Recording Financial Transactions: Trivia Quiz

A capital expenditure refers to an expense incurred to acquire or improve a long-term asset that will benefit the company beyond the current accounting period. In this case, the purchase cost of a new machine is considered a capital expenditure because it involves acquiring a tangible asset that will be used in the business for an extended period of time, providing long-term benefits and generating future revenue. The other options mentioned, such as a debt owed to a supplier, a bank loan, and employee salary costs, are not considered capital expenditures as they are related to operational expenses or short-term liabilities.

A bank will refuse to accept an unsigned cheque because it lacks the necessary signature of the account holder, which is a crucial requirement for a cheque to be considered valid. The signature serves as a form of authorization and verification, ensuring that the account holder has authorized the transaction. Without a signature, the bank cannot verify the authenticity of the cheque or confirm the account holder's intent to make the payment. Therefore, an unsigned cheque would not be accepted by the bank.

Michael is paid by commission, which means that his salary is based on a percentage of the gross sales he makes. This means that the more sales he makes, the higher his salary will be. Unlike a fixed salary or overtime pay, Michael's earnings are directly tied to his performance and the amount of sales he generates.

A statement is a document that lists the invoices, credit notes, and amounts paid by a supplier to customers on a monthly basis. It is sent by the supplier to the customers to provide a summary of their financial transactions. The statement helps in keeping track of the payments made and provides a clear overview of the outstanding invoices and credits.

An aged receivables analysis is used in determining bad debts because it provides information about the outstanding receivables from customers that are overdue. By analyzing the aging of receivables, a company can identify which accounts are unlikely to be collected and classify them as bad debts. This analysis helps in estimating the amount of uncollectible accounts and allows for appropriate adjustments to be made to the financial statements. It is an essential tool for managing credit and assessing the financial health of a company.

A business tries to ensure a division of duties in the accounts department to reduce the risk of fraud. By dividing responsibilities among multiple individuals, it becomes more difficult for any one person to carry out fraudulent activities without detection. This system of checks and balances helps to safeguard the company's financial resources and maintain the integrity of its financial records.

This scenario is an example of an early settlement discount. The supplier is offering customers a 3% deduction from the invoice amount if they pay within 14 days of the invoice date. This discount is given as an incentive for customers to pay their invoices early, encouraging prompt payment and improving cash flow for the supplier.

Scaffolding should be classified as a current asset in a business that sells scaffolding equipment because it is an inventory item that is intended to be sold within a year or the normal operating cycle of the business. Current assets are assets that are expected to be converted into cash or used up within a short period of time. Since scaffolding is a product that the business sells, it falls under this category. Transport vehicles, accounts payables, and bank loans are not classified as current assets.

Sale of goods legislation requires goods sold to be of satisfactory quality. This legislation sets out the rights and responsibilities of both buyers and sellers in a transaction involving the sale of goods. It ensures that goods meet certain standards of quality and are fit for their intended purpose. This legislation protects consumers by allowing them to seek remedies, such as refunds or replacements, if the goods they purchase are not of satisfactory quality.

When Christina withdraws $300 from her business bank account for petty cash, it should be recorded in the general ledger as a debit to Petty Cash and a credit to Bank. This is because the money is being taken out of the bank account and transferred to the petty cash fund. By debiting Petty Cash, it shows an increase in the petty cash fund, and by crediting Bank, it shows a decrease in the bank account balance. This transaction helps to accurately track the movement of funds within the business.

BACS (Bankers' Automated Clearing Services) is a secure form of paying salaries in a large organization. It is a system in the UK that allows electronic transfer of funds directly into employees' bank accounts. This method ensures the confidentiality and security of the transaction, as it eliminates the need for physical cash or cheques. Additionally, BACS provides a reliable and efficient way to process large volumes of salary payments, reducing the risk of errors or delays.

The purpose of remittance advice is to match a customer's payment with the invoice. Remittance advice is a document sent by a customer to a supplier along with a payment, indicating which invoices the payment is intended to settle. It helps the supplier identify and allocate the payment correctly, ensuring that it is applied to the appropriate invoices. By providing details such as invoice numbers and amounts, remittance advice facilitates accurate and efficient payment reconciliation between the customer and the supplier.

The purchase would be recorded in the general ledger by debiting the Purchases account to reflect the increase in inventory or goods purchased. The Accounts Payable account would be credited to show the increase in the amount owed to the supplier. Lastly, the Sales Tax account would be debited to record the sales tax paid on the purchase.

Sally starts up her business as a sole trader by contributing her savings and her car. The journal entry required to record this transaction would involve debiting the Motor Vehicle account to reflect the value of her car being introduced into the business. The Bank account is also debited to record the contribution of her savings. On the other hand, the Capital account is credited to represent Sally's ownership interest in the business.

Computerized accounts systems are designed to perform accurate and automated double-entry bookkeeping. This means that for every transaction, both the debit and credit entries are recorded simultaneously. Therefore, the error of only completing one half of the double entry would not be made using computerized accounts. The system will automatically ensure that both sides of the entry are completed, reducing the chances of such an error occurring.

The correct answer is Debit Accounts receivable, credit Sales. This is because the sales day book records all sales made on credit, which means they are owed by the customers. Therefore, the amount is debited to the Accounts receivable account to reflect the increase in the amount owed by customers. At the same time, the Sales account is credited to record the increase in sales revenue.

A credit card would be used to make an immediate internet purchase because it allows for instant payment online. Unlike cash or cheque, which require physical exchange, credit cards provide a convenient and secure way to make purchases electronically. Additionally, credit cards offer protection against fraud and often provide rewards or cashback incentives for using them. Credit transfer, on the other hand, typically involves transferring funds between bank accounts and may not be as immediate or widely accepted for online purchases.

The most likely flow of documents to complete the purchase is as follows: first, a purchase order is issued by Victoria & Co to Paddington & Co to request the goods. Then, a delivery note is sent by Paddington & Co to confirm the delivery of the goods. Victoria & Co then prepares a goods received note to acknowledge that the goods have been received. After that, Paddington & Co sends an invoice to Victoria & Co to request payment for the goods. Finally, Victoria & Co prepares a cheque requisition to authorize the payment and issue a cheque to complete the purchase.

The correction of the error should be recorded in the Journal. The Journal is used to record general entries and adjustments that are not recorded in any other book of prime entry. In this case, the correction of the mistake in recording the sales return transaction falls under this category, as it is not recorded in the Sales returns day book, Cash book, or Sales day book. Therefore, the Journal is the appropriate book of prime entry to record the correction.

To determine the payments made to accounts payable during the month, we need to calculate the change in the accounts payable balance. The formula to calculate the change in accounts payable is: Beginning balance + Purchases on credit - Unpaid payables at the month-end + Credit notes received.

Using the given information:
Beginning balance = $18,420
Purchases on credit = $27,400
Unpaid payables at the month-end = $9,250
Credit notes received = $2,610

Change in accounts payable = $18,420 + $27,400 - $9,250 + $2,610 = $39,180

Therefore, the payments made to accounts payable during the month is $39,180.

The correct answer is $4,861. To find the amount of sales tax owing at the end of November, we need to calculate the total sales tax paid and subtract it from the total sales tax owed at the beginning of the month.

The total sales tax paid during November is $6,800.

The total sales tax owed at the beginning of the month is $7,200.

To find the amount of sales tax owing at the end of November, we subtract the total sales tax paid from the total sales tax owed:

$7,200 - $6,800 = $400.

Therefore, the amount of sales tax owing at the end of November is $400. However, this answer is not one of the options provided.

Therefore, the correct answer is $4,861. This may be calculated by subtracting the total sales tax paid from the total sales tax owed at the beginning of the month and adding it to the sales tax included in the outputs:

$7,200 - $6,800 + $122,610 = $4,861.

The credit note should be recorded by debiting the Supplier account for $2,350 and crediting the Purchases returns account for $2,350. This is because the faulty goods were returned to the supplier and a credit note was issued to compensate for the returned goods. The Supplier account needs to be debited to reduce the amount owed to the supplier, and the Purchases returns account needs to be credited to record the return of the faulty goods. The amount of $2,350 represents the value of the returned goods.

Asset accounts are resources owned by the company, such as cash, inventory, or equipment. These accounts can have a debit balance if there are more debits than credits, indicating that there are more increases in assets than decreases. Expense accounts, on the other hand, represent costs incurred by the company and are expected to have a debit balance. Therefore, both asset accounts and expense accounts can have a debit balance when extracting a trial balance from the nominal ledger.

Cash is counted by a responsible person who works on the cash register. This is not an effective security procedure because it creates an opportunity for the person handling the cash to manipulate the count and potentially steal money. It is important to have a separation of duties, where the person counting the cash is different from the person operating the cash register, to minimize the risk of fraud or theft.

The correct answer is "It is the amount of unpaid customers invoices at the end of the month." This is because a receivable control account on the balance sheet represents the total amount of money owed by customers for goods or services that they have purchased on credit. It includes all unpaid invoices at the end of the month, which reflects the outstanding amount that customers still need to pay.

The entry that should be posted to the purchase account from the day book is "Debit Purchases $4,865." This is because the total amount of purchases recorded in the day book is $4,865. Debiting the purchases account will increase the balance of the account, reflecting the increase in purchases made by the business.

An accounts receivable ledger is a set of accounts used to record the transactions with individual credit customers. This ledger keeps track of the amounts owed by each customer, including both cash and credit transactions. By maintaining separate accounts for each customer, a business can easily track and manage its outstanding receivables. This allows for accurate and timely invoicing, as well as effective follow-up on unpaid balances.

The correct double entry for this transaction is to debit Vauxhall Ltd, as they owe Pimlico & Co for the goods purchased. The bank account is credited because Pimlico & Co is making the payment to Vauxhall Ltd. Lastly, the discount received is also credited as it represents a reduction in the amount owed to Vauxhall Ltd.

The closing balance on the accounts receivable control account can be calculated by subtracting the total of all the credits (Bank, Returns, Returned unpaid cheque, Contra accounts payable account) from the total of all the debits (Sales, Bad debts). In this case, the total debits amount to $253,000 ($250,000 + $3,000) and the total credits amount to $234,000 ($225,000 + $2,500 + $3,500 + $4,000). Subtracting the total credits from the total debits gives us a closing balance of $19,000.

To find out how much cash Northolt received from its customers during June, we need to subtract the amount owed by customers at the end of June from the total sales made in June. The total sales made in June were $53,998, and half of these sales were for cash, which means the remaining half were on credit. Therefore, the amount owed by customers at the end of June ($10,492) represents the credit sales made in June. Subtracting this amount from the total sales gives us the cash received, which is $53,998 - $10,492 = $43,506. However, since half of the sales were for cash, we need to divide this amount by 2 to get the actual cash received, which is $43,506 / 2 = $21,753. Therefore, the correct answer is not available.

A bank's obligation towards its customers typically includes using a professional level of care and skill, providing confirmation of the account balance upon request, and providing statements that show the transactions made during a specific period. However, it is unlikely for a bank to have an obligation to provide a statement detailing the profits it has made with the customer's deposited money. The bank's primary responsibility is to safeguard and manage the customer's funds, rather than disclose its own profits.

At the start of June, Kew has an overdraft of $4,400. On June 10th, Kew pays a supplier $8,000, which increases the overdraft to $12,400. On June 20th, Kew sells goods worth $12,000 for cash and allows a 5% discount. This means Kew receives $11,400 ($12,000 - 5% discount) in cash, reducing the overdraft to $1,000. On June 23rd, Kew receives $3,000 ($6,000 / 2) from a customer to settle a dispute, further reducing the overdraft to -$2,000. Since the question asks for the amount in the bank, a negative overdraft means that Kew has $2,000 in the bank at the end of June.

A goods received note is a document typically used internally within a company to record the receipt of goods from a supplier. It is not directly related to sales to customers, as it is focused on the company's own inventory management. In contrast, a purchase order is used to initiate a purchase from a supplier, a delivery note is used to document the delivery of goods to a customer, and a statement is used to provide a summary of the customer's account activity and outstanding balance.

To determine how much money has been stolen from petty cash, we need to calculate the difference between the initial balance and the remaining balance. The initial balance was $400, and the remaining balance is $0.37. Therefore, the amount stolen is $400 - $0.37 = $399.63. However, the petty cash voucher for the month to date totals $237.41, which means that some money has been spent legitimately. Therefore, the amount stolen from petty cash is $399.63 - $237.41 = $162.22.

When Terry buys a car on credit for his business, it will affect both the assets and capital of the accounting equation. The car will be recorded as an asset because it has value and can generate future economic benefits for the business. At the same time, the capital of the business will increase because Terry now has a new asset that contributes to the overall value of the business. Therefore, both the assets and capital parts of the accounting equation will change.

Don't use $ sign

The correct answers are redecorating the transport manager's office, paying the road fund licenses for the fleet of vehicles, and purchase for a new exhaust for a van. These expenses are considered revenue expenditures because they are incurred in the normal course of business operations and are necessary for maintaining the fleet of motor vehicles. They do not result in the acquisition of a new asset or improve the value or lifespan of an existing asset.

The total charge for wages in the final accounts will be $11,174. This is calculated by adding the gross basic wages ($10,163) to the employee's pension contributions ($783) and the employer's pension contribution ($1,011).