Computerised Book-keeping Level 1

Knowledge Test 1 – Answers

1. Which of the following plastic card payment methods would allow the card holder to spread
the cost of the goods or services they purchase over several months by paying the card
balance in instalments?

Debit Card Credit Card x

2. Joe runs a very successful business selling Children’s Fashion Wear which he designs and
sells under his own label “Cute Kids”. He has a shop in a precinct in a local town and also has
his own website which has proved to be very popular. As almost 40% of his sales are from
the website, with the proceeds from each sale being transferred directly into his bank
account using an online payments system, Joe feels he needs easy access to is bank account
and the option to monitor and manage the account on a daily basis.

Which of the following services generally offered by banks would be most suitable for Joe’s
needs?

A Bank Deposit Account

B High Interest Savings Account
C Internet Banking x

3. Stephen is the owner of an amusement arcade on a busy seafront. Each evening when the
arcade closes , takings from the arcade machines are counted and made ready to be taken
to the bank the following day. Which of the following courses of action would you NOT
recommend to Stephen, from the point of view of security, as being suitable as part of the
routine of taking monies to the bank?

A Always send more than one person to the bank

B Always take the quickest route to the bank and never vary the route x
C Vary the time each day that the takings are taken to the bank

4. Jemima started her own business several years ago. The business has been very successful
and is expanding rapidly. Jemima is looking to move the business to newer and bigger
premises which she would prefer to buy rather than rent.

Which of the following facilities offered by her bank would be most suitable for the purpose
of helping Jemima finance the purchase of the new premises?

A Bank Loan (term Loan)

B Mortgage x
C Bank overdraft
 5. A business wants to make payments from its bank current account on a quarterly basis
directly to Ecopower for the use of gas and electricity. The amounts charged by Ecopower
are likely to vary period by period. Which of the following payment methods would you
recommend as most suitable in such circumstances?

A Standing Order
B Telegraphic Transfer
C Direct Debit X

6. In the table below you are presented with payments to be made by three businesses. You
are also provided with a list of payment methods commonly used by businesses. You are
required to match the payment method from the items below against the payments to be
made, thereby selecting what is the most suitable payment method for each of the
payments to be made.

Cheque BACS Cash

Payment of wages/salaries to employees by a business with over x
200 employees
The payment of £6.00 to the window cleaner for cleaning the x
windows of the business premises.
The payment of £250,000 by a solicitor representing a client x
buying property, to the solicitor representing the seller of the
property.

7. On which of the following types of building society accounts would the account holder be
guaranteed to receive interest from the bank?

A Mortgage Account
B Deposit Account x
C Current Account

8. Gloria regularly makes small payments, of less than £20 in cash (notes and coins). Which
ONE of the following is a contactless system which would make it possible for her to make
such payments by plastic card, using a terminal situated in, say a shop or store, but without
having to swipe her card?

A CHAPS
B Tap and Go x
C Faster Payments Service

9. Using the selection below please select the options which comples the gaps in each of the
sentences below:

 A drawer may (post-date/account payee/debit card/night-safe) a cheque ie enter a date on

the cheque which is later than the date on which the heque is actually made out.
  Adding the words (post-date/account payee/debit card/night-safe)to the crossing on the
face of a cheque is an insruction to the bank that the cheque should only be paid into a bank
account held in the name of the payee.

 Payment made using a (post-date/account payee/debit card/night-safe)results in funds

being transferred automaticallly from the account of the card holder of the trader and the
funds immediately become cleared funds.

 Banks generally offer business customers a (post-date/account payee/debit card/night-safe)

facility which allows them to bank monies outside of normal banking hours.

10. Indicate whether each of the following statements are true of false:

STATEMENT TRUE FALSE

On arranging a loan with a bank or building society the customer is provided x
with a loan agreement which gives full details of the amount borrowed, the
rate of interest applicable, the terms of the loan and the repayment
instalments
The balance on a credit card needs to be settled immediately the card x
statement is received from the credit card company
Prepaid foreign currency cards are generally available to holders of a bank or x
building society current account . The holder can load the card with funds
from their current account in a currency of their choice and can use the card
when they travel abroad in the same way they would a debit card.
The use of EFTPOS system means that funds are transferred automatically x
from the bank account of the payer to the bank account of the receiver.
It is generally accepted that a cheque is valid for a period of three months X
from the date of issue, after which time it becomes out of date (stale)

11. Which of the following statements is/are true?

a. Bank statements are usually filed in chronological (date order)

b. Documents such as cheque books, paying in books and bank statements should be kept in a
lockable drawer or safe
c. Telephone and internet banking is a service which enables customers of a bank to access
their accounts 24 hours a day 365 days per year

A 1 and 2 only
B 1 and 3 only
C All three statements are true x
 12. Identify each of the follwing statements as being either true or false

True False
A business with a bank deposit account can expect a rate of interest which varied X
according to the period of time for which it is prepared to leave monies on deposit
A bank overaft would be the best way of financing the purchase of a vehicle X
On opening a bank current account the bank will provide the account holder with a X
cheque book and a paying in book. A statement of account will also be provided
periodically
Building societies do not genrally offer mortgages for the purpose of financing the X
purchase of commercial property
Cheques take a period of 5 working daysto pass through the banks central clearing X
system

13. Tina is a member of the Federation of Hairdressers, she pays an annual membership fee to
the federation on 1 April each year. Tina currently pays the fee by cheque. Rather than
paying her membership fees by cheque, which of the following would you recommend as
being a more appropriate method of payment?

A Direct Debit x
B Telegraphic Transfer
C Standing Order

14. Which if the following statements best describes the MAIN function of banks and building
societies?

A The selling of stocks and shares

B The taking of money from depositors and lending it to borrowers X
C Making it easy for customers to conduct money based transactions
by offering a range of accounts and services

15. You are presented with the cheque below:

Identify the Drawee Northern Bank Welsh Gas Suppliers Mr J Bloggs

Identify the Payee Northern Bank Welsh Gas Suppliers Mr J Bloggs
 16. Today’s date is 13th September 201X and Building supplies has received a cheque in the post
from Bodgit Builders, one of their credit customers. Given the information on the cheque
received identify which one of the following statements is/are true

True False
A. The date on the cheque is incorrect A) Only
B. The payee name on the cheque is incorrect A + B) Only
C. The amounts and words and figures do not A + C) Only X
correspond

17. A business has a positive balance on its current account with the bank. Which of the
following statements describes the relationships of the bank to the business?

The Bank is a debtor to the business as it owes the business money x

The bank is a creditor to the business as the business owes the bank money

18. Which of the following bank accounts is designed to be used by businesses or individuals for
the purpose of making payments into and out of the account on a day-to-day basis?

Current
Deposit X
Share Account

19. How do banks and building societies earn the profits the distribute as dividends or interest
to their shareholders or members?

By charging a higher rate of interest to borrowers than they give to depositors x

By offering a range of services to their customers
From both of the above

20. Liu Uang is a very successful businesswoman. She currently resides in the UK but was born
in China. Liu Yang runs a chain of stores which sell a range of licenced Chinese medicines
and health care producers. Liu Yang regularly travels to China to visit her suppliers.

Which one of the following services offered by banks would you consider to be o particular use to Liu
Tan in running her business?

Foreign exchange and currency services X

Safety deposit facilities
Online and telephone banking