Which of the following transactions should be recorded in the purchases journal?
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B. A credit purchase of office supplies. The purchases journal records credit purchases from suppliers, not cash transactions or returns.
Where should a cash discount received be recorded in the books of prime entry?
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C. Cash book. Cash discounts are recorded in the cash book as they affect the cash balance.
Which of the following is a benefit of keeping cash at the business property?
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B. Easy access to funds for small expenses. Keeping cash on hand allows for quick payments of small expenses, but it also increases the risk of theft and does not earn interest.
What is the purpose of the imprest system in petty cash management?
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B. To maintain a fixed amount of petty cash at all times. The imprest system involves replenishing the petty cash fund to a set amount whenever it falls below that level, ensuring accurate record-keeping.
Which of the following is a limitation of using manual methods for the original entry of business transactions?
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D. All of the above. Manual methods are more prone to errors, can be costly, and do not allow for easy remote access to records.
How should a payment made by debit card be recorded in the cash book?
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A. As a credit to the bank column. Payments made by debit card reduce the bank balance, so they are recorded as a credit in the bank column of the cash book.
What is the dual function of the cash book?
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B. To serve as a book of prime entry and a ledger account for bank and cash. The cash book records all cash and bank transactions and also acts as a ledger account for these items.
Which of the following is a benefit of using digital methods for the original entry of business transactions?
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B. Faster processing and easier access to records. Digital methods streamline the recording process, reduce errors, and allow for easy access and retrieval of records.
Where should a credit note received from a supplier be recorded in the books of prime entry?
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D. Purchases returns journal. A credit note received from a supplier indicates a return of goods purchased on credit, so it should be recorded in the purchases returns journal.
What is the purpose of the sales journal?
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B. To record all credit sales to customers. The sales journal is used to record credit sales, not cash receipts or purchases.
Which of the following is a limitation of keeping cash at the business property?
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B. Risk of theft and loss. Keeping cash on hand increases the risk of theft and loss, and it does not earn interest.
How should a trade discount be treated in the books of prime entry?
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B. Deducted from the invoice amount before recording the transaction. A trade discount is a reduction in the list price of goods and should be deducted from the invoice amount before recording the transaction.
Which of the following is a benefit of the imprest system of petty cash?
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B. Ensures accurate record-keeping and maintains a fixed amount of petty cash. The imprest system involves replenishing the petty cash fund to a set amount whenever it falls below that level, ensuring accurate record-keeping and maintaining a fixed amount of petty cash.
Which of the following is a limitation of using digital methods for the original entry of business transactions?
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B. Higher cost of implementation and maintenance. While digital methods offer many benefits, they can also be costly to implement and maintain, and there is always a risk of fraud and data breaches.