Spot the mistake

A table, a list or a day book with one wrong line. Find it, and put steps in order.

6 questions40 bonus marks, once a week

Question 1 of 60 of 6 correct

1The trainee wrote the three accruals as a journal. One line is on the wrong side. Tap it.

Notes for this questionfrom How to record an accrued expense

The adjustment adds the cost to the expense account and records what is owed.

Debit the expense account: the cost for the year goes up
Credit Accrued expenses: a liability, because the business owes this money

Accrued expenses is shown under current liabilities in the statement of financial position.

Tap the line that is wrong.

Beckside Joinery, accruals journal at 31 December
Account	Debit	Credit
Electricity	640.00
Wages		850.00
Telephone	120.00
Accrued expenses		1,610.00

2Dan worked out each department's share of last week's takings. One share is wrong. Tap it.

Notes for this questionfrom How to work out a percentage of an amount

Sometimes you have two amounts and want the percentage. The part is the smaller amount. The whole is the amount it is part of.

Step 1: divide the part by the whole
Step 2: multiply by 100

Worked example: £45 out of £180. 45 ÷ 180 = 0.25. Then 0.25 × 100 = 25%.

Tap the line that is wrong.

Marsh Lane Hardware, takings of £3,200
Department	Takings	Share of takings
Paint	800.00	25%
Tools	1,200.00	37.5%
Garden	640.00	80%
Fixings	560.00	17.5%

3Tasha drafted the Pedal Couriers write-off, with the VAT claimed back. One figure is wrong. Tap its line.

Notes for this questionfrom How to write off a debt that will not be paid

When the invoice had VAT on it, the business owes that VAT to HMRC even though the customer never paid. If the business can claim the VAT back, the VAT account is debited. A question will always say when it can.

Pedal Couriers owes £720, which includes VAT at 20%. Marlow Cycles can claim the VAT back. VAT at 20% is one sixth of the gross amount.

Debit Irrecoverable debts with the net amount
Debit VAT with the VAT
Credit Trade receivables with the gross amount

Tap the line that is wrong.

Marlow Cycles, draft write-off journal
Account	Debit	Credit
Irrecoverable debts	720.00
VAT	120.00
Trade receivables		720.00

4A trainee posted the accrued income and the deferred income at 31 December. One line is on the wrong side. Tap it.

Notes for this questionfrom Accrued and deferred income

Deferred income is money received this year for work that will be done next year. Until the work is done, the business owes it.

On 1 December, Fellgate Hotel pays the joinery £1,800 for a furniture care contract. It covers the 6 months from 1 December to 31 May. The whole receipt was credited to Contract income.

Only December has been earned by the year end. The other five months are deferred income, shown under current liabilities.

Debit the income account: the income for the year goes down
Credit Deferred income: a liability, because the joinery still owes the work

Tap the line that is wrong.

Beckside Joinery, the two income journals as posted
Account	Debit	Credit
Accrued income	500.00
Rental income		500.00
Contract income		1,500.00
Deferred income		1,500.00

5Tom's payslip is put right below. National Insurance is 10% of pay above £1,100 a month. One line is wrong. Tap it.

Notes for this questionfrom How to check your payslip is right

Next, check each deduction against the gross pay on the payslip.

Tom's tax code is 1200L. In this room that makes £1,000 of his month's pay tax-free, and income tax is 20% of the rest.

National Insurance here is 10% of pay above £1,100 a month.

Tap the line that is wrong.

Tom's corrected payslip for May
Item	Working	Amount
Gross pay	160 hours at 14.00	2,240.00
Income tax	20% of 1,240.00	248.00
National Insurance	10% of 2,240.00	224.00
Net pay	Gross pay less both deductions	1,878.00