Bookkeeping Controls

Question 1

What costs make up the Wages Expense?

Answer 1

Gross Pay + ERNI (National Insurance) + ER Pension Contribution

Question 2

What deductions come from employees pay?

Answer 2

PAYE, EENI (National Insurance), EE Pension Contributions, Voluntary Deductions e.g. charity

Question 3

What is net pay?

Answer 3

Gross pay minus deductions (PAYE, EENI, EE Pension, Voluntary Deductions)

Question 4

How to write irrecoverable debt with VAT

Answer 4

Irrecoverable debt - DEBIT
VAT - DEBIT
SLCA - CREDIT

Question 5

What is error of omission?

Does is affect Trial Balance?

Answer 5

Transaction not entered at all, anywhere

No

Question 6

What is error of principle?

Does is affect Trial Balance?

Answer 6

Transaction is entered into the wrong type of account.

No.

Question 7

What is error of commssion?

Does is affect Trial Balance?

Answer 7

Transaction is entered into the wrong account but same type e.g. office expenses is entered into rent.
No

Question 8

What is error of original entry?

Does is affect Trial Balance?

Answer 8

Wrong figure has been entered correctly into debit & credit.

No.

Question 9

What is reversal of entries?

Does is affect Trial Balance?

Answer 9

Correct figure/same figure has been entered to wrong side of both accounts involved.
No/

Question 10

What is a compensating error?

Does is affect Trial Balance?

Answer 10

Two separate errors equal each other out.

No.

Question 11

What is a calculating error in accounts?

Does is affect Trial Balance?

Answer 11

E.g. an error when adding up figures & balancing a ledger account
Yes

Question 12

What is a single entry transaction?

Does is affect Trial Balance?

Answer 12

Entering a debit but not a credit or vice versa.

Yes

Question 13

Does using two debits or two credits affect trial balance?

Give an example

Answer 13

Yes

E.g. Crediting rent recieved and also crediting the bank (when is should be debit)

Question 14

Does entering different amount on the debits & credits affect trial balance?
Give an example

Answer 14

Yes.

E.g. entering £45 in debit and £54 in credit.

Question 15

Would making an error in transferring an account balance the trial balance affect it?
Give an example

Answer 15

Yes

E.g entering £5000 instead of £500

Question 16

Would omitting a general ledger account in the trial balance affect it?

Answer 16

Yes

Leaving an account out of the TB completely.

Question 17

What is DEAD CLIC?

Answer 17

Debit - Expenses, Assets & Drawings

Credit - Liabilities, Income & Capital

Question 18

What is the formula for irrecoverable debts?

Answer 18

Debit - Irrecoverable Debts
Debit - VAT
Credit - SLCA

Question 19

What is the layout for balancing accounts?

Answer 19

Bal c/d
Total
Bal b/d

Question 20

What do you do with outstanding lodgements and unpresented cheques?

Answer 20

ADD outstanding lodgements

MINUS unpresented cheques

Question 21

What is the layout for the Wages Control Account?

What do the Bank and HMRC transactions consist of?

Answer 21

CREDIT - WAGES EXPENSE
DEBIT - Everything else
(Bank, HMRC, Pension Fund, Trade Union Fees, Charity Contributions)
Bank - Net employees pay
HMRC - Income tax, EENI, ERNI

Question 22

What type of account is an SLCA?

What are the debits and credits?

Answer 22

ASSET account
DEBIT - Balance b/d, (credit customer) sales. returned cheque
CREDIT - Bank (receipts), (credit customer) sales returns, discounts allowed, irrecoverable debts, balance c/d

Question 23

What type of account is the PLCA?

What are the debits & credits?

Answer 23

LIABILITY account
DEBIT - Bank (payments), (credit customer) purchase returns, Discounts received, Balance c/d
CREDIT - Balance b/d, (credit customer) purchases

Question 24

When is the company owed VAT and when does it owe it, and do they debit or credit the VAT control account?

Answer 24

Owed VAT on purchases - DEBIT CONTROL ACCOUNT

Owes VAT on sales - CREDIT CONTROL ACCOUNT

Question 25

What are the debits of the VAT control account?

Answer 25

Sales Returns, credit Purchases, Discounts allowed, Cash purchases, petty cash & irrecoverable debts

Question 26

What are the credits of the VAT control account?

Answer 26

Credit sales, purchase returns, discounts recieved, cash sales

Question 27

Where do the c/d and b/d balances have to be for the company to OWE VAT?

Answer 27

Owing is a liability - c/d is in debit and b/d is in credit

Question 28

Where do the c/d and b/d balances have to be for the company to BE OWED VAT?

Answer 28

Being owed VAT is an ASSET - c/d is in credit and b/d is in debit

Question 29

What 8 things do I need to write down at the beginning of the exam?

Answer 29

DEAD CLIC How to balance accounts (where to put c/d & b/d)# Irrecoverable debts layout ADD outstanding lodgements, MINUS unpresented cheques SLCA type of account (ASSET) and layout PLCA type of account (LIABILITY) and layout Wages control account layout - (WAGES EXPENSES ARE CREDIT) Vat Control Account layout & MONEY PAID IS DEBIT MONEY RECEIVED IS CREDIT

Question 30

What is PAYE, who bears the cost and who is responsible and who is it paid to?

Answer 30

Pay As You Earn Income tax is collected by employer from employee and deducted from employee before net pay. Employer pays HMRC on a monthly basis.