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9 Accounts and fi nancial services Answers to Test yourself questions

9.1, page 137

Q1a Credit control means monitoring the amount of money outstanding to the organisation on accounts and taking action to make sure these are paid.

b It is important because businesses need money from their sales to make a profi t. Also, they need to receive payments promptly so that they can pay their own bills and staff salaries.

9.2, page 139

Q1 A statement of account is sent to a customer to summarise all of the transactions that have taken place that month, for example, invoices sent and payments received, and to inform the customer of the sum of money now due.

9.3, page 143

Q1 STATEMENT OF ACCOUNTNovelty Sales Company

16 Town StreetPort of Spain

TRINIDAD

Tel: 932 8541Fax: 932 5814

To: Bits and Pieces20 Country RoadPort of SpainTRINIDAD

Email: accounts@novelties.com.ttWebsite: www.novelties.com.tt

Date: 30 April 2012

Balance ($)Credit ($)Debit ($)DetailsDate

1 April

6 April

16 April

17 April

25 April

Balance owing

Invoice 10032

Cheque

Invoice 10045

Credit note 172

350.50

280.25

2000.00

70.00

2825.52

3176.02

1176.02

1456.27

1386.27

AMOUNT DUE 1386.27

9.4, page 145

Q1 Any 3 of: Calculators – used to do business calculations quickly and easily, many have a print-out facility, which is ideal as calculations can be checked more easily; adding machines – similar to a calculator but less commonly used as

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they do not have the sophisticated calculation abilities that calculators do; computers – used to record and store accounts information using an accounting package and/or to carry out calculations using a spreadsheet package; printers – used to print out accounts information and worksheets created on computer; scanners – used to capture a digital image of a printed document, such as a statement of account, that can be saved as a computer fi le and/or sent electronically to someone else; copiers – used to produce multiple copies of a fi nancial document.

9.5, page 147

Q1 Advantages: It is a quick way of settling a debt; the recipient knows that payment has defi nitely been made. Disadvantages, any 2 of: Without a receipt, payment would be diffi cult to prove; cash needs to be stored and transported securely, especially if it is a large amount; there may be money laundering restrictions to prevent the acceptance of large cash amounts if the payment is being made by an unknown person.

9.6, page 149

Q1 Direct debit is an electronic transfer system whereby a bank account holder agrees that an organisation can withdraw regular amounts from their account. The organisation must notify the holder if the amounts change. Standing order also means that a regular payment is automatically made to an organisation, but this time it has been set up by the account holder with their bank and can only be changed or stopped by the account holder. The payee is the person receiving a cheque and, therefore, receiving payments. The drawer is the person making out the cheque and, therefore, ‘drawing’ money out of their account. Deposits are monies paid into a bank account, including cash and cheques.

9.7, page 151

Q1 Any 4 of: Issue vouchers; check that vouchers and receipts match each other; check that vouchers for multiple amounts are added up correctly; check that vouchers have been authorised; complete the cash disbursement sheet; calculate the amount required to restore the imprest. Security is important because cash can easily be stolen. The tin must be lockable and must be locked away securely when not in use.

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Practice exam questions

SECTION 1: Multiple-choice questions

1 d; 2 a; 3 c; 4 d; 5 b; 6 b; 7 d; 8 b; 9 a; 10 c.

SECTION 2: Short answer questions

1 Any 3 of: Name; works number; period; tax code; NI number; basic pay; overtime; gross pay; deductions (including different types); net pay.

2 Any 2 of: Refuse to supply further goods; insist on immediate payment; eventually take legal action.

3 Any 2 of: Check that all fi nancial documents are fi led and easily accessible; check that all fi nancial records are up to date; check that all documents have been completed correctly.

4 A bank statement is received from the bank whereas a statement of account is received from a supplier. A bank statement itemises all deposits into the account and all expenditure from the account whereas a statement of account itemises all invoices sent and payments received within the month.

5 Any 3 of: Preparing the payroll; credit control; collection of accounts; dealing with debit and credit notes; preparing for audit; knowing different types of bank accounts.

6 Any 2 of: It is lost in the post; it is delayed in the post; the customer is away when it is delivered; the customer has not yet banked it; the bank has not yet processed it.

7 A credit card enables the holder to buy something and pay for it at a later date. This is interest free if paid by the date stated on the next statement, otherwise interest is charged. A debit card enables the holder to make a purchase but the money is taken from their bank account immediately.

8 The accounts offi ce will issue a credit note for the value of the damaged goods. This will be listed on the statement of account so the customer will not be expected to pay for the items.

9 Any 3 of: Current accounts; loans; insurance; electronic banking; investments; credit cards. This answer is not defi nitive and other appropriate suggestions may be acceptable.

10 $103.50.

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Case study

1 Any 2 of: Staff can record accounts information quickly and easily; information can be entered on sales and purchases; month-end reports can be produced at a key stroke.

2 Francelle will produce the payroll and individual payslips. The payroll provides a list of all employees with each person’s gross pay, all deductions and their net pay. This is the organisation’s record of pay for that period. Individual payslips are the employee’s record of what they earned in gross pay, what was deducted and the amount of their take-home pay.

3 Any 2 of: Jordan monitors when payment is due. He contacts customers to remind them of overdue payments. He contacts them again if no payment is received. Eventually he may start legal action to recover the money due.

4 Amount spent was: $148.85. This is the amount required to restore the imprest. Note: the disbursement sheet should also be drawn up accurately and all information entered in the correct columns as shown below.

Received$

Date DetailsVoucher

no.Total

payment $Travel

Postage andstationery

Officesundries

200.00 (today)

(today)

(today)

(today)

(today)

(today)

(today)

(today)

(today)

Cash received

Taxi fare

Milk and sugar

Registered letter fee

Display card andmarker pen

Parcel postage

Taxi fare

Display folders

Magazines forreception

TOTAL

148.85

51.15

-51.15(today)

(today)

Balance c/f

Balance b/f

(today) Cash received

252

251

253

254

255

256

257

258

6.50 6.50

20.00 20.00

15.00

19.35

18.60 18.60

32.00

22.40

15.00

19.35

22.40

15.00 15.00

148.85

32.00

52.00 75.35 21.50

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5 The corrected cash book balance is $1200.50. The reconciliation statement should be drawn up and completed accurately as shown below.

Bank Reconciliation StatementSUNSHINE TOURS LTD

Date: (today) Closing balance – Bank Statement $1035.00Add item(s) not credited: Cheque from Island Retail +$600.00 Electronic transfer from Caribbean Trading +$200.00 Bank interest $15.00

Subtotal $1850.50

Less Cheque not presented: Cheque for Brockley Fabrics −$250.00 Cheque for Palm Accessories –$400.00

Corrected cash book balance $1200.50

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