AAT Basic Accounting 2 Assignment 2

Crossing your cheques 'Account payee only, not negotiable' is the correct answer because it adds an extra layer of security to the cheque. When a cheque is crossed, it can only be deposited into the account of the person or organization that the cheque is made out to. This prevents anyone else from cashing or depositing the cheque into their own account. By adding the additional instruction 'not negotiable', it further ensures that the cheque cannot be transferred to another party. This helps to protect against the risk of the cheque being lost or stolen and used fraudulently.

A Bank Reconciliation Statement is a statement that explains the reasons for the differences between the balance shown in the cash book and the balance shown in the bank statement. It helps to identify and rectify any discrepancies or errors in recording transactions between the bank and the company's cash book. This statement is an important tool for ensuring accuracy and reliability of financial records.

The cash received from debtors during the year can be calculated by subtracting the outstanding debtors at the end of the year from the total sales during the year. In this case, the outstanding debtors at the end of the year is £25,000. Therefore, the cash received from debtors during the year is £70,000 - £25,000 = £45,000. However, since the cash sales during the year amounted to £10,000, we need to subtract this amount as well. Therefore, the final cash received from debtors during the year is £45,000 - £10,000 = £35,000.

When money is withdrawn from the bank, the bank debits the account of the customer. This means that the bank deducts the amount of money that has been withdrawn from the customer's account. Debiting the account is a common practice in banking to track the decrease in funds for the customer.

The VAT column on the receipts side of the cash book is credited to the VAT account in the general ledger because VAT is a liability for the business. When the business collects VAT from customers, it increases its liability to the government. Therefore, the VAT amount is credited to the VAT account to reflect the increase in the liability. This helps in accurately recording and tracking the VAT liabilities of the business.

The correct answer is Credit. In accounting, the term "credit" refers to an entry made on the right side of a general ledger account, indicating an increase in liabilities or a decrease in assets. Accounts payable is a liability account that represents the amount owed by a company to its creditors for goods or services received on credit. Therefore, a credit balance in the accounts payable account indicates that the company owes money to its suppliers or vendors.

The discount allowed column total from the cash book is debited to the discount allowed account in the general ledger because discounts allowed are considered as an expense for the business. By debiting the discount allowed account, it reflects the decrease in the business's profit and shows that discounts have been given to customers. This helps in accurately recording and tracking the discounts given and maintaining the correct financial records.

The balance as per cash book should be £16,000. This can be calculated by taking the credit balance as per the bank statement (£22,000) and subtracting the cheques deposited but not cleared (£2,000) and adding the cheques issued but not presented (£8,000). Therefore, £22,000 - £2,000 + £8,000 = £28,000. However, since we are looking for the balance as per cash book, we need to subtract the outstanding cheques (£8,000) from the calculated amount. Therefore, £28,000 - £8,000 = £16,000, which is the correct answer.

Debit bank column £100
Credit cash column £100

It means the petty cashier starts each week or month with a fixed amount of money.

The total sales can be calculated by adding the cash sales and the cash collected from debtors, and then subtracting the bad debts during the year. In this case, the cash sales are £50,000 and the cash collected from debtors is £130,000. The bad debts during the year are £5,000. Therefore, the total sales would be £50,000 + £130,000 - £5,000 = £175,000.

Only if the bookkeeper has made an error!

The expenses that can be paid out of petty cash are usually small, incidental expenses that do not require a formal approval process. Window cleaning for £10 and a taxi fare for £7.80 are examples of such expenses. These are small amounts that can be easily paid for using petty cash without the need for a formal reimbursement process. On the other hand, a gift to a retiring director, a donation to a local charity, and the purchase of a printer are larger expenses that would typically require a more formal approval and payment process.

If the Bank Reconciliation Statement starts with a debit balance as per the Bank statement, it means that the Bank statement shows more money in the account than the company's records. This could be due to unpresented cheques, which are checks that have been issued by the company but have not yet been presented to the bank for payment. To reconcile this difference, the unpresented cheques need to be added to the company's records, so that the balance matches the Bank statement. Therefore, the correct answer is "Added".

It is credited

The correct answer is £527 because the balance at the bank as per the adjusted cash book is £274. This balance needs to be adjusted for cheques that have not yet been presented (£730) and cheques that have been deposited but not yet recorded by the bank (£477). Adding these adjustments to the balance at the bank as per the adjusted cash book (£274 + £730 + £477) gives a total of £1481. Therefore, the balance at the bank as per the bank statement should be £1481. Since none of the options provided match this amount, the correct answer is £527.

30400+2700+1200+13800 -10200 = 37900 (credit sales)
Plus cash sales 28400 = 66300

The correct answer is "The drawer." In this scenario, T Ltd is the one who is making out the cheque and sending it to X Ltd. The drawer is the person or entity who writes the cheque and orders the bank to pay a specific amount of money to the payee, which in this case is X Ltd. Therefore, T Ltd is referred to as the drawer in this situation.