ACCA FA · Chapter 10
Trial balance, errors, control accounts and bank reconciliations MCQs with Answers
12 multiple-choice questions on Trial balance, errors, control accounts and bank reconciliations for ACCA FA Financial Accounting. Try each one before revealing the answer and explanation.
Practise this chapter interactivelyQuestion 1
A business sells goods to a customer who is also a supplier, and the two balances are set off against each other. What is the double entry for this contra?
- A) Debit Cash; Credit Receivables control
- B) Debit Payables control; Credit Receivables control
- C) Debit Payables control; Credit Cash
- D) Debit Receivables control; Credit Payables control
Show answer & explanation
Answer: B) Debit Payables control; Credit Receivables control
A contra reduces both the amount owed to the supplier and the amount owed by the customer. The payables balance (a credit) is reduced by debiting the payables control account, and the receivables balance (a debit) is reduced by crediting the receivables control account. No cash is involved.
Question 2
Which of the following errors would cause the totals of a trial balance to disagree?
- A) Repairs to a vehicle were debited to the motor vehicles account
- B) A debit entry was posted, but the corresponding credit entry was omitted
- C) Two errors of equal amount were made on opposite sides
- D) A transaction was completely omitted from the books
Show answer & explanation
Answer: B) A debit entry was posted, but the corresponding credit entry was omitted
A single-sided entry means that total debits no longer equal total credits, so the trial balance does not balance. Errors of principle, complete omission and compensating errors all leave the debits and credits equal, so they are not revealed by the trial balance.
Question 3
Repairs to a factory building were debited to the buildings (non-current asset) account. What type of error is this?
- A) An error of commission
- B) An error of original entry
- C) A compensating error
- D) An error of principle
Show answer & explanation
Answer: D) An error of principle
An error of principle occurs when an item is posted to the wrong type of account - here, revenue expenditure (repairs) treated as capital expenditure. An error of commission involves the correct type of account but the wrong account (for example, the wrong customer). An error of original entry is an incorrect amount recorded in the book of prime entry.
Question 4
A trial balance has debit totals of $386,450 and credit totals of $389,170. What entry is required to open a suspense account?
- A) Credit suspense $2,720
- B) Debit suspense $2,720
- C) Credit suspense $1,360
- D) Debit suspense $5,440
Show answer & explanation
Answer: B) Debit suspense $2,720
Credits exceed debits by $389,170 - $386,450 = $2,720. To make the trial balance agree, a debit balance of $2,720 is placed in the suspense account until the errors are found and corrected.
Question 5
A suspense account was opened when a trial balance failed to agree. The following errors were then found: 1. A gas bill of $560 was correctly recorded in the cash book but debited to the gas account as $650. 2. Cash received from a customer of $1,300 was recorded in the cash book but not posted to the receivables control account. 3. Discount received of $220 was debited to the discount received account. After correcting these errors the suspense account has a nil balance. What was the original balance on the suspense account?
- A) $1,830 credit
- B) $1,610 credit
- C) $1,650 credit
- D) $1,830 debit
Show answer & explanation
Answer: A) $1,830 credit
Error 1: the gas debit is $90 too high, so the correction is Dr Suspense $90, Cr Gas $90. Error 2: only the debit was made, so Dr Suspense $1,300, Cr Receivables $1,300. Error 3: a credit of $220 was posted as a debit, so correcting it requires Cr Discount received $440, Dr Suspense $440. Total debits to suspense = $90 + $1,300 + $440 = $1,830, so the original balance was a credit of $1,830. Correcting error 3 with only $220 gives $1,610.
Question 6
A company's draft profit for the year is $48,200. The following errors are then discovered: 1. Closing inventory was understated by $2,600. 2. A machine costing $5,000, bought at the start of the year, was debited to repairs. Machinery is depreciated at 20% per year straight-line. 3. An accrual for expenses of $750 was omitted. What is the corrected profit?
- A) $55,050
- B) $49,050
- C) $55,550
- D) $54,050
Show answer & explanation
Answer: D) $54,050
Start with $48,200. Add the understated inventory $2,600; add back the machine wrongly expensed $5,000; deduct depreciation on it of $5,000 x 20% = $1,000; deduct the omitted accrual $750. $48,200 + $2,600 + $5,000 - $1,000 - $750 = $54,050. Forgetting the depreciation gives $55,050, and adding the accrual instead of deducting it gives $55,550.
Question 7
The following information relates to a receivables control account for a year: Opening balance $42,800 Credit sales $310,500 Cash sales $24,000 Cash received from credit customers $296,300 Discounts allowed $1,900 Irrecoverable debts written off $2,400 Sales returns $4,100 Contra with payables ledger $1,600 Customer cheque dishonoured $700 Increase in allowance for receivables $800 What is the closing balance on the receivables control account?
- A) $46,900
- B) $46,300
- C) $71,700
- D) $47,700
Show answer & explanation
Answer: D) $47,700
Debits: $42,800 + $310,500 + $700 (dishonoured cheque reinstates the debt) = $354,000. Credits: $296,300 + $1,900 + $2,400 + $4,100 + $1,600 = $306,300. Closing balance = $354,000 - $306,300 = $47,700. Cash sales never pass through receivables, and the allowance for receivables is a separate account, so neither is included. Deducting the allowance gives $46,900.
Question 8
A receivables control account has a balance of $63,010, but the list of receivables ledger balances totals $61,490. The following errors were found: 1. A customer balance of $820 was omitted from the list. 2. A credit balance of $150 on a customer account was included in the list as a debit balance. 3. The sales day book was overcast by $1,000. What is the corrected receivables balance?
- A) $62,160
- B) $62,010
- C) $63,010
- D) $64,010
Show answer & explanation
Answer: B) $62,010
The sales day book overcast affects the control account only: $63,010 - $1,000 = $62,010. The list is corrected by adding the omitted balance and reversing the credit balance wrongly treated as a debit (2 x $150 = $300): $61,490 + $820 - $300 = $62,010. Both now agree at $62,010. Deducting only $150 gives $62,160.
Question 9
A business's cash book shows a debit balance of $5,420. When compared with the bank statement, the following items are found: Unpresented cheques $2,860 Outstanding lodgements $1,940 Bank charges not in the cash book $85 Direct debit not in the cash book $300 Credit transfer from a customer not in the cash book $640 What is the corrected cash book balance?
- A) $4,395
- B) $6,445
- C) $6,595
- D) $5,675
Show answer & explanation
Answer: D) $5,675
Only items not yet recorded in the cash book are adjusted there: $5,420 - $85 - $300 + $640 = $5,675. Unpresented cheques and outstanding lodgements are timing differences that affect the bank statement balance, not the cash book. $6,595 is the bank statement balance.
Question 10
After correcting its cash book, a business has a debit (cash at bank) balance of $5,675. The remaining differences with the bank statement are unpresented cheques of $2,860 and outstanding lodgements of $1,940. There are no other differences. What balance should be shown on the bank statement?
- A) $5,675
- B) $6,595
- C) $4,755
- D) $10,475
Show answer & explanation
Answer: B) $6,595
Start from the corrected cash book balance and reverse the timing differences. Cheques written but not yet presented have not reduced the bank balance, so they are added. Lodgements not yet credited by the bank are deducted: $5,675 + $2,860 - $1,940 = $6,595. Applying the timing differences the wrong way round gives $4,755, and adding both gives $10,475.
Question 11
Which of the following items in a bank reconciliation requires an adjustment to the cash book?
- A) An error made by the bank
- B) Unpresented cheques
- C) Bank charges shown on the bank statement
- D) Outstanding lodgements
Show answer & explanation
Answer: C) Bank charges shown on the bank statement
Bank charges have been deducted by the bank but not yet recorded by the business, so the cash book must be updated. Unpresented cheques and outstanding lodgements are timing differences dealt with in the reconciliation, and bank errors are corrected by the bank, not in the cash book.
Question 12
A business's bank statement shows an overdraft of $1,200. There are unpresented cheques of $900 and a lodgement of $400 has not yet been credited by the bank. There are no other differences. What balance should appear for cash at bank in the statement of financial position?
- A) Overdraft of $2,500
- B) Overdraft of $700
- C) Overdraft of $1,700
- D) Cash at bank of $100
Show answer & explanation
Answer: C) Overdraft of $1,700
Correct balance = bank statement balance - unpresented cheques + outstanding lodgements = -$1,200 - $900 + $400 = -$1,700. Unpresented cheques will increase the overdraft when presented, and the lodgement will reduce it. The overdraft of $1,700 is shown as a current liability.