Computerised Book-keeping

Level 1 Pilot Paper 2 & Answers

1. Which one of the following statements describes the purpose of a trial balance?

1 A statement prepared for the purpose of bringing the balance on the bank current
account in the double entry bookkeeping system into agreement with the balance
shown on a statement of account received from a bank.
2. A periodic listing of balances on all accounts within the double entry bookkeeping
system for the purpose of proving the arithmetic accuracy of the system
3. A statement prepared for the purpose of bringing the balance on the petty cash
account in the double entry bookkeeping system into agreement with the amount
of petty cash in the petty cash tin.

2. Identify each of the following as an asset, a liability or a capital item.

Asset Liability Capital

1 An amount owed to the business by a customer to which the
business has sold goods on credit
2 Finance invested in a business by its owner(s)
3. An overdrawn balance on the bank current account of a
business

3. Which ONE of the following statements best describes the function of bookkeeping?

1. The mechanic system of keeping financial records ie the recording of day-to-day

business transactions
2. The use of financial information from within the bookkeeping system for the
purpose of preparing financial statements
3. A form of internal accounting which provides financial information at a time
and in a format which makes useable by management for the purpose of
planning and controlling the business

4. Which one of the folling represents the period of time for which a business is legally
required to retain its business documents and records?

6 Months 3 Years 6 Years

5. You work in the wages and salaries section of the company where you are employed as an
accooutns junior. Your best friend Alex also works for the same company. Alex has recently
had a row with his line manager after he was cautioned over his poor timekeeping.

Alex is if the opinion that the line manager is incompetent and has only got to where she has
in the company because her father is the company manageing director. Knowing that you
have access to personnel files and wages and salaries records, Alex asks you what salary his
line manaer is paid. Should you?

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 1. Tell Alex you don’t have the information regarding his line manager’s
salary on hand, but you will look in the files andl et him know.
2. Give Alex the information he has asked for as he is a good friend
3. Refuse Ale’s reqest for information, telling him that to give him suuch
information would be a breach of confidentiality.

6. Listed below are two descriptions relating to documents commonly used as the source from
which business transactions are recorded. Identify each of the documents described.

Petty Credit Invoic Bank

Cash Note e Statement
Voucher
A document issued by a supplier to a credit customer
who has returned goods
A document from which transactions are entered in
the petty cash book
A document issued by a business to its customer
when they purchase goods on credit
A document which summarises all the bank
transactions during a period of time

7. Complete the gaps in the sentence below from the options given.

Income earned each accounting period by business from its trading or non-trading activities
is known as (revenue income/capital income/capital expenditure/revenue income/revenue
expenditure).

Funds invested by the owner(s) of a business and funds borrowed from other persons or
organisations for the purpose of financing a business is known as (revenue income/capital
income/capital expenditure/revenue income/revenue expenditure)

8. Which one of the following concepts requires that bookkeepers and accountants to treat
each business as though it were a living person with its own identity?

1. Dual Aspect
2. Business Entity

9. The proprietor of a business takes a sum of money each month for personal use. This should
be treated as?

1 Wages
2 Salary
3 Drawings

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 10. Which one of the following statements describes the petty cash system known as the
“imprest” system.

1 Petty cash is set at an agreed amount, from which petty cash payments will
be made for an agreed period of time, at the end of which the petty cash is
restored to the agreed amount.
2 There is no agreed petty cash float and the petty cash balance is restored
whenever the business owner runs out of petty cash

11. Which one of the following documents is sent out at the end of wach month by the seller to
the buyer, summarising the transactions that have taken place between the two businesses
in the month. The document shows the balance on the account of the buyer in the books of
the seller at the month end sate and indicates that a payment is due.

Credit Note Statement of Account Invoice

12. From the following identify the UK government agency responsible for administration of the
VAT system

Her Majesty’s Revenue and Department for Work and Her Majestry’s Treasury
Customs Pensions

13. Which one of the following concept is the basis of the system of bookkeeping known as
double entry?

Dual Aspect Business Entity

14. Which one of the following statements best describes the term “cash Sale”

1 The supplier does not expect immediate payment and gives the customer a
period of time in which to pay for goods or services
2 The supplier is paid in advance by the customer for goods or services to be
supplied
3 The customer pays the supplier immediately for goods or services supplied X

15. Which one of the following types of business entity is owned by one person?

Partnership Sole Trader Limited Company

16. Which one of the following is an example of CAPITAL EXPENDITURE to a business?

1 The purchase of a delivery van for business use

2 Money borrowed from a bank for the purpose of expanding the business

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 3 Purchase of goods for resale
17. Which one of the following is the correct example of what is commonly refereed to as the
“accounting equation”.

1. Liabilities = Capital + Assets

2. Assets = Capital + Liabilities

18. Which one of the following statements describes the VAT term “output tax”?

1 VAT collected by a VAT registered business in goods and services supplied to

customers
2 Goods and services on which there is no VAT collected or paid because
theyare outside the scope of the VAT return
3 VAT paid by a VAT registered business on the goods it buys-in from
suppliers, and on some of the expenses it occurs

19. You are presented below with three examples of business transactions.

Identify for EACH of the transactions the source document from which the transaction would be
recorded I the bookkeeping system of a business. Select your answers from the options provided.

Invoice Till Credit Bank Petty

Receipt Note Statement Cash
Voucher
Goods sold on credit to a customer
Cash sales processed through a cash register
Gas and Electricity bills paid by direct debit
Receipts for small items paid by cash
Items returned by a customer

20. In which one of the following are business transactions recorded when the bookkeeper
maintains double entry records for a business?

1 The Ledger
2. The Journal

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