Cambridge International AS and A Level Accounting

Raza account
$ $
April 10 Sales 880 April 30 Bank (2160 × 95%) 2 052
April 17 Sales 1 280 Discount allowed 108
2 160 2 160

Amna account
$ $
April 16 Sales 1 200 April 24 Sales returns 300
April 30 Bank (1200 - 300 × 95%) 855
Discount allowed 45
1 200 1 200

Sales account
$ $
April 30 Sales journal total 4 080

Sales returns account

$ $
April 30 Sales returns journal total 360

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Discount allowed account
$ $
April 30 Bank 176

Discount received account

$ $
April 30 Bank 447

Syed account
$ $
April 30 Bank 6 000 April 5 Del. Van (Inv 324) 6 000

Delivery van account

$ $
April 5 Syed 6 000
 Answers to activities, practice exercises and exam practice questions: Chapter 3

2 Date Accounts Dr Cr
$ $
a March 3 Machinery 10 000
Mumtaz 10 000
Purchase of machinery on credit on invoice 506.
b March 6 Sales 675
Wayne 675
Correction of invoice 495 entered twice in error.
c March 7 Delivery van 4 250
Younas 4 250
Purchase of new delivery van from Younas on invoice 998.
d March 10 Sales returns 190
Browne 190
Credit note 103 omitted from sales returns journal.
e March 15 Geeta 1 300
Sandra 1 300
Transfer of invoice no. 854 from Sandra posted to Geeta’s account in error.

Exam practice questions

Multiple-choice questions
1 C
2 B 17
3 B
4 C
 Cambridge International AS and A Level Accounting

4 Balancing accounts
Practice exercise
1 Three-column cash book
Discounts Cash Bank Discounts Cash Bank
allowed received
$ $ $ $ $ $
March 1 Capital 10 000 March 2 Rent 1 000
March 3 Sales 550 March 7 Joe 190 3 610
March 7 Postages 20
March 7 Balance c/d 530 5 390
550 10 000 190 550 10 000
March 8 Balance b/d 530 5 390

Capital account
$ $
March 7 Balance c/d 10 000 March 1 Bank 10 000
360 March 8 Balance b/d 10 000

Purchases account
$ $
March 2 Joe 4 000 March 7 Balance c/d 4 000
18 March 8 Balance b/d 4 000
  

Joe account
$ $
March 5 Purchases returns 200 March 2 Purchases 4 000
March 7 Bank ($4000 − $200 × 95%) 3 610
March 7 Discount received 190
4 000 4 000

Purchases returns account

$ $
March 7 Balance c/d 200 March 5 Joe 200
March 8 Balance b/d    200

Barney account
$ $
March 3 Sales 2 000 March 7 Balance c/d 2 000
March 8 Balances b/d 2 000
 Answers to activities, practice exercises and exam practice questions: Chapter 4

Sales account
$ $
March 7 Balance c/d 2 550 March 3 Barney 2 000
March 3 Cash 550
2 550 2 550
March 8 Balance b/d 2 550

Rent account
$ $
March 2 Bank 1 000 March 7 Balance c/d 1 000
March 8 Balance b/d 1 000

Postages account
$ $
March 7 Cash 20 March 7 Balance c/d 20
March 8 Balance b/d 20

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 Cambridge International AS and A Level Accounting

5 The classification of accounts and division of the ledger

Activities
Activity 1

Account Personal Non-current Current asset Revenue or Expense

asset other income
Capital ✓
Sales returns ✓
Delivery vans ✓
Purchases ✓
Rent payable ✓
Trade receivables2 ✓ ✓
Inventory ✓
Discount allowed ✓
Drawings ✓
Bank1 ✓
Rent receivable ✓
Trade payables3 ✓
Computer ✓
Wages ✓
20 Discount received ✓

Notes:
1 The bank account would be a ‘current liability’ if it was overdrawn.
2 Trade payables is the International Accounting Standards terminology for the aggregate
amount owing to suppliers. It is not literally a personal account but is a description given
to the total of the credit balances on the supplier personal accounts. Trade payables are
presented as a ‘current liability’ in the statement of financial position (see later chapters)
at the end of an accounting period.
3 Trade receivables is the International Accounting Standards terminology for the aggregate
amount receivable from customers. It is not literally a personal account but is a description
given to the total of the debit balances on the customer personal accounts. Trade receivables
are presented as a ‘current asset’ in the statement of financial position (see later chapters) at
the end of an accounting period.
 Answers to activities, practice exercises and exam practice questions: Chapter 5

Practice exercises
1 Statement True or false
The purchase of a motor car is revenue expenditure False
The payment of wages to employees is revenue expenditure True
The accounts for customers are kept in the sales ledger True
Repairs to the office windows is an example of capital expenditure False
The purchase of office stationery is revenue expenditure True
The sales account is a nominal account True
The fixtures and fittings account is a real account True
Suppliers’ accounts are kept in the nominal ledger False
The day-to-day costs of running the business is an example True
of revenue expenditure

2 a The sales account records the revenue of the business and is an example of a
nominal account.
b The purchase of a new machine is an example of capital expenditure and the
account is an example of a real account
c Small items of expenditure are recorded in the petty cash book.
d A non- current asset is bought to keep in the business for a long period of time.

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