ICAEW AF · Chapter 6
Control accounts MCQs with Answers
9 multiple-choice questions on Control accounts for ICAEW AF Accounting Fundamentals. Try each one before revealing the answer and explanation.
Practise this chapter interactivelyQuestion 1
The following information relates to a business's receivables for the year: Opening balance £28,400 Credit sales £196,500 Cash sales £12,000 Cash received from credit customers £182,300 Irrecoverable debts written off £2,100 Contra with payables ledger £1,600 Sales returns £3,750 What is the closing balance on the receivables control account?
- A) £47,150
- B) £38,350
- C) £42,650
- D) £35,150
Show answer & explanation
Answer: D) £35,150
Closing balance = £28,400 + £196,500 - £182,300 - £2,100 - £1,600 - £3,750 = £35,150. Cash sales never create a receivable, so they do not appear in the control account. The contra and sales returns both reduce the amount owed by customers and are credits in the account.
Question 2
Which of the following would be recorded in the receivables control account?
- A) Discounts received from suppliers
- B) Cash sales banked during the month
- C) A cheque received from a credit customer that has been dishonoured
- D) An increase in the allowance for receivables
Show answer & explanation
Answer: C) A cheque received from a credit customer that has been dishonoured
A dishonoured cheque reinstates the customer's debt, so it is debited to the receivables control account. The allowance for receivables is kept in a separate account and deducted from receivables only on the statement of financial position. Cash sales never pass through receivables, and discounts received relate to payables.
Question 3
Information about a business's trade payables for the year: opening balance £19,250; credit purchases £143,800; payments to suppliers £137,600; purchase returns £2,900; contra with the receivables ledger £1,600. What is the closing balance on the payables control account?
- A) £20,950 credit
- B) £20,950 debit
- C) £24,150 credit
- D) £26,750 credit
Show answer & explanation
Answer: A) £20,950 credit
The payables control account normally has a credit balance. Closing balance = £19,250 + £143,800 - £137,600 - £2,900 - £1,600 = £20,950 credit. Purchase returns and contras both reduce the amount owed to suppliers and are debited to the account.
Question 4
The total of the list of balances in a business's payables ledger is £18,640, which does not agree with the payables control account. The following errors are found: 1. A supplier's credit balance of £420 was omitted from the list. 2. An invoice for £1,150 was correctly entered in the purchases day book but posted to the supplier's account as £1,510. 3. The purchases day book total was overcast by £900. What is the corrected total of the list of payables ledger balances?
- A) £18,700
- B) £17,860
- C) £17,800
- D) £19,420
Show answer & explanation
Answer: A) £18,700
Only errors affecting individual supplier accounts change the list. Add the omitted balance of £420. The invoice was posted £360 too high (£1,510 - £1,150), so deduct £360. Corrected list = £18,640 + £420 - £360 = £18,700. The day book overcast affects the control account only, not the individual accounts.
Question 5
A business both buys from and sells to Fenwick Ltd. It agrees to set off the £1,250 Fenwick owes it against the £3,400 it owes Fenwick. What double entry records the contra?
- A) Debit Cash £1,250, Credit Receivables control £1,250
- B) Debit Receivables control £1,250, Credit Payables control £1,250
- C) Debit Payables control £3,400, Credit Receivables control £3,400
- D) Debit Payables control £1,250, Credit Receivables control £1,250
Show answer & explanation
Answer: D) Debit Payables control £1,250, Credit Receivables control £1,250
A contra sets off the smaller balance against the larger one. The amount owed to the supplier falls by £1,250 (debit payables control) and the amount owed by Fenwick as a customer falls by £1,250 (credit receivables control). The business still owes Fenwick £3,400 - £1,250 = £2,150. No cash changes hands.
Question 6
Which of the following is a main purpose of maintaining a receivables control account?
- A) To record cash sales made to customers
- B) To calculate the allowance for receivables automatically
- C) To remove the need to keep individual customer accounts
- D) To provide a check on the arithmetical accuracy of the individual customer accounts in the receivables ledger
Show answer & explanation
Answer: D) To provide a check on the arithmetical accuracy of the individual customer accounts in the receivables ledger
The control account summarises in total the entries made in the individual customer accounts. Comparing its balance with the total of the list of individual balances helps to detect and locate errors, gives a quick total figure for receivables, and supports internal control by separating duties. Individual accounts are still needed to know what each customer owes.
Question 7
The sales day book for June was undercast by £500. The individual customer accounts were posted correctly. What correction is required?
- A) Debit Receivables control £500, Credit Revenue £500
- B) Debit Receivables control £500, Credit Suspense £500
- C) Debit Revenue £500, Credit Receivables control £500
- D) No correction is needed because the individual accounts are correct
Show answer & explanation
Answer: A) Debit Receivables control £500, Credit Revenue £500
An undercast day book total means that both the receivables control account and the revenue account were posted with a total £500 too low; the double entry still balanced. Both accounts must be increased: debit receivables control and credit revenue with £500. The individual customer accounts were posted from the individual invoices, so they are unaffected.
Question 8
A business's receivables control account shows a balance of £41,370, while the list of individual customer balances totals £40,170. Investigation reveals: 1. A credit note for £600 was recorded in the customer's individual account but was omitted from the sales returns day book. 2. An irrecoverable debt of £450 was written off in the control account but not in the customer's individual account. 3. A customer's debit balance of £1,050 was omitted from the list of balances. What is the agreed receivables balance after correcting these errors?
- A) £40,770
- B) £41,220
- C) £39,720
- D) £41,370
Show answer & explanation
Answer: A) £40,770
Control account: the credit note was missed from the day book, so the control account must be reduced: £41,370 - £600 = £40,770. List of balances: deduct the irrecoverable debt not yet written off in the individual account and add the omitted balance: £40,170 - £450 + £1,050 = £40,770. Both now agree at £40,770.
Question 9
A business keeps its individual customer accounts as memorandum records outside the double entry system. Where is the double entry for credit sales completed in the general ledger?
- A) By posting the sales day book total to the cash book
- B) By posting each invoice to the individual customer account only
- C) By posting the sales day book total to the journal
- D) By posting the sales day book totals to the receivables control account and the revenue account
Show answer & explanation
Answer: D) By posting the sales day book totals to the receivables control account and the revenue account
When the receivables ledger is a memorandum ledger, the receivables control account forms part of the double entry in the general ledger. The periodic totals from the sales day book are debited to receivables control and credited to revenue (and VAT). Individual invoices are posted to customer accounts purely for information and credit control.