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The MCQs below are drawn from the Accountancy & Auditing subject category.
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871
When a customer's check is dishonored by the bank, how should this be recorded in the sales ledger control account?
When a check previously received from a debtor is dishonored, the debtor's balance must be reinstated. Since the debtor's account was originally credited when the check was received, the reversal requires a debit to the debtor's account and, consequently, a debit to the sales ledger control account to reflect the increase in the amount owed by debtors.
872
Which of the following items is excluded from the sales ledger control account?
The sales ledger control account tracks the total balance of trade receivables. A provision for bad debts is a valuation adjustment account and is not a transaction with a specific debtor; therefore, it does not affect the individual debtor balances and is excluded from the control account.
873
What does the closing balance of a Sales Ledger Control Account represent?
The Sales Ledger Control Account is a summary account that tracks the total amount owed by all credit customers. Therefore, the closing balance of this account represents the total trade receivables (debtors) at the end of the accounting period.
874
Which of the following terms is synonymous with a debtor control account?
A sales ledger control account, also known as a debtor control account, is a memorandum account in the general ledger that summarizes the total balance of all individual customer accounts in the sales ledger. It serves as a reconciliation tool to ensure the accuracy of the subsidiary ledger balances against the general ledger.
875
Which of the following transactions is recorded on the debit side of a customer's (debtor's) account?
A debtor's account is an asset account. According to the rules of debit and credit, an increase in an asset is recorded on the debit side. Since credit sales increase the amount owed by the customer to the business, they are recorded as a debit in the debtor's ledger account. Other items like payments or returns would be credited as they reduce the balance.
876
What is the alternative terminology used for a debtor control account in accounting?
A sales ledger control account, also known as a debtor control account, is a memorandum account maintained in the general ledger. It summarizes the total balances of all individual customer accounts found in the sales ledger. It serves as a control mechanism to ensure the accuracy of the subsidiary ledger by verifying that the total of individual balances matches the control account balance.
877
When a customer's check is dishonored by the bank, how should this be recorded in the debtor control account?
When a check previously received from a debtor is dishonored, the debtor's account must be reinstated to reflect the outstanding debt. Since a debtor is an asset, increasing the balance requires a debit entry. Therefore, the sales ledger control account is debited to reverse the previous credit entry that was made when the check was initially received and recorded.
878
When a payment of $500 is received from a debtor, how should this transaction be recorded in the control accounts?
A debtor is an asset to the business. When a payment is received from a debtor, the asset value decreases. According to the rules of double-entry bookkeeping, a decrease in an asset account is recorded by crediting that account. Therefore, the accounts receivable control account must be credited to reflect the reduction in the amount owed by the debtor.
879
Which document provides a comprehensive list of customer accounts, their individual balances, and the total amount owed to the business?
A schedule of accounts receivable is a supplementary report that lists all individual customer balances at a specific point in time. The total of this schedule must reconcile with the balance of the Accounts Receivable control account in the general ledger, ensuring that all credit sales and payments have been accurately recorded for each client.
880
The total balance of the sales ledger is represented by which of the following accounts?
The sales ledger, often referred to as the receivables ledger, contains individual accounts for each credit customer. The aggregate of all these individual balances represents the total amount owed to the business by its customers. In a well-organized accounting system, this total is reconciled with the sales ledger control account maintained in the general ledger to ensure accuracy and detect potential posting errors.
