Question 1

Which of the following is a book of original entry and is also part of the ledger?

Accepted Answer

The cash book is both a book of original entry and part of the ledger because it records cash transactions in detail and also serves as a ledger account for cash, summarizing cash receipts and payments.

Question 2

The company returns goods to the supplier because they were the wrong colour. Which of the following is the correct double entry?

Accepted Answer

A

Question 3

The cash book:

Accepted Answer

A

Question 4

A cash discount given to a customer should be recorded by:

Accepted Answer

When a cash discount is given to a customer, it is recorded by debiting the Discount Allowed account and crediting the Customer's account. This reflects the reduction in the receivable from the customer due to the discount given.

Question 5

A trade discount:

Accepted Answer

Trade discounts are reductions in the selling price of goods or services and are not recorded in the accounting books; hence, they do not form part of the double entry system.

Question 6

On behalf of the business, you pay D. Grey's account within 10 days. The company owes D. Grey
£10,000 for purchases made. D. Grey agrees to give you a discount of 5%. The accounting entry to
Post this in the books of a company is:

Accepted Answer

The answer of On behalf of the business, you pay...

Question 7

Which of the following is not an appropriate reason for differences between the cash book balance and the entity's bank statement?

Accepted Answer

Cash payments posted to suppliers accounts are internal transactions and do not affect the bank statement directly. They are related to accounts payable and do not cause a difference between the cash book balance and the bank statement. Differences usually arise from timing differences, errors, or unrecorded transactions directly affecting the bank account.

Question 8

In the cash book a cheque written to an electricity company would be analysed as:

Accepted Answer

A cheque written to an electricity company would be categorized under "Heat and light" as it directly relates to the expenses incurred for electricity, which is a utility expense specifically associated with heating and lighting the business premises.

Question 9

In the cash book a cheque written for a replacement radiator would be analysed as:

Accepted Answer

A replacement radiator is considered a repair or renewal to maintain the functionality of the existing asset, rather than acquiring a new asset or covering operational expenses like heat and light.

Question 10

In the cash book a cheque written to a supplier to settle their account would be analysed as:

Accepted Answer

The answer of In the cash book a cheque written...

Question 11

In the cash book a cheque received for the sale of goods would be analysed as:

Accepted Answer

The answer of In the cash book a cheque received...

Question 12

In the cash book a cheque paid for goods would be analysed as:

Accepted Answer

A cheque paid for goods represents an expense for the purchase of goods, which is recorded in the purchases account, not in the purchases day book, purchase ledger, or directly in the bank account in the context of accounting analysis.

Question 13

In the cash book a cheque received from a customer in settlement of their account would be analysed as:

Accepted Answer

The answer of In the cash book a cheque received...

Question 14

The double entry to record £500 cash withdrawn from the bank is:

Accepted Answer

The answer of The double entry to record £500 cash...

Question 15

£400 Discount given to customers is posted as follows:

Accepted Answer

The answer of £400 Discount given to customers is posted...

Question 16

A. Sparrow returned goods to you because they were faulty. This should be posted by:

Accepted Answer

When Sparrow returns goods because they were faulty, it is recorded as a return inward (also known as sales return). Therefore, the Returns inward account is debited (to decrease sales) and A. Sparrow's account is credited (to decrease the receivable from Sparrow).

Quiz 12: The Cash Book