Basic Accountin (1) Q & A

OSBORNE BOOKS TUTOR ZONE
Basic accounting 1
Chapter activities
(revised version calculating standard rate VAT @ 20%)
© Osborne Books Limited, 2011

Chapter activities
1 Introduction to the accounting system
1.1 Examples of financial documents include:

invoice, credit note, cheque, petty cash voucher
invoice, credit note, cheque, sales day book
invoice, credit note, cheque, sales ledger
Tick the appropriate box.
1.2 The accounts of receivables (debtors) are contained in:

purchases ledger
sales ledger
general ledger
1.3 Select the missing words from the selection below to complete the following text.
The general ledger of a business normally contains the accounts of assets, which are
................................................. and liabilities, which are ...................................................., and
.................................................., which is the owner’s investment in the business.
items owed capital items owned

chapter activities 3
1.4 An extract from the trial balance of a food store is shown below.
Name of business: Cibo Limited

Trial Balance as at 31 December (extract)
Debit £ Credit £
Receivables 8,500
Payables 48,720
Marketing 6,900
Insurance 1,120
Rates 2,800
Bank 39,000
Cash 325
Rent 28,000
Capital 255,000
On the basis of the figures shown here, calculate the following money amounts:
(a) How much do the customers of Cibo Limited owe the business?
(b) How much does Cibo Limited owe its suppliers?
(c) What is the total of the expenses of Cibo Limited?
(d) What investment do the owners of Cibo Limited have in the business?
£
4 basic accounting 1 tutor zone
Chapter activities
2 Financial documents for sales
2.1 Cucina Cookware has supplied the following goods to a credit customer, R Copolis.
The list price of the goods is £30.00 per pan, plus VAT at 20%. R Copolis is to be given a 20%
trade discount and a 5% discount for settlement within 14 days.
DELIVERY NOTE No 1791

CUCINA COOKWARE Date 09 09 20-4
10 Mantle Street
Mereford MR2 RS4
R Copolis
21 Sandy Lane, Stourford, ST1 5GH Customer code RC924
20 Luxor pans, Code LX25
You are to complete the following invoice with the required details:
INVOICE No 2071
10 Mantle Street
Mereford MR2 RS4
VAT Reg 105 1195 03
To
R Copolis
21 Sandy Lane, Stourford, ST1 5GH Customer code
Delivery note no
Quantity Product code Unit price (£) Total (£) Net (£) VAT (£) Total (£)
2.2 If Cucina Cookware had provided a further discount of 10% for orders in excess of £2,000, this
would be known as a:

cash discount
group discount
bulk discount
2.3 The following transactions have been passed through the account of a Ramsay Ltd, a new credit
customer of Cucina Cookware:
Date Document Amount (£)

1 October Invoice 2539 2,308.69
8 October Invoice 2586 1,905.60
14 October Invoice 2610 756.70
18 October Credit note 836 120.45
30 October Cheque 4,093.84
You are to complete the statement of account shown below:
STATEMENT OF ACCOUNT To Ramsay Limited

10 Mantle Street, Mereford MR2 RS4
Date Details Amount (£) Balance outstanding (£)
1 October Invoice 2539
18 October Credit note 836
30 October Cheque
2.4 Cucina Cookware codes all sales invoices with a customer code and a general ledger code.
A selection of the codes used is given below.
Customer Customer Account Code

Alba Limited ALB09
Bright Foods BRI07
British Caterers BRI08
Dansk Foods Ltd DAN10
Dancer Trading DAN12
Item General Ledger Code

Pans GL1001
Cutlery GL1004
Blenders GL1006
Crockery GL1012
Coffee making GL1014
Indicate in the table below the appropriate customer and general ledger codes that would be
applied to the the following sales invoices:
Product Customer General Ledger Code Customer Code
Ace blender British Caterers
Dinner plates Dansk Foods Ltd
Soup spoons Bright Foods
Pasta pan Alba Limited
Coffee grinder Dancer Trading
Canteen mugs Bright Foods

2.5 The financial document which is received by the seller and states what goods or services are to be
supplied is known as:

a delivery note
a sales order
a purchase order
2.6 A business sells goods which have a total list price of £1,200. The following discounts are available
to the buyer:
• 20% normal trade discount
• trade discount of 25% for purchases over £2,000
The net amount to be charged before VAT will be:

£900.00
£930.00
£960.00

Chapter activities
3 Accounting for sales and sales returns
3.1 Which two of the following are general ledger accounts?

1 sales day book
2 sales account
3 Value Added Tax account
4 account of T Smith, a receivable (debtor)
1 and 2
2 and 3
3 and 4
2 and 4
3.2 Which one of the following is a sales ledger account?

sales returns account
Value Added Tax account
account of P Lane, a receivable (debtor)
sales account
3.3 Which one of the following is entered in the sales day book?
credit note issued
purchase order
statement of account sent to B Roberts, a receivable (debtor)
sales invoice
For Activities 3.4 and 3.5:

• work in pounds and pence, where appropriate
• the rate of Value Added Tax is to be calculated at 20% (when calculating VAT amounts, you
should ignore fractions of a penny, ie round down to a whole penny)
• use a coding system incorporating the following:
sales day book – SDB54 general ledger account numbers

sales returns day book – SRDB18 sales ledger control account – GL1200
sales account – GL4100
sales ledger account numbers sales returns account – GL4110
Beavan & Co – SL050 Value Added Tax account – GL2200
Larcombe Stores – SL110
Outdoor Supplies – SL190
Weatherproof Ltd – SL220
3.4 DryZone Limited manufactures and sells outdoor clothing. During June 20-4 the following credit
transactions took place:
20-4
5 Jun Sold goods to Outdoor Supplies £550 + VAT, invoice no 7234 issued
8 Jun Sold goods to Beavan & Co £875 + VAT, invoice no 7235 issued
12 Jun Sold goods to Larcombe Stores £690 + VAT, invoice no 7236 issued
16 Jun Sold goods to Weatherproof Ltd £1,210 + VAT, invoice no 7237 issued
22 Jun Sold goods to Beavan & Co £625 + VAT, invoice no 7238 issued
27 Jun Sold goods to Weatherproof Ltd £1,575 + VAT, invoice no 7239 issued
You are to:

(a) enter the above transactions in DryZone Limited’s sales day book for June 20-4, using the
format shown on the next page
(b) record the accounting entries in DryZone Limited’s general ledger and sales ledger. (You
will need to retain the ledger accounts for use with Activity 3.5.)
Sales Day Book SDB54

Date Details Invoice Reference Total VAT Net
number
£ £ £
3.5 The following details are the sales returns of DryZone Limited for June 20-4. They are to be:
(a) entered in the sales returns day book for June 20-4, using the format shown below
(b) recorded in the general ledger and sales ledger (use the ledgers already prepared in the
answer to Activity 3.4)
20-4
10 Jun Outdoor Supplies returns goods £75 + VAT, credit note no 224 issued
18 Jun Beavan & Co returns goods £110 + VAT, credit note no 225 issued
22 Jun Larcombe Stores returns goods £45 + VAT, credit note no 226 issued
30 Jun Beavan & Co returns goods £122 + VAT, credit note no 227 issued
Sales Returns Day Book SRDB18

Date Details Credit note Reference Total VAT Net
number
£ £ £
3.6 Sales invoices have been prepared and partially entered in the sales day book, as shown below.
(a) Complete the entries in the sales day book by inserting the appropriate figures for each
invoice
(b) Total the last five columns of the sales day book
Sales day book
Date Details Invoice Total VAT Net Sales type 1 Sales type 2
20XX number £ £ £ £ £
30 June Avalos Ltd 2021 6,240 5,200

30 June Bolster & Co 2022 496 2,480
30 June Watsons 2023 2,112 1,760 1,760
Totals
3.7 You are employed by Perran Limited as an accounts assistant. The business has a manual
accounting system. Double-entry takes place in the general ledger; individual accounts of
receivables (debtors) are kept as memorandum accounts in the sales ledger. The VAT rate is 20%.
Notes:
• show your answer with a tick, words or figures, as appropriate
• coding is not required
(a) The following credit transactions all took place on 30 June 20-7 and have been entered into
the sales day book as shown below. No entries have yet been made in the ledgers.
Sales day book

Date Details Invoice Total VAT Net
20-7 number £ £ £
30 June Durning Ltd 271 4,368 728 3,640
30 June Penyard & Co 272 2,256 376 1,880
30 June Merrimans 273 2,544 424 2,120
30 June Porth plc 274 5,808 968 4,840
Totals 14,976 2,496 12,480
What will be the entries in the sales ledger?
Select your account name from the following list: Durning Ltd, Merrimans, Penyard & Co, Porth plc,
Purchases, Purchases ledger control, Purchases returns, Sales, Sales ledger control, Sales
returns, Value Added Tax.
Sales ledger
Account name Amount Debit Credit
£
What will be the entries in the general ledger?
Select your account name from the following list: Purchases, Purchases ledger control, Purchases
returns, Sales, Sales ledger control, Sales returns, Value Added Tax.
General ledger
£
(b) The following credit transactions all took place on 30 June 20-7 and have been entered into
the sales returns day book as shown below. No entries have yet been made in the ledgers.
Sales returns day book
Date Details Credit note Total VAT Net
20-7 number £ £ £
30 June Sanchez & Co CN 105 672 112 560
30 June Honnor Ltd CN 106 384 64 320
Totals 1,056 176 880
What will be the entries in the sales ledger?

Select your account name from the following list: Honnor Ltd, Purchases, Purchases ledger control,
Purchases returns, Sales, Sales ledger control, Sales returns, Sanchez & Co, Value Added Tax.
Sales ledger
£

General ledger
£
Chapter activities
4 Process payments from customers
4.1 If a business receieves a remittance advice from a customer and there is an underpayment of
the account, the reason could be one of the following situations.
Choose the correct option.

The customer has paid a sales invoice twice in error
The customer has failed to take a sales credit note into account
There is a dispute over an invoice
The payment has been late
4.2 A business receives payment of an invoice for goods costing £1,200 before VAT at 20% is added.
The invoice allows deduction of settlement discount at 5% for payment within 14 days of the
invoice date.The payment is received 21 days after the invoice date.
(a) Choose the correct amount of payment due on this invoice.

£1,200.00
£1,428.00
£1,368.00
(b) The final total amount shown in the invoice will be:
4.3
The account shown below is in the sales ledger of Johnston & Co. The customer, G Flynn, is a new
customer who opened the account at the beginning of Seprtember. Initial terms were for settlement
of the account at the end of the month by BACS transfer.
Also shown below is the BACS remittance advice sent by G Flynn at the end of September.
G Flynn
Date Details Amount £ Date Details Amount

20XX 20XX £
5 Sept Sales invoice 468 1,238 10 Sept Credit note 295 120
15 Sept Sales Invoice 490 1,560
25 Sept Sales Invoice 523 525
G Flynn
BACS REMITTANCE ADVICE
To: Johnston & Co Date: 30 Sept 20XX

The following payment will reach your bank account within 3 working days.
Invoice number Credit note number Amount

£
468 1,238
523 525
Total amount paid 1,763
You are required to check the remittance advice against the sales ledger account.
(a) State the two documents (including the reference numbers) missing from the remittance advice:
(b) State the total amount that should have been sent to settle the account:
Chapter activities
5 Process documents from suppliers
5.1 A goods received note is issued:

by the buyer when ordering goods
by the supplier when despatching goods
by the buyer when the goods arrive
5.2 A purchase order should be checked by the buyer against:

the supplier’s account
the delivery note
the remittance advice
5.3 Discount given by the supplier specifically when the buyer orders large quantities of goods is
known as:

trade discount
settlement discount
bulk discount

5.4
Praxis Stationery codes all purchase invoices with a supplier code and a general ledger code. A
selection of the codes used is given below.
Supplier Supplier Account Code

Masters Ltd MA008
Nero Associates NE003
Nextday Ltd NE009
Omega Traders OM004
Pimania Ltd PI006
Item General Ledger Code

Pens GL1008
Paper GL1009
Filing GL1010
Furniture GL1011
Planners GL1012
During the week Praxis Stationery receives a number of supplier invoices to settle.
You are to code these invoices using the lists shown above and the table below.
Supplier Product ordered Supplier Code General ledger code
Nextday Ltd Office desks
Pimania Ltd Black gel pens
Nero Associates A4 copy paper
Omega Traders Red fibre tip pens
Masters Ltd Suspension files
Nextday Ltd Office holiday planner

5.5 A supply of box files has been delivered to Praxis Stationery by Stationery Supplies Ltd. The
purchase order sent from Praxis Stationery, and the invoice from Stationery Supplies, are shown
below.
PURCHASE ORDER No 1070

PRAXIS STATIONERY Date 12 08 20-3
45 Jarvis Street, Mereford MR1 2GH
To: Stationery Supplies

Please supply 500 Box files (burgundy) Product code BFB672
Purchase price: £4 each, plus VAT @ 20%.
Discount: less 25% trade discount, as agreed.
INVOICE
STATIONERY SUPPLIES LIMITED
67 Grossmith Street
Norwich NR1 4FG
VAT Reg 119 8426 22
To: Date 14 08 20-3

Praxis Stationery No. 2364
45 Jarvis Street, Mereford MR1 2GH Account P562
Quantity Product code Price (£) Total (£) Net (£) VAT (£) Total (£)
500 BFL677 6.00 3000.00 2250.00 450.00 2700.00
Check the invoice against the purchase order and answer the following questions.
Has the correct item been supplied? Yes or No?
What should the correct total be after deduction of discount? £
What would be the VAT (charged @20%) if the invoice was correct? £
What would be the VAT charged (@20%) if 2% settlement discount was taken? £
Chapter activities
6 Accounting for purchases and purchases
returns
6.1 Which two of the following are general ledger accounts?
1 purchases account
2 Value Added Tax account
3 purchases day book
4 account of J Vincent, a payable (creditor)
1 and 2
2 and 3
3 and 4
2 and 4
6.2 Which one of the following is a purchases ledger account?

purchases account
Value Added Tax account
purchases returns account
account of M Ostrowski, a payable (creditor)

6.3 Which one of the following is entered in the purchases returns day book?
purchases invoice
statement of account sent by T Lewis, a payable (creditor)
credit note received
purchase order
For Activities 6.4 and 6.5:

• work in pounds and pence, where appropriate
• the rate of Value Added Tax is to be calculated at 20% (when calculating VAT amounts, you
should ignore fractions of a penny, ie round down to a whole penny)
• use a coding system incorporating the following:
purchases day book – PDB38

purchases returns day book – PRDB12 general ledger account numbers
purchases ledger control account – GL2350
purchases ledger account numbers purchases account – GL5100
Askews – PL040 purchases returns account – GL5110
Keating & Co – PL320 Value Added Tax account – GL2200
Melia Manufacturing – PL410
Taylor Supplies – PL680
6.4 Scott Products Limited manufactures and sells chocolate products. During March 20-2 the following
credit transactions took place:
20-2
4 Mar Purchased goods from Taylor Supplies £527 + VAT, invoice no T/I459
8 Mar Purchased goods from Keating & Co £831 + VAT, invoice no 3472
11 Mar Purchased goods from Askews £689 + VAT, invoice no A862
18 Mar Purchased goods from Taylor Supplies £975 + VAT, invoice no T/I550
25 Mar Purchased goods from Melia Manufacturing £569 + VAT, invoice no 8817
28 Mar Purchased goods from Askews £433 + VAT, invoice no A902
You are to:
(a) enter the above transactions in Scott Products Limited’s purchases day book for March
20-2, using the format shown on the next page
(b) record the accounting entries in Scott Products Limited’s general ledger and purchases
ledger. (You will need to retain the ledger accounts for use with Activity 6.5)
Purchases Day Book PDB38

number
£ £ £
6.5 The following are the purchases returns of Scott Products Limited for March 20-2. They are to be:
(a) entered in the purchases returns day book for March 20-2, using the format shown below
(b) recorded in the general ledger and purchases ledger (use the ledgers already prepared in
the answer to Activity 6.4)
20-2
12 Mar Returned goods to Taylor Supplies £82 + VAT, credit note no T/R270 received
18 Mar Returned goods to Keating & Co £54 + VAT, credit note no CN368 received
26 Mar Returned goods to Taylor Supplies £37 + VAT, credit note no T/R275 received
30 Mar Returned goods to Askews £85 + VAT, credit note no CN/A303 received
Purchases Returns Day Book PRDB12

number
£ £ £
6.6 Purchases invoices have been prepared and partially entered in the purchases day book, as shown
below.
(a) Complete the entries in the purchases day book by inserting the appropriate figures for each
invoice
(b) Total the last five columns of the purchases day book
Purchases day book
Date Details Invoice Total VAT Net Purchases Purchases

20XX number £ £ £ type 1 £ type 2 £
30 June Kinnear & Co 4513 5,472 4,560 4,560

30 June Boswells B/364 768 3,840
30 June Zamora Ltd Z274 3,552 2,960
Totals
6.7 You are employed by Larcombe Limited as an accounts assistant. The business has a manual
accounting system. Double-entry takes place in the general ledger; individual accounts of payables
(creditors) are kept as memorandum accounts in the purchases ledger. The VAT rate is 20%.
Notes:
• show your answer with a tick, words or figures, as appropriate
• coding is not required
(a) The following credit transactions all took place on 30 June 20-8 and have been entered into
the purchases day book as shown below. No entries have yet been made in the ledgers.
Purchases day book

Date Details Invoice Total VAT Net
20-8 number £ £ £
30 June Thorpe Ltd 4729 2,112 352 1,760
30 June Avalos plc A346 2,832 472 2,360
30 June Barkers 9784 6,144 1,024 5,120
30 June Floyd & Co F/242 5,616 936 4,680
Totals 16,704 2,784 13,920
What will be the entries in the purchases ledger?
Select your account name from the following list: Avalos plc, Barkers, Floyd & Co, Purchases,
Purchases ledger control, Purchases returns, Sales, Sales ledger control, Sales returns, Thorpe
Ltd, Value Added Tax.
Purchases ledger
£
General ledger
£
(b) The following credit transactions all took place on 30 June 20-8 and have been entered into
the purchases returns day book as shown below. No entries have yet been made in the
ledgers.
Purchases returns day book
Date Details Credit note Total VAT Net
20-8 number £ £ £
30 June Church Stores 616 336 56 280
30 June Thornton Ltd CN55 672 112 560
Totals 1,008 168 840
What will be the entries in the purchases ledger?

Select your account name from the following list: Church Stores, Purchases, Purchases ledger
control, Purchases returns, Sales, Sales ledger control, Sales returns, Thornton Ltd, Value Added
Tax.
Purchases ledger
£

General ledger
£
Chapter activities
7 Prepare payments to suppliers
7.1 If a supplier duplicates a credit note for goods returned, the likely effect will be:

an increase in the total amount owing shown on the statement of account
a decrease in the total amount owing shown on the statement of account
no effect at all
7.2 A remittance advice is used to:

advise the customer of the total amount owing
advise the supplier’s bank of the total amount being paid by the customer
advise the supplier of the total amount being paid by the customer
7.3 The purchase ledger account of a supplier shows a credit note which is not shown on the supplier’s
statement of account. This:
can be adjusted by asking the supplier to issue an adjusting invoice
will increase the total amount shown as owing on the statement of account
will decrease the total amount shown as owing on the statement of account

7.4 Shown below is a statement of account received from Al Binoni Importers, a credit supplier, and the
supplier’s account as shown in the purchases ledger of Broadfield Traders.
Al Binoni Importers
29 Gresham Avenue, London, EC2 8JX
To: Broadfield Traders
Unit 18 Elgar Estate
Mereford, MR2 5FG STATEMENT OF ACCOUNT
Date Invoice Number Details Invoice Amount Cheque Amount Balance

20XX £ £ £
1 Feb 1071 Goods 2,510 2,510
3 Feb 1080 Goods 1,075 3,585
7 Feb 1120 Goods 600 4,185
28 Feb 1290 Goods 1,960 6,145
1 March - Cheque 4,185 1,960
Al Binoni Importers
Date Details Amount Date Details Amount
20XX £ 20XX £
1 March Bank 4,185 3 Feb Purchases 2,510
28 March Bank 1,200 10 Feb Purchases 1,075
26 Feb Purchases 600
(a) Which item is missing from the statement of account from Al

Binoni Importers? Select your answer from the following list:
Invoice 1071, Invoice 1080, Invoice 1120, Invoice 1290, Cheque for £4,185, Cheque for
£1,200
(b) Which item is missing from the supplier account in Broadfield

Traders’ purchases ledger? Select your answer from the
following list:
Invoice 1071, Invoice 1080, Invoice 1120, Invoice 1290, Cheque for £4,185, Cheque for
£1,200
(c) Assuming any differences between the statement of account

from Al Binoni Importers and the supplier account in Broadfield
Traders’ purchases ledger are simply due to omission errors,
what is the amount owing to Al Binoni Importers?
£
7.5 Mereford Traders sends BACS remittance advice notes to suppliers on the last day of the month
following the month of invoice. Mereford Traders banks with National Bank plc and Manzini & Co
banks with Europa Bank plc. Below is an uncompleted BACS remittance advice and an extract from
Mereford Trader’s purchases ledger.
Mereford Traders
45 College Street
Mereford, MR3 4GT
BACS REMITTANCE ADVICE
To: Date:
The following payment will reach your bank account within 3 working days.
Invoice number Credit note number Amount

£
Total amount paid
Manzini & Co
20XX £ 20XX £
3 Mar Purchases returns credit note 120 15 Mar Purchases Invoice 2250 2,450
CN107
20 Mar Purchases returns credit note 250 20 Apl Purchases Invoice 2449 1,946
CN145
30 Apl Bank 2,080 29 Apl Purchases Invoice 2687 1,951
10 May Purchases Invoice 2946 1,452
(a) the BACS remittance advice will be sent . . . .

with the cheque
to Europa Bank plc
to Manzini & Co
to Mereford Traders
Select the correct option.

(b) What will be the date shown on the BACS remittance advice?

1 June
28 March
30 April
31 May
Select the correct option
(c) What will be the items shown on the BACS remittance advice?

Invoice 2250, invoice 2449, invoice 2687, invoice 2946
Invoice 2250, invoice 2449, invoice 2687, credit mote CN107
Invoice 2449, Invoice 2687
Invoice 2946, credit note CN145
(d) The amount of the remittance advice will be . . . .

£3,897
£3,647
£3,527
£5,977

Chapter activities
8 Cash book
8.1 A business has made a cash sale for £400 plus VAT at 20%. Which one of the following is correct
double-entry book-keeping to record the sale?
debit bank £400; debit VAT £80; credit sales £480
debit bank £480; credit sales £400; credit VAT £80
debit sales £480; debit VAT £80; credit bank £560
debit sales £400; debit VAT £80; credit bank £480
8.2 The discount received column of the cash book is totalled at regular intervals and transferred to:
the credit side of discount received account
the debit side of discount received account
the debit side of purchases account
the credit side of purchases account
8.3 The VAT column on the receipts side of the cash book is totalled at regular intervals and transferred
to:

the credit side of administrative expenses account
the debit side of VAT account
the credit side of sales account
the credit side of VAT account

8.4 The following transactions all took place on 30 June 20-4 and have been entered into the cash book
of Martina Lockhart, as shown below. No entries have yet been made in the ledgers.
Dr Cash Book CB73 Cr
Date Details Discounts Bank Date Details VAT Bank

20-4 £ £ 20-4 £ £
30 Jun Balance b/f 5,284 30 Jun Rent 2,250
30 Jun Thorntons Ltd (receivable) 125 5,000 30 Jun Wages 3,695
30 Jun Office expenses 88 528
30 Jun Balance c/d 3,811
125 10,284 88 10,284
1 Jul Balance b/d 3,811
(a) What will be the entries in the sales ledger?

Select your account name from the following list: Balance b/f, Bank, Discounts allowed,
Discounts received, Purchases ledger control, Sales Ledger control, Thorntons Ltd.
Sales ledger

£
(b) What will be the entries in the general ledger?

Discounts received, Office expenses, Purchases ledger control, Rent, Sales Ledger control,
Thorntons Ltd, Value Added Tax, Wages.
General ledger
£
8.5 The following cash book of Carolyn Daly shows a number of transactions which all took place on
30 September 20-1:
Dr Cash Book CB45 Cr
Date Details Ref Discounts VAT Bank Date Details Ref Discounts VAT Bank
20-1 £ £ £ 20-1 £ £ £
30 Sep Balance b/f 2,950 30 Sep Nugent & Co
30 Sep Cash sales 80 480 (payable) 15 760
30 Sep Cooper Ltd 30 Sep Cash purchases 48 288
(receivable) 55 2,360 30 Sep General expenses 112 672
30 Sep Wages 2,365
30 Sep Office equipment 208 1,248
30 Sep Balance c/d 457
55 80 5,790 15 368 5,790
1 Oct Balance b/d 457
(a) The balance brought forward of £2,950 on 30 September shows that, according to the cash
book, the business has money in the bank. True or false?
(b) The balance brought down of £457 on 1 October shows that, according to the cash book,
the business has money in the bank. True or false?
(c) You are to transfer the data from the cash book into the general ledger of Carolyn Daly. Note
that a bank control account is not required.
(d) Show the entries in the sales ledger and purchases ledger of Carolyn Daly.
8.6 The following transactions all took place on 30 June and have been entered in the debit side of the
cash book of Gareth Scott, as shown below. No entries have yet been made in the ledgers.
Cash book – Debit side
Date 20XX Details Discounts Bank

£ £
30 June Balance b/f 3,247
30 June Millard & Co 25 1,460
(a) What will be the entries in the sales ledger?

Discounts received, Millard & Co, Purchases ledger control, Sales ledger control.
Sales ledger

£
(b) What will be the THREE entries in the general ledger?

Discounts received, Millard & Co, Purchases ledger control, Sales ledger control.
General ledger

£
The following transactions all took place on 30 June and have been entered in the credit side of the cash
book of Gareth Scott, as shown below. No entries have yet been made in the ledgers.
Cash book – Credit side
Date 20XX Details VAT Bank

£ £
30 June Wages 2,795
30 June Stationery 88 528
(c) What will be the THREE entries in the general ledger?

Select your account name from the following list: Bank, Purchases ledger control, Sales
ledger control, Stationery, Value Added Tax, Wages.
General ledger

£
Chapter activities
9 Petty cash book
9.1 When dealing with petty cash vouchers, which one of the following statements is true?
they are always authorised for payment by the petty cashier
they must have relevant documentation attached to show that the amount
claimed is correct
they need to be completed only for amounts claimed above £25
they are used to draw cash from the bank to top-up the petty cash imprest
amount
9.2 A petty cash control account has a balance b/d of £175 at the beginning of a month. During the
month, payments are made from petty cash which total £122. Which one of the following
transactions will restore the balance of petty cash control account to £175?
debit bank £175; credit petty cash control £175
debit petty cash control £53; credit bank £53
debit petty cash control £122; credit bank £122
debit bank £122; credit petty cash control £122

9.3 Show whether the following statements are true or false.
Statement True False

petty cash vouchers are financial documents
against which payments are made out of petty cash
the petty cash book is a part of double-entry book-

keeping only
receipts from the bank to top-up the petty cash

imprest amount are recorded on the debit side of
petty cash book
petty cash book is the book of prime entry for low-
value cash payments
9.4 The petty cashier of the business where you work tops up the petty cash at the end of the month
with £65 withdrawn from the bank.
Select your account name from the following list: Bank, Cash, Petty cash book, Purchases,
Purchases ledger control, Sales, Sales ledger control, Value Added Tax.
General ledger
£
9.5 Vallance Limited maintains a petty cash book as both a book of prime entry and part of the double-
entry accounting system. The following transactions all took place on 30 April and have been
entered in the petty cash book as shown below. No entries have yet been made in the general
ledger.
Petty cash book
Date Details Amount Date Details Amount VAT Postage Travel Office
expenses expenses
20XX £ 20XX £ £ £ £ £
30 Apr Balance b/f 73.00 30 Apr Post office 9.53 9.53
30 Apr Bank 77.00 30 Apr Envelopes 12.48 2.08 10.40
30 Apr Rail fare 19.55 19.55
30 Apr Copier paper 18.24 3.04 15.20
Balance c/d 90.20
150.00 150.00 5.12 9.53 19.55 25.60
What will be the FIVE entries in the general ledger?

Select your account name from the following list: Balance b/f, Balance c/d, Bank, Copier paper,
Envelopes, Office expenses, Petty cash book, Postage, Post office, Rail fare, Travel expenses,
Value Added Tax.
General ledger

£
9.6 The following petty cash book shows a number of transactions of Avalos Limited for August 20-8.
The petty cash book is kept solely as a book of prime entry.
Petty Cash Book PCB28
Receipts Date Details Voucher Total Analysis columns

number payment VAT Travel Postages Stationery Sundry Ledger
£ 20-8 £ £ £ £ £ £ £
150.00 1 Aug Balance b/f
5 Aug Taxi 83 12.00 2.00 10.00
7 Aug Post office 84 7.65 7.65
12 Aug Window cleaning 85 24.00 4.00 20.00
14 Aug Copier paper 86 15.36 2.56 12.80
4.80 16 Aug H Clark 417
(postage)
20 Aug Rail fare 87 14.55 14.55
23 Aug T Carline (PL) 88 19.35 19.35
27 Aug Flip charts 89 12.48 2.08 10.40
105.39 10.64 24.55 7.65 23.20 20.00 19.35
100.59 31 Aug Bank
31 Aug Balance c/d 150.00
255.39 255.39
150.00 1 Sep Balance b/d
(a) You are to transfer the data from the petty cash book into the general ledger accounts
(including cash book) as at 31 August 20-8. Note that a petty cash control is required.
(b) Show the entry that will be recorded in purchases ledger as at 31 August 20-8.
Chapter activities
10 Balancing accounts, the accounting
equation, capital and revenue
10.1 The following three accounts are in the general ledger at the close of day on 31 March.
(a) Insert the balance carried down together with date and details
(b) Insert the totals
(c) Insert the balance brought down together with date and details
For each account select your account name from the following list: Balance b/f, Balance c/d, Bank,
Closing balance, Opening balance, Sales ledger control
Office expenses

20XX £ 20XX £
01 Mar Balance b/f 1,876
20 Mar Bank 349
Total Total
Discounts allowed

20XX £ 20XX £
01 Mar Balance b/f 205
31 Mar Sales ledger control 87
Total Total
Rent received

20XX £ 20XX £
01 Mar Balance b/f 1,055
14 Mar Bank 325
Total Total
10.2 Financial accounting is based upon the accounting equation.
(a) Show whether the following statements are true or false.

Assets plus liabilities equals capital
Liabilities equals assets minus capital
Capital plus liabilities equals assets
(b) Classify each of the following items as an asset or a liability.
Item Asset Liability

Bank overdraft
Office equipment
Money owing to payables (creditors)
Inventory (stock)
Petty cash
VAT owing to HM Revenue and Customs

10.3 Fill in the missing figures:
Assets Liabilities Capital
£ £ £
75,000 0 ..........
60,000 .......... 35,000
75,500 27,200 ..........
........... 16,350 33,950
62,940 .......... 47,160
.......... 37,320 76,880

10.4 The table below sets out account balances from the books of a business. The opening capital is
£50,000 which has been paid into the business bank account.
The columns (a) to (f) show the account balances resulting from a series of financial transactions
that have taken place over time.
You are to compare each set of adjacent columns, ie (a) with (b), (b) with (c), and so on and state,
with figures, what financial transactions have taken place in each case. The first has been
completed for you.
Ignore VAT.
(a) (b) (c) (d) (e) (f)
£ £ £ £ £ £
Assets
Office equipment – 20,000 20,000 20,000 25,000 25,000
Inventory (stock) – – 5,000 8,000 8,000 8,000
Bank 50,000 30,000 25,000 25,000 25,000 22,000
Liabilities
Payables (creditors) – – – 3,000 8,000 5,000
Capital 50,000 50,000 50,000 50,000 50,000 50,000
Answer (a) - (b): Office equipment has been bought for £20,000, paid from the bank.
10.5 It is important to understand the difference between capital expenditure, revenue expenditure,
capital income and revenue income.
Select one option in each instance below to show whether the item will be capital
expenditure, revenue expenditure, capital income or revenue income.
Item Capital Revenue Capital Revenue

expenditure expenditure income income

Receipts from sale of goods to

credit customers
Increase in owner’s capital
Purchase of office equipment
Purchase of stationery for use

in the office
Bank loan received
Redecoration of property
Chapter activities
11 The initial trial balance
11.1 Which one of the following accounts always has a debit balance?
drawings account
purchases ledger control account
purchases returns account
discount received account
11.2 Which one of the following accounts always has a credit balance?

inventory (stock) account
bank account
petty cash control account
capital account
11.3 You work as an accounts assistant for Kingham Trading. The accounts supervisor has asked you
to work on preparing an initial trial balance as at 31 March 20-4. 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.

£ £ £
Bank (debit balance) 2,649
Loan from bank 8,500
Office equipment 12,200
Vehicles 20,750
Inventory (stock) 8,608
Petty cash control 66
VAT owing to HM Revenue and Customs 1,261
Purchases 89,738
Purchases returns 2,107
Purchases ledger control 26,846
Sales 147,924
Sales returns 3,842
Sales ledger control 37,411
Discount received 276
Discount allowed 135
Capital 34,731
Drawings 13,244
Advertising 2,827
Insurance 967
Heating and lighting 4,326
Rent and rates 5,368
Telephone 971
Miscellaneous expenses 379
Wages 18,164
Totals –
11.4 You work as an accounts assistant for Charlbury Limited. The accounts supervisor has asked you
to work on preparing an initial trial balance as at 30 September 20-7. 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.

£ £ £
Sales 175,843
Sales returns 2,316
Purchases 105,871
Purchases returns 1,045
Office equipment 18,395
Vehicles 34,170
Rent and rates 6,842
Advertising 3,776
Insurance 2,097
Wages 37,864
Heating and lighting 3,791
Postages and telephone 1,946
Miscellaneous expenses 558
Discount received 654
Discount allowed 317
Capital 75,737
Drawings 25,650
Inventory (stock) 12,415
Petty cash control 119
Bank (overdraft) 3,086
VAT owing to HM Revenue and Customs 2,041
Loan from bank 15,560
Totals –
OSBORNE BOOKS TUTOR ZONE
Basic accounting 1
Chapter activities – answers

(revised version calculating standard rate VAT @ 20%)
© Osborne Books Limited, 2011

1 Introduction to the accounting system
1.1 invoice, credit note, cheque, petty cash voucher
1.2 sales ledger
1.3 The general ledger of a business normally contains the accounts of assets, which are
items owned and liabilities, which are items owed, and capital, which is the owner’s
investment in the business.
1.4 (a) £ 8,500

(b) £48,720
(c) £38,820
(d) £255,000

2 Financial documents for sales
2.1
INVOICE No 2071
10 Mantle Street
Mereford MR2 RS4
VAT Reg 105 1195 03
To
R Copolis
21 Sandy Lane, Stourford, ST1 5GH Customer code RC924
Delivery note no 1791
Quantity Product code Unit price (£) Total (£) Net (£) VAT (£) Total (£)
20 LX25 30.00 600.00 480.00 91.20 571.20

answers to chapter activities 3
2.2 bulk discount
2.3
STATEMENT OF ACCOUNT To Ramsay Limited
10 Mantle Street, Mereford MR2 RS4
Date Details Amount (£) Balance outstanding (£)
1 October Invoice 2539 2,308.69 2,308.69
8 October Invoice 2586 1,905.60 4,214.29
14 October Invoice 2610 756.70 4,970.99
18 October Credit note 836 120.45 4,850.54
30 October Cheque 4,093.84 756.70
2.4
Product Customer General Ledger Code Customer Code
Ace blender British Caterers GL1006 BRI08
Dinner plates Dansk Foods Ltd GL1012 DAN10
Soup spoons Bright Foods GL1004 BRI07
Pasta pan Alba Limited GL1001 ALB09
Coffee grinder Dancer Trading GL1014 DAN12
Canteen mugs Bright Foods GL1012 BRI07
2.5 a purchase order
2.6 £960.00

3 Accounting for sales and sales returns
3.1 2 sales account; 3 Value Added Tax account
3.2 account of P Lane, a receivable (debtor)
3.3 sales invoice
3.4 (a)
Sales Day Book SDB54

number
20-4 £ £ £
5 Jun Outdoor Supplies 7234 SL190 660.00 110.00 550.00
8 Jun Beavan & Co 7235 SL050 1,050.00 175.00 875.00
12 Jun Larcombe Stores 7236 SL110 828.00 138.00 690.00
16 Jun Weatherproof Ltd 7237 SL220 1,452.00 242.00 1,210.00
22 Jun Beavan & Co 7238 SL050 750.00 125.00 625.00
27 Jun Weatherproof Ltd 7239 SL220 1,890.00 315.00 1,575.00
30 Jun Totals for month 6,630.00 1,105.00 5,525.00
GL1200 GL2200 GL4100

(b) GENERAL LEDGER

Dr Sales Ledger Control Account (GL1200) Cr
20-4 £ 20-4 £
30 Jun Sales Day Book SDB54 6,630.00
Dr Value Added Tax Account (GL2200) Cr

20-4 £ 20-4 £
Dr Sales Account (GL4100) Cr

20-4 £ 20-4 £
SALES LEDGER
Dr Beavan & Co (SL050) Cr
20-4 £ 20-4 £
8 Jun Sales SDB54 1,050.00
22 Jun Sales SDB54 750.00
Dr Larcombe Stores (SL110) Cr

20-4 £ 20-4 £
Dr Outdoor Supplies (SL190) Cr

20-4 £ 20-4 £
Dr Weatherproof Limited (SL220) Cr

20-4 £ 20-4 £
3.5 (a)
Sales Returns Day Book SRDB18

number
20-4 £ £ £
10 Jun Outdoor Supplies 224 SL190 90.00 15.00 75.00
18 Jun Beavan & Co 225 SL050 132.00 22.00 110.00
22 Jun Larcombe Stores 226 SL110 54.00 9.00 45.00
30 Jun Beavan & Co 227 SL050 146.40 24.40 122.00
30 Jun Totals for month 422.40 70.40 352.00
GL1200 GL2200 GL4110
(b) GENERAL LEDGER
Dr Sales Ledger Control Account (GL1200) Cr

20-4 £ 20-4 £
30 Jun Sales Day Book SDB54 6,630.00 30 Jun Sales Returns
Day Book SRDB18 422.40

20-4 £ 20-4 £
30 Jun Sales Returns 30 Jun Sales Day Book SDB54 1,105.00
Dr Sales Returns Account (GL4110) Cr

20-4 £ 20-4 £
30 Jun Sales Returns
SALES LEDGER
Dr Beavan & Co (SL050) Cr
20-4 £ 20-4 £
8 Jun Sales SDB54 1,050.00 18 Jun Sales Returns SRDB18 132.00
22 Jun Sales SDB54 750.00 30 Jun Sales Returns SRDB18 146.40
Dr Larcombe Stores (SL110) Cr

20-4 £ 20-4 £
Dr Outdoor Supplies (SL190) Cr

20-4 £ 20-4 £
3.6 (a) and (b)
Sales day book
Date Details Invoice Total VAT Net Sales type 1 Sales type 2
20XX number £ £ £ £ £
30 June Avalos Ltd 2021 6,240 1,040 5,200 5,200

30 June Bolster & Co 2022 2,976 496 2,480 2,480
30 June Watsons 2023 2,112 352 1,760 1,760
Totals 11,328 1,888 9,440 2,480 6,960
3.7 (a)
Sales ledger
£
Durning Ltd 4,368
Penyard & Co 2,256
Merrimans 2,544
Porth plc 5,808
General ledger
£
Sales 12,480
Value Added Tax 2,496
(b)
Sales ledger
£
Sanchez & Co 672
Honnor Ltd 384
General ledger
£
Sales returns 880
Value Added Tax 176

4 Process payments from customers
4.1 There is a dispute over an invoice
4.2 (a) £1,428.00
(b) £1,428.00
4.3 (a) Invoice 490
(b) £3,203

5 Process documents from suppliers
5.1 by the buyer when the goods arrive
5.2 the delivery note
5.3 bulk discount
5.4
Supplier Product ordered Supplier Code General ledger code
Nextday Ltd Office desks NE009 GL1011
Pimania Ltd Black gel pens PI006 GL1008
Nero Associates A4 copy paper NE003 GL1009
Omega Traders Red fibre tip pens OM004 GL1008
Masters Ltd Suspension files MA008 GL1010
Nextday Ltd Office holiday planner NE009 GL1012
5.5 Has the correct item been supplied? Yes or No? NO
What should the correct total be after deduction of discount? £1500
What would be the VAT (charged @20%) if the invoice was correct? £300.00
What would be the VAT (charged @20%) if 2% settlement discount was taken? £294.00

6 Accounting for purchases and purchases
returns
6.1 1 purchases account; 2 Value Added Tax account
6.2 account of M Ostrowski, a payable (creditor)
6.3 credit note received
6.4 (a)
Purchases Day Book PDB38

number
20-2 £ £ £
4 Mar Taylor Supplies T/I459 PL680 632.40 105.40 527.00
8 Mar Keating & Co 3472 PL320 997.20 166.20 831.00
11 Mar Askews A862 PL040 826.80 137.80 689.00
18 Mar Taylor Supplies T/I550 PL680 1,170.00 195.00 975.00
25 Mar Melia Manufacturing 8817 PL410 682.80 113.80 569.00
28 Mar Askews A902 PL040 519.60 86.60 433.00
31 Mar Totals for month 4,828.80 804.80 4,024.00
GL2350 GL2200 GL5100

(b) GENERAL LEDGER

20-2 £ 20-2 £
31 Mar Purchases Day
Book PDB38 804.80
Dr Purchases Ledger Control Account (GL2350) Cr

20-2 £ 20-2 £
Book PDB38 4,828.80
Dr Purchases Account (GL5100) Cr

20-2 £ 20-2 £
Book PDB38 4,024.00
PURCHASES LEDGER
Dr Askews (PL040) Cr
20-2 £ 20-2 £
11 Mar Purchases PDB38 826.80
Dr Keating & Co (PL320) Cr

20-2 £ 20-2 £
Dr Melia Manufacturing (PL410) Cr

20-2 £ 20-2 £
Dr Taylor Supplies (PL680) Cr

20-2 £ 20-2 £
18 Mar Purchases PDB38 1,170.00
6.5 (a)
Purchases Returns Day Book PRDB12

number
20-2 £ £ £
12 Mar Taylor Supplies T/R270 PL680 98.40 16.40 82.00
18 Mar Keating & Co CN368 PL320 64.80 10.80 54.00
26 Mar Taylor Supplies T/R275 PL680 44.40 7.40 37.00
30 Mar Askews CN/A303 PL040 102.00 17.00 85.00
31 Mar Totals for month 309.60 51.60 258.00
GL2350 GL2200 GL5110
(b) GENERAL LEDGER

20-2 £ 20-2 £
31 Mar Purchases Day 31 Mar Purchases Returns
Book PDB38 804.80 Day Book PRDB12 51.60
Dr Purchases Ledger Control Account (GL2350) Cr

20-2 £ 20-2 £
31 Mar Purchases Returns 31 Mar Purchases Day
Day Book PRDB12 309.60 Book PDB38 4,828.80
Dr Purchases Returns Account (GL5110) Cr

20-2 £ 20-2 £
31 Mar Purchases Returns
Day Book PRDB12 258.00
chapter activities – answers 13
PURCHASES LEDGER
Dr Askews (PL040) Cr
20-2 £ 20-2 £
30 Mar Purchases Returns 11 Mar Purchases PDB38 826.80
PRDB12 102.00 28 Mar Purchases PDB38 519.60
Dr Keating & Co (PL320) Cr

20-2 £ 20-2 £
PRDB12 64.80
Dr Taylor Supplies (PL680) Cr

20-2 £ 20-2 £
PRDB12 98.40 18 Mar Purchases PDB38 1,170.00
26 Mar Purchases Returns
PRDB12 44.40
6.6 Purchases day book
Date Details Invoice Total VAT Net Purchases Purchases

20XX number £ £ £ type 1 £ type 2 £
30 June Kinnear & Co 4513 5,472 912 4,560 4,560

30 June Boswells B/364 4,608 768 3,840 3,840
30 June Zamora Ltd Z274 3,552 592 2,960 2,960
Totals 13,632 2,272 11,360 4,560 6,800
6.7 (a)
Purchases ledger

£
Thorpe Ltd 2,112
Avalos plc 2,832
Barkers 6,144
Floyd & Co 5,616
General ledger

£
Purchases 13,920
Value Added Tax 2,784
(b)
Purchases ledger

£
Church Stores 336
Thornton Ltd 672
General ledger

£
Purchases returns 840
Value Added Tax 168

7 Prepare payments to suppliers
7.1 a decrease in the total amount owing shown on the statement of account
7.2 advise the supplier of the total amount being paid by the customer
7.3 will increase the total amount shown as owing on the statement of account
7.4 (a) Cheque £1,200

(b) Invoice 1290
(c) £760
7.5 (a) to Manzini & Co

(b) 31 May
(c) Invoice 2449, Invoice 2687
(d) £3,897

8 Cash book
8.1 debit bank £480; credit sales £400; credit VAT £80
8.2 the credit side of discount received account
8.3 the credit side of VAT account
8.4 (a) Sales ledger

£
Thorntons Ltd 5,000
Thorntons Ltd 125
(b) General ledger

£
Discounts allowed 125
Sales ledger control 125
Rent 2,250
Wages 3,695
Office expenses 440
Value Added Tax 88

8.5 (a) True
(b) True
(c) GENERAL LEDGER
Dr Sales Account Cr
20-1 £ 20-1 £
30 Sep Bank CB45 400
Dr Sales Ledger Control Account Cr

20-1 £ 20-1 £
30 Sep Bank CB45 2,360
30 Sep Discount allowed CB45 55
Dr Purchases Ledger Control Account Cr

20-1 £ 20-1 £
30 Sep Discount received CB45 15
Dr Purchases Account Cr
20-1 £ 20-1 £
Dr General Expenses Account Cr

20-1 £ 20-1 £
Dr Wages Account Cr
20-1 £ 20-1 £
Dr Office Equipment Account Cr

20-1 £ 20-1 £
Dr Discount Allowed Account Cr

20-1 £ 20-1 £
30 Sep Bank CB45 55
Dr Discount Received Account Cr

20-1 £ 20-1 £
30 Sep Bank CB45 15
Dr Value Added Tax Account Cr

20-1 £ 20-1 £
30 Sep Bank CB45 368 30 Sep Bank CB45 80
(d) SALES LEDGER

Dr Cooper Limited Cr
20-1 £ 20-1 £
30 Sep Discount allowed CB45 55
PURCHASES LEDGER
Dr Nugent & Co Cr
20-1 £ 20-1 £
30 Sep Discount received CB45 15
8.6 (a) Sales ledger

£
Millard & Co 1,460
Millard & Co 25
(b) General ledger

£
Discounts allowed 25
Sales ledger control 25
(c) General ledger

£
Wages 2,795
Stationery 440
Value Added Tax 88

9 Petty cash book
9.1 they must have relevant documentation attached to show that the amount claimed is correct
9.2 debit petty cash control £122; credit bank £122
9.3

petty cash vouchers are financial documents
against which payments are made out of petty cash
the petty cash book is a part of double-entry book-

keeping only
receipts from the bank to top-up the petty cash

imprest amount are recorded on the debit side of
petty cash book
petty cash book is the book of prime entry for low-
value cash payments
9.4 General ledger

£
Petty cash book 65
Bank 65
9.5 General ledger

£
VAT 5.12
Postage 9.53
Travel expenses 19.55
Office expenses 25.60
Bank 77.00
9.6 (a) GENERAL LEDGER

Dr Value Added Tax Account Cr
20-8 £ 20-8 £
31 Aug Petty cash book PCB28 10.64
Dr Travel Account Cr
20-8 £ 20-8 £
Dr Postages Account Cr
20-8 £ 20-8 £
31 Aug Petty cash book PCB28 7.65 16 Aug Petty cash book PCB28 4.80
Dr Stationery Account Cr
20-8 £ 20-8 £
Dr Sundry expenses Account Cr

20-8 £ 20-8 £
Dr Purchases Ledger Control Account Cr

20-8 £ 20-8 £
Dr Petty Cash Control Account Cr

20-8 £ 20-8 £
1 Aug Balance b/d 150.00 31 Aug Petty cash book PCB28 105.39
31 Aug Petty cash book PCB28 4.80 31 Aug Balance c/d 150.00
31 Aug Bank CB 100.59
255.39 255.39
1 Sep Balance b/d 150.00
Dr Cash Book Cr
20-8 Bank 20-8 Bank
31 Aug Petty cash PCB28 100.59
(b) PURCHASES LEDGER

Dr T Carline Cr
20-8 £ 20-8 £

10 Balancing accounts, the accounting
equation, capital and revenue
10.1 (a), (b) and (c)
Office expenses

20XX £ 20XX £
01 Mar Balance b/f 1,876 31 Mar Balance c/d 2,225
20 Mar Bank 349
Total 2,225 Total 2,225
01 Apr Balance b/d 2,225
Discounts allowed

20XX £ 20XX £
01 Mar Balance b/f 205 31 Mar Balance c/d 292
31 Mar Sales ledger control 87
Total 292 Total 292
01 Apr Balance b/d 292
Rent received

20XX £ 20XX £
31 Mar Balance c/d 1,380 01 Mar Balance b/f 1,055
14 Mar Bank 325
Total 1,380 Total 1,380
01 Apr Balance b/d 1,380

10.2 (a)

Assets plus liabilities equals capital
Liabilities equals assets minus capital
Capital plus liabilities equals assets
(b)
Item Asset Liability

Bank overdraft
Office equipment
Money owing to payables (creditors)
Inventory (stock)
Petty cash
VAT owing to HM Revenue and Customs
10.3
Assets Liabilities Capital
£ £ £
75,000 0 75,000
60,000 25,000 35,000
75,500 27,200 48,300
50,300 16,350 33,950
62,940 15,780 47,160
114,200 37,320 76,880

10.4 (a) - (b) Office equipment has been bought for £20,000, paid from the bank
(b) - (c) Inventory (stock) has been bought for £5,000, paid from the bank
(c) - (d) Inventory (stock) has been bought £3,000, on credit from a supplier
(d) - (e) Office equipment has been bought for £5,000, on credit from a supplier
(e) - (f) £3,000 paid to the payables (creditors) from the bank
10.5
Item Capital Revenue Capital Revenue

expenditure expenditure income income

Receipts from sale of goods to

credit customers
Increase in owner’s capital
Purchase of office equipment

Purchase of stationery for use
in the office
Bank loan received
Redecoration of property

11 The initial trial balance
11.1 drawings account
11.2 capital account
11.3
£ £ £
Bank (debit balance) 2,649 2,649
Loan from bank 8,500 8,500
Office equipment 12,200 12,200
Vehicles 20,750 20,750
Inventory (stock) 8,608 8,608
Petty cash control 66 66
VAT owing to HM Revenue and Customs 1,261 1,261
Purchases 89,738 89,738
Purchases returns 2,107 2,107
Purchases ledger control 26,846 26,846
Sales 147,924 147,924
Sales returns 3,842 3,842
Sales ledger control 37,411 37,411
Discount received 276 276
Discount allowed 135 135
Capital 34,731 34,731
Drawings 13,244 13,244
Advertising 2,827 2,827
Insurance 967 967
Heating and lighting 4,326 4,326
Rent and rates 5,368 5,368
Telephone 971 971
Miscellaneous expenses 379 379
Wages 18,164 18,164
Totals – 221,645 221,645
11.4
£ £ £
Sales ledger control 40,272 40,272
Sales 175,843 175,843
Sales returns 2,316 2,316
Purchases ledger control 22,433 22,433
Purchases 105,871 105,871
Purchases returns 1,045 1,045
Office equipment 18,395 18,395
Vehicles 34,170 34,170
Rent and rates 6,842 6,842
Advertising 3,776 3,776
Insurance 2,097 2,097
Wages 37,864 37,864
Heating and lighting 3,791 3,791
Postages and telephone 1,946 1,946
Miscellaneous expenses 558 558
Discount received 654 654
Discount allowed 317 317
Capital 75,737 75,737
Drawings 25,650 25,650
Inventory (stock) 12,415 12,415
Petty cash control 119 119
Bank (overdraft) 3,086 3,086
VAT owing to HM Revenue and Customs 2,041 2,041
Loan from bank 15,560 15,560
Totals – 296,399 296,399

Basic Accountin (1) Q & A

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OSBORNE BOOKS TUTOR ZONE

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1.1 Examples of financial documents include:

invoice, credit note, cheque, sales day book

invoice, credit note, cheque, sales ledger

Tick the appropriate box.

1.2 The accounts of receivables (debtors) are contained in:

Tick the appropriate box.

................................................. and liabilities, which are ...................................................., and

.................................................., which is the owner’s investment in the business.

items owed capital items owned

Name of business: Cibo Limited

(b) How much does Cibo Limited owe its suppliers?

(c) What is the total of the expenses of Cibo Limited?

DELIVERY NOTE No 1791

20 Luxor pans, Code LX25

Tick the appropriate box.

Date Document Amount (£)

You are to complete the statement of account shown below:

STATEMENT OF ACCOUNT To Ramsay Limited

Date Details Amount (£) Balance outstanding (£)

1 October Invoice 2539

8 October Invoice 2586

14 October Invoice 2610

18 October Credit note 836

Customer Customer Account Code

Item General Ledger Code

Product Customer General Ledger Code Customer Code

Ace blender British Caterers

Dinner plates Dansk Foods Ltd

Soup spoons Bright Foods

Pasta pan Alba Limited

Coffee grinder Dancer Trading

Canteen mugs Bright Foods

Tick the appropriate box.

The net amount to be charged before VAT will be:

Tick the appropriate box.

3.1 Which two of the following are general ledger accounts?

3.2 Which one of the following is a sales ledger account?

Value Added Tax account

account of P Lane, a receivable (debtor)

credit note issued

statement of account sent to B Roberts, a receivable (debtor)

For Activities 3.4 and 3.5:

sales day book – SDB54 general ledger account numbers

You are to:

Sales Day Book SDB54

Sales Returns Day Book SRDB18

Sales day book

30 June Avalos Ltd 2021 6,240 5,200

Sales day book

30 June Durning Ltd 271 4,368 728 3,640

30 June Penyard & Co 272 2,256 376 1,880

30 June Merrimans 273 2,544 424 2,120

30 June Porth plc 274 5,808 968 4,840

Totals 14,976 2,496 12,480

What will be the entries in the sales ledger?

What will be the entries in the general ledger?

30 June Sanchez & Co CN 105 672 112 560

30 June Honnor Ltd CN 106 384 64 320

Totals 1,056 176 880

What will be the entries in the sales ledger?

What will be the entries in the general ledger?