Questions and Answers of Business Accounting

Enter the following in the three-column cash book of an office supply shop. Balance off the cash book at the end of the month and show the discount accounts in the general ledger.
At 1 September the financial position of Sara Young’s business was:During September:1. The three debtors settled their accounts by cheque subject to a cash discount of 4%.2. A cheque for £100 was
You are to enter up the Sales Day Book from the following details. Post the items to the relevant accounts in the Sales Ledger and then show the transfer to the sales account in the General Ledger.
Enter up the Sales Day Book from the following details. Post the items to the relevant accounts in the Sales Ledger and then show the transfer to the sales account in the General Ledger. 20X8 Mar 1
F Benjamin of 10 Lower Street, Plymouth, is selling the following items at the recommended retail prices as shown: white tape £10 per roll, green felt at £4 per metre, blue cotton at £6 per sheet,
J Fisher, White House, Bolton, is selling the following items at the retail prices as shown: plastic tubing at £1 per metre, polythene sheeting at £2 per length, vinyl padding at £5 per box, foam
A Jack has the following purchases for the month of May 20X8:Required:(a) Enter up the purchases day book for the month.(b) Post the transactions to the suppliers’ accounts.(c) Transfer the total
J Glen has the following purchases for the month of June 20X9:Required:(a) Enter up the purchases day book for the month.(b) Post the items to the suppliers’ accounts.(c) Transfer the total to the
C Phillips, a sole trader specialising in material for Asian clothing, has the following purchases and sales for March 20X9:Required:(a) Prepare the purchases and sales day books of C Phillips from
A Henriques has the following purchases and sales for May 20X6:Required:(a) Write up the sales and purchases day books.(b) Post the items to the personal accounts.(c) Post the totals of the day books
A Jones has the following credit purchases and credit sales for May:Required:(a) Write up sales and purchases day books.(b) Post the items to the personal accounts.(c) Post the totals of the day
You are to enter up the Purchases Day Book and the Returns Outwards Day Book from the following details, then to post the items to the relevant accounts in the Purchases Ledger and to show the
You are to enter up the sales, purchases, returns inwards and returns outwards day books from the following details, then to post the items to the relevant accounts in the sales and purchase ledgers.
Enter up the Sales Day Book and the Returns Inwards Day Book from the following details. Then post to the customers’ accounts and show the transfers to the General Ledger. 20X8 June
You are to enter the following items in the books, post to personal accounts, and show the transfers to the General Ledger. 20X9 July 1 Credit purchases from: K Hill £380; M Norman £500; N Senior
You are to open the books of F Polk, a trader, via the journal to record the assets and liabilities, and are then to record the daily transactions for the month of May. A trial balance is to be
The following is a summary of the petty cash transactions of Jockfield Ltd for May 20X8.You are required to:(a) Rule up a suitable petty cash book with analysis columns for expenditure on cleaning,
(a) Why do some businesses keep a petty cash book as well as a cash book?(b) Kathryn Rochford keeps her petty cash book on the imprest system, the imprest being £25. For the month of April 20X9 her
You are to show the journal entries necessary to record the following items:(a) 20X8 May 1 Bought a van on credit from Deedon Garage for £5,395.(b) 20X8 May 3 A debt of £81 owing from P Knight was
Oakhill Printing Cost Ltd operates its petty cash account on the imprest system. It is maintained at a figure of £80, with the balance being restored to that amount on the first day of each month.
Rule up a petty cash book with analysis columns for office expenses, motor expenses, cleaning expenses, and casual labour. The cash float is £600 and the amount spent is reimbursed on 30 June.
On 1 March 20X6, A Duff, Middle Road, Paisley, sold the following goods on credit to R Wilson, 24 Peter Street, Loughborough, Order No 943:All goods are subject to VAT at 10%.(a) Prepare the sales
The following sales have been made by F Rae Ltd during the month of June 20X9. All the figures are shown net after deducting trade discount, but before adding VAT at the rate of 10%.You are required
On 1 May 20X7, F Marr Ltd, 2 Frank Lane, Manchester, sold the following goods on credit to M Low & Son, Byron Golf Club, Cheesham, Notts:Order No A/4963 sets ‘Tiger Gold’ golf clubs at £810
The following sales and purchases were made by J Flan Ltd during the month of May 20X6.Enter up the Sales and Purchases Day Books, Sales and Purchases Ledgers and the General Ledger for the month of
The credit sales and purchases for the month of December 20X7 in respect of G Bain & Co were:Write up all of the relevant books and ledger accounts for the month. 20X7 Dec "1 11 11 Sales to H
Louise Baldwin commenced business as a wholesaler on 1 March 20X9.Her sales on credit during March 20X9 were:All transactions are subject to Value Added Tax at 10%.(a) Rule up a Sales Day Book and
Mudgee Ltd issued the following invoices to customers in respect of credit sales made during the last week of May 20X7. The amounts stated are all net of Value Added Tax. All sales made by Mudgee Ltd
Enter up a columnar purchases day book with columns for the various expenses for F Wayne for the month from the following information on credit items. 20X6 July 1 Bought goods from G Hope 11 3 Bought
R Bright, an electrical goods wholesaler, has three departments: (a) Music, (b) TV and (c) Kitchen. The following is a summary of Bright’s sales invoices during the week 1 to 7 February 20X7.The
Enter up the relevant accounts in the purchases and general ledgers from the columnar purchases day book you completed for Question 20.2.Data from Question 20.2:Enter up a columnar purchases day book
Enter up a columnar purchases day book with columns for the various expenses for G Graham for the month from the following information on credit items. 20X8 Aug 1 Bought goods from J Syme Bought
Enter up the relevant accounts in the purchases and general ledgers from the columnar purchases day book you completed for Question 20.4A.Data from Question 20.4A:Enter up a columnar purchases day
B Charles has a basic working week of 40 hours, paid at the rate of £4 per hour. For hours worked in excess of this he is paid 11/2 times basic rate. In the week to 12 March 20X6 he worked 45 hours.
H Smith is employed at a rate of £5 per hour. During the week to 18 May 20X9 he worked his basic week of 40 hours. According to the requisite tables the income tax due on his wages was £27, and
B Croft has a job as a car salesman. He is paid a basic salary of £200 per month, with a commission extra of 2% on the value of his car sales. During the month of April 20X6 he sells £30,000 worth
T Penketh is an accountant with a salary of £2,000 per month plus bonus, which for May 20X6 was £400. He pays superannuation contributions of 5% of gross pay, and these are allowed as reliefs
K Blake is employed at the rate of £6 per hour. During the week to 25 May 20X6 he works 35 hours. According to the tax and National Insurance tables he should pay income tax £28 and National
R Kennedy is a security van driver. He has a wage of £200 per week, plus danger money of £2 per hour extra spent in transporting gold bullion. During the week ended 15 June 20X6 he spends 20 hours
Mrs T Hulley is paid monthly. For part of April 20X6 she earns £860 and then goes on maternity leave, her maternity pay for April being £90. She has pay free of tax £320, whilst on the next £250
P Urmston is paid monthly. For June 20X6 he earns £1,500 and also receives statutory sick pay of £150. He pays £90 superannuation which is allowed as a relief against income tax and he has further
What are the legal principles underlying the protection of personal information kept on computers?
What benefits can flow from processing sales details on a computer?
For what type of activities in accounting is the use of spreadsheets particularly suitable?
What benefits for the whole accounting system can follow from using a computer for accounting work?
Why is the need for accounting skills and knowledge important when the accounting system is computerised?
Why is the need to fully integrate a computerised accounting system so important?
What issues need to be considered when making the switch from a manual accounting system to a computerised accounting system?
(a) What is meant by ‘capital expenditure’, and ‘revenue expenditure’?(b) Some of the following items should be treated as capital and some as revenue. For each of them state which
Indicate which of the following would be revenue items and which would be capital items in a wholesale bakery:(a) Purchase of a new van.(b) Purchase of replacement engine for existing van.(c) Cost of
State the type of expenditure, capital or revenue, incurred in the following transactions(a) Break-down van purchased by a garage.(b) Repairs to a fruiterer’s van.(c) The cost of installing a new
On what principles would you distinguish between capital and revenue expenditure? Illustrate your answer by reference to the following:(a) The cost of repairs and an extension to the
The data which follows was extracted from the books of account of H Kirk, an engineer, on 31 March 20X6, his financial year end.You are required to allocate each or part of the items above to either
Explain clearly the difference between capital expenditure and revenue expenditure. State which of the following you would classify as capital expenditure, giving your reasons:(a) Cost of building
For the business of J Charles, wholesale chemist, classify the following between ‘capital’ and ‘revenue’ expenditure:(a) Purchase of an extra van.(b) Cost of rebuilding warehouse wall which
(a) Distinguish between capital and revenue expenditure.(b) Napa Ltd took delivery of a microcomputer and printer on 1 July 20X6, the beginning of its financial year. The list price of the equipment
For the business of H Ward, a food merchant, classify the following between ‘capital’ and ‘revenue’ expenditure:(a) Repairs to meat slicer.(b) New tyre for van.(c) Additional shop counter.(d)
Classify the following items as either revenue or capital expenditure:(a) An extension to an office building costing £24,000.(b) The cost of replacement valves on all the labelling machines in a
A Bloggs, a building contractor, had a wooden store shed and a brick-built office which have carrying amounts in the books of £850 and £179,500 respectively. During the year, the wooden shed was
Sema plc, a company in the heavy engineering industry, carried out an expansion programme in the 20X6 financial year, in order to meet a permanent increase in contracts. The company selected a
At the beginning of the financial year on 1 April 20X5, a company had a balance on plant account of £372,000 and on provision for depreciation of plant account of £205,400. The company’s policy
In a new business during the year ended 31 December 20X7 the following debts are found to be bad, and are written off on the dates shown:On 31 December 20X8 the schedule of remaining debtors,
Why is the difference between classifying something as capital expenditure rather than revenue expenditure, and vice versa, so important to the users of financial statements?
A business started trading on 1 January 20X7. During the two years ended 31 December 20X7 and 20X8 the following debts were written off to the Bad Debts Account on the dates stated:On 31 December
A business, which started trading on 1 January 20X7, adjusted its doubtful debt provision at the end of each year on a percentage basis, but each year the percentage rate is adjusted in accordance
John Boggis saw a computer for sale in a local store for £1,499. This was much cheaper than he’d seen it for sale elsewhere. He needed five of these PCs and also needed the cabling to network
A business makes a provision for doubtful debts of 3% of debtors, also a provision of 1% for discount on debtors.On 1 January 20X8 the balances brought forward on the relevant accounts were provision
D Faculti started in business buying and selling law text books, on 1 January 20X3. At the end of each of the next three years, his figures for debtors, before writing off any bad debts, were as
J Blane commenced business on 1 January 20X6 and prepares her financial statements to 31 December every year. For the year ended 31 December 20X6, bad debts written off amounted to £1,400. It was
(A) Explain why a provision may be made for doubtful debts.(B) Explain the procedure to be followed when a customer whose debt has been written off as bad subsequently pays the amount originally
A Gill, purchased a notebook PC for £2,600. It has an estimated life of four years and a scrap value of £200.She is not certain whether she should use the straight line or the reducing balance
A machine costs £8,000. It will be kept for five years, and then sold for an estimated figure of £2,400. Show the calculations of the figures for depreciation (to nearest £) for each of the five
A car costs £9,600. It will be kept for three years, and then sold for £2,600. Calculate the depreciation for each year using (a) The reducing balance method, using a depreciation rate of 50
A photocopier costs £23,000. It will be kept for four years, and then traded-in for £4,000. Show the calculations of the figures for depreciation for each year using (a) The straight line
A company, which makes up its financial statements annually to 31 December, provides for depreciation of its machinery at the rate of 15 per cent per annum using the reducing balance method. On 31
A printer costs £800. It will be kept for five years and then scrapped. Show your calculations of the amount of depreciation each year if (a) The reducing balance method at a rate of 60 per
A bus is bought for £56,000. It will be used for four years, and then sold back to the supplier for £18,000. Show the depreciation calculations for each year using (a) The reducing balance
Ivor Innes has supplied you with the following information:During the year to 31 March 20X8, Ivor withdrew £11,400 from the business for private purposes. In November 1996, Ivor received a legacy of
A motor vehicle which cost £12,000 was bought on credit from Trucks Ltd on 1 January 20X6. Financial statements are prepared annually to 31 December and depreciation of vehicles is provided at 25
On 10 August 20X3 Joblot, a computer software retailer, bought a fixed asset which cost £100,000. It had an anticipated life of four years and an estimated residual value of £20,000. Due to
A company starts in business on 1 January 20X5. You are to write up the vans account and the provision for depreciation account for the year ended 31 December 20X5 from the information given below.
A company starts in business on 1 January 20X3, the financial year end being 31 December.You are to show:(a) The machinery account.(b) The provision for depreciation account.(c) The balance sheet
Black and Blue Ltd depreciates its forklift trucks using a reducing balance rate of 30 percent. Its accounting year end is 30 September. On 30 September 20X6, it owned four forklift trucks:(A)
A company maintains its fixed assets at cost. Depreciation provision accounts, one for each type of asset, are in use. Machinery is to be depreciated at the rate of 15% per annum, and fixtures at the
A company maintains its fixed assets at cost. Depreciation provision accounts for each asset are kept.At 31 December 20X8 the position was as follows:The following additions were made during the
Mavron plc owned the following motor vehicles as at 1 April 20X6:Mavron plc’s policy is to provide at the end of each financial year depreciation using the straight line method applied on a
A vehicle bought on 1 January 20X0 cost £16,000. Its useful economic life is estimated at 4 years and its trade-in value at that point is estimated as being £4,000. During 20X2 a review of the
(a) Identify the four factors which cause fixed assets to depreciate.(b) Which one of these factors is the most important for each of the following assets?(i) A gold mine,(ii) A lorry,(iii) A 50 year
Contractors Ltd was formed on 1 January 20X6 and the following purchases and sales of machinery were made during the first 3 years of operations.Each machine was estimated to last 10 years and to
A business buys a fixed asset for £10,000. The business estimates that the asset will be used for 5 years. After exactly 21/2 years, however, the asset is suddenly sold for £5,000. The business
XY Ltd provides for depreciation of its machinery at 20% per annum on cost; it charges for a full year in the year of purchase but no provision is made in the year of sale/disposal.Financial
A machine cost £40,000 on 1 January 20X7. The reducing balance depreciation method is used at 25% per annum. Year end is 31 December. During 20X9, it was decided that a straight line method would be
(a) A machine was bought on credit for £15,000 from the XY Manufacturing Co Ltd, on 1 October 20X1. The estimated useful economic life of the machine was seven years and the estimated scrap value
Distance Limited owned three lorries at 1 April 20X6:A Purchased 21 May 20X2 Cost £31,200B Purchased 20 June 20X4 Cost £19,600C Purchased 1 January 20X6 Cost £48,800Depreciation is charged
(a) The following trial balance was extracted from the books of M Jackson on 30 April 20X7. From it, and the note below it, prepare his trading and profit and loss account for the year ending 30
A company maintains its fixed assets at cost. Accumulated provision for depreciation accounts are kept for each asset.At 31 December 20X8 the position was as follows:The following transactions were
The two accounts below were taken from the books of a retailer at the end of his financial year, 31 December 20X7.Required:Answers to the following questions.1. What type of account is the insurance
The financial year of T Guiness ended on 31 December 20X6. Show the ledger accounts for the following items including the balance transferred to the necessary part of the financial statements, also
The following trial balance was extracted from the books of R Giggs at the close of business on 28 February 20X7.Notes:(a) Stock 28 February 20X7 £2,400.(b) Wages and salaries accrued at 28 February
Three of the accounts in the ledger of Charlotte Williams indicated the following balances at 1 January 20X0:Insurance paid in advance £562;Wages outstanding £306;Rent receivable, received in

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