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The MCQs below are drawn from the Accountancy & Auditing subject category.
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891
Which of the following transactions is recorded on the credit side of a Trade Payables Ledger Control account?
The Trade Payables Ledger Control account represents the total liability owed to suppliers. Credit purchases increase the liability, so they are recorded on the credit side. Conversely, payments, discounts received, and purchase returns decrease the liability and are recorded on the debit side.
892
Given a creditor balance of $1,000 on Jan 1, 2012, an ending balance of $2,000 on Dec 31, 2012, and payments of $500 made during the year, what is the total amount of purchases?
To calculate purchases, use the formula: Ending Balance = Opening Balance + Purchases - Payments. Plugging in the values: 2000 = 1000 + Purchases - 500. This simplifies to 2000 = 500 + Purchases. Solving for Purchases gives 2000 - 500 = 1500. Thus, the total purchases made during the year amount to $1,500.
893
On which side of the creditor control account is the total of the purchases return recorded?
A creditor control account represents the total amount owed to suppliers. Since a purchase return reduces the liability owed to the creditor, it is recorded on the debit side of the creditor control account, reflecting a decrease in the balance.
894
Which of the following items would not be recorded in a purchases ledger control account?
A purchases ledger control account tracks liabilities owed to suppliers. Balances owed by customers are recorded in the sales ledger control account, not the purchases ledger. Therefore, customer balances are irrelevant to the purchases ledger control account.
895
Which term is commonly used to refer to the creditor's ledger?
The creditor's ledger, also known as the purchase ledger or supplier's ledger, is a subsidiary ledger that records all transactions related to individual suppliers from whom goods or services are purchased on credit. It tracks the amounts owed to each specific creditor, ensuring that the business maintains accurate records of its accounts payable obligations.
896
If a contra entry of $1,000 between the sales ledger and the purchase ledger was omitted from the creditor control account, what is the required adjustment?
A contra entry between sales and purchase ledgers reduces the balance owed to creditors. Since a creditor control account normally has a credit balance, reducing this liability requires a debit entry. Therefore, omitting this transaction means the creditor control account is overstated, and a debit of $1,000 is necessary to correct it.
897
Given a creditor control account with Bank payments of $100, Purchases of $200, Discount received of $100, and a closing balance (c/d) of $300, what is the opening balance (b/d)?
The creditor control account follows the logic: Opening Balance + Purchases = Payments + Discounts + Closing Balance. Let X be the opening balance. X + 200 = 100 + 100 + 300. X + 200 = 500. X = 300. Thus, the opening balance brought down is $300.
898
Which of the following statements accurately describes the terminology used for a creditor control account?
A creditor control account tracks the total amount owed to suppliers. It is interchangeably referred to as an accounts payable control account or a purchase ledger control account, as it summarizes the individual balances found in the purchase ledger.
899
Which subsidiary book serves as the primary source for the total credit purchases recorded in the Creditors Control Account?
The Purchase Day Book (or Purchases Journal) is the book of original entry where all credit purchases are recorded chronologically. The total of this book is posted periodically to the credit side of the Creditors Control Account to maintain the integrity of the ledger.
900
Which of the following items is typically recorded in a Purchase Ledger Control Account?
A Purchase Ledger Control Account summarizes the total transactions with trade creditors. Purchases returns are recorded here because they reduce the total amount owed to creditors. Cash discounts allowed and provisions for bad debts relate to sales, while trade discounts are usually deducted before recording the invoice amount, making purchases returns the correct entry for this control account.
