Ace Timber 186

20 Sep Bristows 742 9 Sep 112003 Fairfield Ltd 870

29 Sep Barber & Bates 469 13 Sep 112004 BLH Ltd 219

30 Sep Jackson & Co 245 24 Sep 112005 Bridge Tools 607

30 Sep Balance c/d 947 26 Sep A-Z Finance 600

28 Sep 112006 Tenon Ltd 1,505

Bank statement
Date Description Paid out Paid in Balance
20-4 £ £ £
01 Sep Balance 252 C
02 Sep Cheque 112001 1,628 1,376 D
04 Sep BACS credit: Green & Co 2,307 931 C
08 Sep Cheque 112002 186 745 C
12 Sep Cheque 112003 870 125 D
13 Sep BACS credit: Peer Prints 653 528 C
18 Sep Cheque 112004 219 309 C
20 Sep Counter credit: Bristows 742 1,051 C
26 Sep Direct Debit: A-Z Finance 600 451 C
28 Sep BACS credit: GTK Ltd 349 800 C
30 Sep Bank charges 148 652 C
D = Debit C = Credit
 practice assessmen t 3 119

Update the cash book and prepare a bank reconciliation statement at 30 September 20-4.

Select your entries from the following list: Ace Timber, A-Z Finance, Balance b/d, Balance c/d,
Bank charges, Barber & Bates, BLH Ltd, Bridge Tools, Fairfield Ltd, Green & Co, GTK Ltd,
Jackson & Co, Peer Prints, Tenon Ltd.

Cash book Debit Credit

£ £

Closing balance b/d 947

Adjustments:

Adjusted balance c/d

Bank reconciliation £

Closing bank statement balance 652

Less unpresented cheques:

Add outstanding lodgements:

Adjusted closing cash book balance

120 principles of bookkee ping controls w o r k b o o k

Task 5

This task is about using the journal.

(a) Julia is in business selling artists’ materials from a shop which she rents. She has produced
accounts using a spreadsheet up until 1 January 20-6 but now wishes to start using a cloud
accounting system.

She has the following items which are to be included as opening balances in the new accounting
system: cash £320, bank overdraft £585, inventory £3,250, shop fittings £2,650, payables £1,050.

Complete the opening journal entry for her business as at 1 January 20-6.

1 January 20-6 Journal number: 001

Account name Debit Credit

£ £

Cash

Bank

Inventory

Shop fittings

Payables

Capital

Totals

(b) Lottie runs a gardening business, which is registered for VAT. She has recorded the following
journal entry in her accounting system at her year-end of 30 June 20-5:

30 June 20-5 Journal number: 54

Account name Debit Credit Description
£ £
Receivables ledger control 180 Write off: irrecoverable debt
Irrecoverable debts 150 Write off: irrecoverable debt
Value Added Tax 30 Write off: irrecoverable debt

The receivables ledger control account has a closing balance before processing this journal entry
of £2,508 debit.

After the journal is processed, what will be the revised balance carried down on her receivables
ledger control account?

£
 practice assessmen t 3 121

(c) Greta employs six people in her business. At 30 April 20-8 she needs to prepare a journal to reflect
the following payroll information for the month:

Gross pay £7,800

Income tax £760

Employees’ National Insurance Contributions (NIC) £450

Employer’s National Insurance Contributions (NIC) £520

Complete the journal entry for her payroll transactions.

30 April 20-8 Journal number: 75

Account name Debit Credit

£ £

Wages expense

HMRC – Income tax

HMRC – NIC

Net wages

Totals
122 principles of bookkee ping controls w o r k b o o k

Task 6

This task is about using the journal to correct errors.

(a) Identify the type of error not disclosed by the trial balance which is described by each of the
following statements. Choose from the types of error listed in the option box below.

Statement Type of error

Tom has paid for repairs to his delivery van. He has coded the
cost to his vehicles account
Alice has coded rent paid on her business premises to her
stationery account
Daisy has bought copy paper for use in the office and paid in
cash. She has forgotten to record the entry in her accounting
system
Ernesto has bought a computer for his business. He has coded
it as a debit to bank account and a credit to office equipment
account

OPTIONS
Error of omission
Error of commission
Error of principle
Error of original entry
Reversal of entries
Compensating error

(b) Ravi is in business as a repairer of domestic kitchen appliances.

On 30 June 20-7 his bookkeeper prepared a trial balance which did not balance. The debit column
totalled £156,966 and the credit column totalled £155,521.

(i) What entry is needed in the suspense account to balance the trial balance?

Account name Debit Credit

£ £

Suspense
 practice assessmen t 3 123

(ii) The journal entries to correct all the bookkeeping errors, and a list of balances as they
appear in the trial balance, are shown below.

30 June 20-7 Journal number: 68

Account name Debit Credit
£ £
Office stationery 355
Suspense 355

Suspense 1,800
Rent received 1,800

Delivery expenses 450

Bank 450

Complete the table below to show:

• the balance of each account after the journal entries have been recorded

• whether each balance will be a debit or credit entry in the trial balance

Account name Original balance New balance Debit in trial Credit in

£ £ balance trial balance

Office stationery 3,027

Rent received 8,040
Delivery expenses 1,285
Bank (overdraft) 3,261

(c) Maggie’s trial balance fails to agree by £125 and the difference is placed in a suspense account.
Later it is found that a cash purchase for this amount has not been recorded in the purchases
account. Which one of the following journal entries is correct?

Debit suspense account £125; credit purchases account £125

Debit purchases account £250; credit suspense account £250

Debit purchases account £125; credit suspense account £125

Debit purchases account £125

124 principles of bookkee ping controls w o r k b o o k

Task 7

This task is about extracting a trial balance.

You work in the accounts department at Oxley Limited.

Most of the ledger accounts have been closed off and the balances included in the year-end trial balance
at 31 December 20-8.

(a) You are to complete the remaining ledger accounts by inserting the balance carried down on each
account. Enter your answers to two decimal places.

Office equipment
20-8 Details £ 20-8 Details £
1 Dec Balance b/d 22,250.00
10 Dec Bank 1,700.00

31 Dec Balance c/d

Purchases returns
20-8 Details £ 20-8 Details £
1 Dec Balance b/d 358.26
15 Dec Payables ledger control 176.52
31 Dec Balance c/d

Receivables ledger control

20-8 Details £ 20-8 Details £
1 Dec Balance b/d 12,582.36 10 Dec Irrecoverable debt 146.29
31 Dec Sales 7,054.18 31 Dec Sales returns 278.84
31 Dec Bank 7,052.13
31 Dec Balance c/d

Capital
20-8 Details £ 20-8 Details £
31 Dec Bank 1,890.50 1 Dec Balance b/d 36,200.00
31 Dec Balance c/d
 practice assessmen t 3 125

(b) Complete the trial balance by inserting the missing figures and calculating the total for each
column. Enter your answers to two decimal places.

Item Debit Credit

£ £
Sales 120,452.18
Purchases 86,422.76
Purchases returns
Bank 40,581.18
Irrecoverable debts 480.29
Capital
Office equipment
Payables ledger control 7,054.92
Receivables ledger control
VAT 1,242.13
Totals
126 principles of bookkee ping controls w o r k b o o k

Task 8

This task is about redrafting a trial balance.

You work in the accounts department at Vernon Ltd. You have been asked to redraft a trial balance after
some errors have been identified and the correcting journal entries have been made.

The initial list of balances Vernon Ltd at 31 March 20-2 is:

Item £
Sales 42,308.16
Purchases 39,107.38
Irrecoverable debts 320.21
Bank debit 9,332.66
Receivables ledger control 14,760.84
Payables ledger control 10,108.76
Capital 14,092.36
Wages 3,064.96

The errors have been identified and the following journal entries need to be processed:

Date: 30 March 20-2 Journal number: 104

Date Description Debit Credit

£ £

31 March Suspense 272.15 Cash sales not coded

31 March Sales 272.15 Cash sales not coded

31 March Irrecoverable debts 195.38 Irrecoverable debt not initially coded

31 March Suspense 195.38 Irrecoverable debt not initially coded

 practice assessmen t 3 127

You are to complete the adjusted trial balance by inserting the correct figures in either the debit or credit
column, and calculating the totals for each column.

Item Debit Credit

£ £
Sales
Purchases
Irrecoverable debts
Bank
Receivables ledger control
Payables ledger control
Capital
Wages
Totals
128 principles of bookkee ping controls w o r k b o o k
Answers to
practice
assessment 1
130 principles of bookkee ping controls w o r k b o o k

Task 1

(a)
Statement

An entry made in the wrong receivables ledger account will be revealed by the
receivables ledger control account
The net figure from sales day book is debited to receivables ledger control account

Irrecoverable debts written off are not recorded in receivables ledger control
account
The balance of receivables ledger control account gives a total figure for the ✔
amount owing by credit customers

(b)

VAT control account

Details £ Details £
Purchases 1,345 Balance b/d 1,585
Sales returns 205 Sales 2,627
Discounts allowed 122 Purchases returns 286
Bank 1,585 Discounts received 154
Cash sales 728
Balance c/d 2,123

(c) £ 9,205

Task 2

(a)
Statement
Entries made in the wrong payables ledger accounts can be identified and
corrected
Differences between the payables ledger and payables ledger control account can ✔
be identified and corrected
To check that irrecoverable debts have been recorded correctly in both the
payables ledger and the payables ledger control account
To ensure that payments made to credit suppliers are recorded correctly in the
cash book
 answers to p ractice a ssessmen t 1 131

(b) (i) £ 25,928

(ii) The receivables ledger control account balance is £ 376 more than the receivables
ledger.

(c)
Reason May explain Does not
difference explain
difference
A supplier invoice has been recorded twice in the ✔
payables ledger
The amount for purchases returns has been omitted from ✔
payables ledger control account
A supplier’s account balance has been understated when ✔
totalling the payables ledger
A cash purchase has not been recorded in the payables ✔
ledger
A supplier invoice has been recorded in the wrong ✔
account in payables ledger

Task 3

(a)
Description Payment method
A variable date and amount payment set up by the business Direct debit
receiving the payments
A high value, same-day payment sent through the banks’ CHAPS
computer systems
Simple method used to pay for low-value purchases without Cash
using cards or electronic systems
A bank card payment method used for purchases and cash Debit card
withdrawals where payment is usually taken from the bank
account on the next working day

(b)
Statement
Direct debits paid by the bank are not recorded in the cash book
At the beginning of each month the opening balances for the bank statement and
the cash book will always be the same
The bank reconciliation statement makes use of timing differences ✔
132 principles of bookkee ping controls w o r k b o o k

(c)
Statement True False
The payments column of the bank statement should be checked for ✔
automated payments that may have been missed in the cash book
Where the bank has made an error, the item and amount should not be ✔
recorded in the cash book
When reconciling from the bank statement balance to the cash book ✔
balance, unpresented cheques are added

Task 4

Cash book Debit Credit

£ £

Closing balance b/d 567

Adjustments:

Cairns and Co 571

Insurance Direct 850

Bank charges 88

Adjusted balance c/d 200

Bank reconciliation £

Closing bank statement balance 1,002

Less unpresented cheques:

MVR Ltd 652

Makin and King 450

Add outstanding lodgements:

Randle Fitments 300

Adjusted closing cash book balance 200

 answers to p ractice a ssessmen t 1 133

Task 5

(a)
Situation

Lottie has found an error in the accounting system and wishes to process a journal ✔
entry to show how she has corrected the error

Alice’s business has had an excellent week for sales. She wants to record this
success through a journal entry

To increase his capital Ernesto is putting his car into the business. As this is a ‘one- ✔
off’ transaction, he wants to process it through a journal entry

Blanca has arranged a bank overdraft of £5,000 and her bookkeeper wants to process
this through a journal entry

(b) £ 7,643

(c)
15 December 20-3 Journal number: 69

Account name Debit Credit Description

£ £

Receivables ledger control 240 Write off: irrecoverable debt

Irrecoverable debts 200 Write off: irrecoverable debt

Value Added Tax 40 Write off: irrecoverable debt

Task 6

(a)
Statement

When errors are disclosed by a trial balance, it is balanced by opening a suspense ✔

account for the difference
A suspense account always has a debit balance

All errors found within the bookkeeping system are corrected by processing a
journal entry, one part of which is an entry for suspense account
Once errors have been corrected, suspense account has a nil balance and the trial ✔
balance can be redrafted
134 principles of bookkee ping controls w o r k b o o k

(b)

Error Disclosed Not disclosed

The cost of fuel for vehicles has been debited to vehicles ✔
account
Stationery expenses paid from the bank have been debited to ✔
both stationery account and bank account

(c) (i) £ 719

Debit ✔

Credit

(ii)
30 September 20-4 Journal number: 175

Account name Debit Credit Description

£ £
Business rates 755 Correction of error 1
Suspense 755 Correction of error 1
Suspense 36 Correction of error 2
Purchases returns 36 Correction of error 2

Tutorial note: the difference of £36 has been entered here. An alternative treatment is to take out
the wrong figure of £648 (debit purchases returns; credit suspense) and then record the correct
figure of £684 (debit suspense; credit purchases returns). The effect is the same as the net amount
of £36 shown above.

Task 7

(a)

Bank
20-7 Details £ 20-7 Details £
1 Jul Balance b/d 1,532.98 20 Jul Stationery 846.95
6 Jul Sales 2,405.33 25 Jul Purchases 5,176.27
31 Jul Receivables ledger control 8,274.19 31 Jul Payables ledger control 7,465.32
31 Jul Balance c/d 1,276.04
 answers to p ractice a ssessmen t 1 135

Discounts received
20-7 Details £ 20-7 Details £
1 Jul Balance b/d 544.63
31 Jul Payables ledger control 86.48
31 July Balance c/d 631.11

Receivables ledger control

20-7 Details £ 20-7 Details £
1 Jul Balance b/d 20,353.54 31 Jul Bank 8,274.19
14 Jul Sales 6,487.29
28 Jul Sales 5,074.68 31 Jul Balance c/d 23,641.32

VAT control
20-7 Details £ 20-7 Details £
31 Jul Purchases 1,542.61 1 Jul Balance b/d 978.65
31 Jul Sales 2,327.88
31 Jul Balance c/d 1,763.92

(b)
Item Debit Credit
£ £
Sales 75,591.20
Purchases 60,417.74
Bank 1,276.04
Discounts allowed 1,405.19
Discounts received 631.11
Stationery 6,045.18
Payables ledger control 12,247.16
Receivables ledger control 23,641.32
VAT control 1,763.92
Totals 91,509.43 91,509.43
136 principles of bookkee ping controls w o r k b o o k

Task 8

Item Debit Credit

£ £
Sales 89,610.84
Purchases 65,398.34
Discounts allowed 431.42
Bank 12,205.75
Vehicles 28,098.17
Payables ledger control 16,522.84
Totals 106,133.68 106,133.68
Answers to
practice
assessment 2
138 principles of bookkee ping controls w o r k b o o k

Task 1

(a)
Statement

VAT on purchases returns is debited to VAT control account

VAT on discounts received is credited to VAT control account ✔

The amount of VAT paid to HMRC is credited to VAT control account

A debit balance on VAT control account shows how much VAT is owing to HMRC

(b)

Receivables ledger control account

Details £ Details £
Balance b/d 28,392 Sales returns 1,096
Sales 21,068 Bank 22,362
Discounts allowed 492
Irrecoverable debts 341

Balance c/d 25,169

(c) £ 15,272

Task 2

(a)
Statement
Entries made in the wrong receivables ledger accounts can be identified and
corrected
Differences between the receivables ledger and receivables ledger control account ✔
can be identified and corrected
To check that goods sold to cash customers have been recorded correctly in both
the receivables ledger and the receivables ledger control account
To ensure that receipts from credit customers are recorded correctly in the cash
book
 answers to p ractice a ssessment 2 139

(b) (i) £ 11,174

(ii) The payables ledger control account balance is £ 106 less than the payables
ledger.

(c)
Reason May explain Does not
difference explain
difference
A customer invoice has been recorded twice in the ✔
receivables ledger
The amount for sales returns has been omitted from ✔
receivables ledger control account
A customer’s account balance has been overstated when ✔
totalling the receivables ledger
A cash sale has not been recorded in the receivables ✔
ledger
A customer invoice has been recorded in the wrong ✔
account in receivables ledger

Task 3
(a)
Description Payment method
Regular fixed date payments for the same amount set up Standing order
with the bank by the business sending the money
Computer-based direct payments between bank accounts BACS
with a three day clearance
An instruction in writing, signed by the bank’s customer, Cheque
telling the bank to pay a one-off amount to a named person
A card issued on a ‘buy now and pay later’ basis and for Credit card
cash withdrawals; payment is made monthly in full or in part

(b)
Statement
Unpresented cheques are timing differences which need to be deducted in the
cash book
A completed bank reconciliation statement proves that there are no errors in the
accounting system
Faster Payments receipts shown on the bank statement need to be recorded in ✔
the cash book
140 principles of bookkee ping controls w o r k b o o k

(c)
Statement True False
A direct debit payment recorded on the bank statement but not in the cash ✔
book is deducted on the bank reconciliation statement
Outstanding lodgements are amounts paid into the bank but not yet ✔
recorded on the bank statement
A credit balance on a bank statement is a debit balance in a business cash ✔
book

Task 4

Cash Book Debit Credit

£ £

Closing balance b/d 3,270

Adjustments:

Bayer Ltd 1,095

Allen plc 2,786

JA Finance 592

Bank charges 45

Adjusted balance c/d 6,514

Bank reconciliation £

Closing bank statement balance 6,060

Less unpresented cheques:

Bradnock Traders 1,036

Filiaps Ltd 798

Add outstanding lodgements:

Pardo Ltd 1,746

Torre & Co 542

Adjusted closing cash book balance 6,514

 answers to p ractice a ssessment 2 141

Task 5

(a)
Situation
✔
Arthur has a new bookkeeper who has prepared the monthly payroll transactions.

Alexandra runs a delicatessen and she has bought goods for resale on credit from
Kernow Cheese Ltd.

Emma has taken cash drawings from her business.

✔
Faye’s bookkeeper has found an error in the accounts which needs to be corrected.

(b)
1 May 20-6 Journal number: 001
Account name Debit Credit
£ £
Cash 250
Bank 4,500
Inventory 2,500
Office equipment 2,850
Payables 725
Capital 9,375
Totals 10,100 10,100

(c) £ 545 Debit / Credit

142 principles of bookkee ping controls w o r k b o o k

Task 6

(a)
Statement

When the debit side total of a trial balance is more than the credit side total, a
suspense account is opened with a debit balance
The correction of errors not disclosed by the trial balance are recorded through
suspense account
After errors disclosed by the trial balance have been corrected, a redrafted trial ✔
balance will show that suspense has been cleared
A suspense account can have either a debit balance or a credit balance ✔

(b)

Error Disclosed Not disclosed

Fuel for vehicles of £55 has been debited to vehicles account ✔
Rent paid account has been overcast by £100 ✔

(c) (i) £ 759

Debit

Credit ✔

(ii)

30 April 20-5 Journal number: 314

Account name Debit Credit Description

£ £
Suspense 750 Correction of error 1
Rent received 750 Correction of error 1
Suspense 9 Correction of error 2
Sales returns 9 Correction of error 2
 answers to p ractice a ssessment 2 143

Task 7

(a)

Bank
20-8 Details £ 20-8 Details £
1 Jun Balance b/d 856.92 15 Jun Office expenses 2,528.88
30 Jun Capital 5,210.63 20 Jun Purchases 3,045.22
30 Jun Receivables ledger control 18,428.15 30 Jun Payables ledger control 10,247.91
30 Jun Balance c/d 8,673.69

Office expenses
20-8 Details £ 20-8 Details £
1 Jun Balance b/d 10,504.68
15 Jun Bank 2,107.40
30 Jun Balance c/d 12,612.08

Payables ledger control

20-8 Details £ 20-8 Details £
30 Jun Bank 10,247.91 1 Jun Balance b/d 18,328.14
10 Jun Purchases 5,329.02
30 Jun Balance c/d 20,472.39 28 Jun Purchases 7,063.14

Capital
20-8 Details £ 20-8 Details £
30 Jun Bank 1,810.95 1 Jun Balance b/d 13,715.88
30 Jun Balance c/d 11,904.93
144 principles of bookkee ping controls w o r k b o o k

(b)
Item Debit Credit
£ £
Sales 115,350.13
Purchases 86,024.28
Bank 8,673.69
Discounts allowed 828.44
Capital 11,904.93
Office expenses 12,612.08
Payables ledger control 20,472.39
Receivables ledger control 42,106.11
VAT control 2,517.15
Totals 150,244.60 150,244.60

Task 8

Item Debit Credit

£ £
Sales 75,737.97
Purchases 66,810.13
Sales returns 1,010.60
Bank 11,266.95
Receivables ledger control 25,271.16
Payables ledger control 20,310.18
Capital 8,310.69
Totals 104,358.84 104,358.84
Answers to
practice
assessment 3
146 principles of bookkee ping controls w o r k b o o k

Task 1

(a)
Statement True False
A debit balance on VAT control account shows how much is due from ✔
HMRC
Discounts received is recorded on the credit side of payables ledger control ✔
account

(b)
Receivables ledger control Debit Credit
£ £
1 April 20-2 Balance b/d 15,043
Sales day book 14,448
Sales returns day book 1,116
Discounts allowed day book 252
Bank – receipts from credit customers 13,200
30 April 20-2 Balance c/d 14,923

£ 1,756 Debit Credit ✔

Task 2

(a)
An entry made in the wrong receivables ledger account will not be revealed by the receivables
ledger control account.
Reconciling the payables ledger control account to the payables ledger could reveal errors in
both payables ledger and payables ledger control account.

(b) (i) £ 16,231

(ii) £ 585
 answers to p ractice a ssessment 3 147

(iii)
Reasons
Purchases were entered twice in a supplier’s account in the payables ledger ✔
Purchases returns were not entered in the payables ledger control account
Purchases returns were entered twice in a supplier’s account in the payables
ledger
Discounts received were not entered in the payables ledger control account
A bank payment to a supplier was entered into the wrong supplier’s account in
the payables ledger
A bank payment to a supplier was entered twice in the payables ledger control ✔
account

Task 3

(a)
Payment method Immediate Later date
Faster payment ✔
Debit card ✔

(b)
Description Difference
A cheque from a customer, which was entered in the cash book and Unpaid cheques
paid into the bank last week, has been returned
Cheques to suppliers have been recorded in the cash book, but are Unpresented cheques
not yet shown on the bank statement
The monthly payment for business rates has been made Direct debit
automatically by the ban
Cash and cheques from customers were recorded in the cash book Outstanding lodgements
and paid into the bank today, but are not yet shown on the bank
statement

(c)
Adjustment Cash book Bank reconciliation
Bank charges are deducted on the bank statement ✔
Cash sales recorded in the cash book are not shown on ✔
the bank statement
148 principles of bookkee ping controls w o r k b o o k

Task 4

Cash book Debit Credit

£ £

Closing balance b/d 947

Adjustments:

GTK Ltd 349

Bank charges 148

Adjusted balance c/d 746

Bank reconciliation £

Closing bank statement balance 652

Less unpresented cheques:

Bridge Tools 607

Tenon Ltd 1,505

Add outstanding lodgements:

Barber & Bates 469

Jackson & Co 245

Adjusted closing cash book balance (746)

 answers to p ractice a ssessment 3 149

Task 5

(a)
1 January 20-6 Journal number: 001

Account name Debit Credit

£ £

Cash 320

Bank 585

Inventory 3,250

Shop fittings 2,650

Payables 1,050

Capital 4,585

Totals 6,220 6,220

(b) £ 2,328

(c)
30 April 20-8 Journal number: 75

Account name Debit Credit

£ £

Wages expense 8,320

HMRC – Income tax 760

HMRC – NIC 970

Net wages 6,590

Totals 8,320 8,320

150 principles of bookkee ping controls w o r k b o o k

Task 6

(a)
Statement Type of error
Tom has paid for repairs to his delivery van. He has coded the Error of principle
cost to his vehicles account
Alice has coded rent paid on her business premises to her Error of commission
stationery account
Daisy has bought copy paper for use in the office and paid in Error of omission
cash. She has forgotten to record the entry in her accounting
system
Ernesto has bought a computer for his business. He has coded Reversal of entries
it as a debit to bank account and a credit to office equipment
account

(b) (i)
Account name Debit Credit
£ £

Suspense 1,445

(ii)
Account name Original balance New balance Debit in trial Credit in
£ £ balance trial balance

Office stationery 3,027 3,382 ✔

Rent received 8,040 9,840 ✔
Delivery expenses 1,285 1,735 ✔
Bank (overdraft) 3,261 3,711 ✔

(c)
Debit suspense account £125; credit purchases account £125

Debit purchases account £250; credit suspense account £250

Debit purchases account £125; credit suspense account £125 ✔

Debit purchases account £125

 answers to p ractice a ssessment 3 151

Task 7

(a)

Office equipment
20-8 Details £ 20-8 Details £
1 Dec Balance b/d 22,250.00
10 Dec Bank 1,700.00

31 Dec Balance c/d 23,950.00

Purchases returns
20-8 Details £ 20-8 Details £
1 Dec Balance b/d 358.26
15 Dec Payables ledger control 176.52
31 Dec Balance c/d 534.78

Receivables ledger control

20-8 Details £ 20-8 Details £
1 Dec Balance b/d 12,582.36 10 Dec Irrecoverable debt 146.29
31 Dec Sales 7,054.18 31 Dec Sales returns 278.84
31 Dec Bank 7,052.13
31 Dec Balance c/d 12,159.28

Capital
20-8 Details £ 20-8 Details £
31 Dec Bank 1,890.50 1 Dec Balance b/d 36,200.00
31 Dec Balance c/d 34,309.50
152 principles of bookkee ping controls w o r k b o o k

(b)
Item Debit Credit
£ £
Sales 120,452.18
Purchases 86,422.76
Purchases returns 534.78
Bank 40,581.18
Irrecoverable debts 480.29
Capital 34,309.50
Office equipment 23,950.00
Payables ledger control 7,054.92
Receivables ledger control 12,159.28
VAT 1,242.13
Totals 163,593.51 163,593.51

Task 8

Item Debit Credit

£ £
Sales 42,580.31
Purchases 39,107.38
Irrecoverable debts 515.59
Bank 9,332.66
Receivables ledger control 14,760.84
Payables ledger control 10,108.76
Capital 14,092.36
Wages 3,064.96
Totals 66,781.43 66,781.43
for your notes
for your notes
for your notes
for your notes
 PRINCIPLES OF BOOKKEEPING CONTROLS WORKBOOK
PRINCIPLES OF
BOOKKEEPING
PRINCIPLES OF
CONTROLS BOOKKEEPING
WORKBOOK CONTROLS
This book has been written to provide practice assessment material
for the Unit ‘Principles of Bookkeeping Controls’ which is mandatory WORKBOOK
for the Q2022 AAT Level 2 Certificate in Accounting.

The book contains Chapter Activities and Practice Assessments

which will enable the student to gain confidence in tackling the AAT
Computer Based Assessment. Answers are also provided in this text.

This practical workbook should be used in combination with the

Osborne Books ‘Principles of Bookkeeping Controls Tutorial’ which
contains explanatory text and further practice questions.

SUPPORT
AS YOU
LEARN
ISBN 978-1-911198-53-6
DAVID COX
MICHAEL FARDON

email: books@osbornebooks.co.uk
9 781911 198536 www.osbornebooks.co.uk