Level 2 Certificate in Bookkeeping (QCF) (Accreditation number 500/9053/7) Sample Assessment Material KNOWLEDGE TESTS 1 VAT at the Standard Rate of 20% IAB Student Number: Student Name: Name of Centre: Unique Learner Number: Student signature (to confirm own work): FOR USE BY COLLEGE/CENTRE ASSESSOR ONLY: IAB Units I/D Professional Values and Basic Business Ethics F/600/8757 Principles of Recording and Processing Financial Transactions A/600/8756 Principles of VAT F/600/4952 Possible marks Actual marks Pass or Fail (70%) Assessor name: Assessor signature: Date: COLLEGE/ CENTRE INTERNAL VERIFICATION ONLY: Have the knowledge tests undertaken IV? If yes name of internal verifier Decision of internal verifier - agree or disagree Comments: Signature of IV: Date: IAB MODERATION OF KNOWLEDGE TESTS ONLY: Name of moderator Decision of moderator - agree or disagree: Comments Signature of moderator: Date: International Association of Book-keepers, Suite 30, 40 Churchill Square, Kings Hill, West Malling, Kent ME19 4YU Tel: 0844 330 3527 email: education@iab.org.uk website www.iab.org.uk
LEVEL 2 CERTIFICATE IN BOOKKEEPING (QCF) CENTRE BASED KNOWLEDGE TEST This paper consists of Forty short answer/multiple choice type questions. You must answer ALL questions. You should spend no more than 1 hour 30 minutes in completing this test. Professional Values and Basic Business Legislation (K) QU1 Bookkeepers are expected to demonstrate a range of qualities and values in carrying out their professional duties. These include: Demonstrating integrity Recognising a duty of care Demonstrating competence Recognising the need for confidentiality Recognising the importance of the security of information/data The following table provides a series of statements describing the qualities and values of a professional bookkeeper. Using the column headed quality/value match each of the statements with an item from the list above. The first statement has been matched for you by way of an example: Statement 1 Acting responsibly and showing a reasonable level of care and diligence when dealing with the business affairs of an employer or client is an example of a bookkeeper demonstrating Quality/Value A duty of care 2 Never discussing an employer s or clients business affairs outside the office or with third-parties without permission is an example of the bookkeeper observing the need for 3 Having the qualifications, training, ability and experience required to perform well in a specific job role or task is an example of 4 Introducing internal controls to ensure the safekeeping of information/data is an example of 5 Adhering to a code of values and principles based on honesty, trustworthiness and openness is an example of Principles of Recording, Processing Financial Transactions 2
QU2 Complete the following statement by inserting the missing words in the spaces provided: Professional bodies (including the IAB) have a set of standards, rules, guidelines and primary values that they insist their members adopt, this is known as their. QU3 The Data Protection Act controls how personal information is used by those who collect data. The Act contains eight rules known as the data protection principles. Identify any four of the principles and list them below: (iii) (iv) QU4 Within the definitions of the Data Protection Act what is meant by the following terms. Give a brief description on the lines provided: Data subject Data controller Data processor QU5 Employers have responsibilities for the health and safety of their employees. The Health and Safety at Work Act 1974 sets out the responsibilities of employers. (a) Identify on the line provided below the action an employer should carry out to spot possible health and safety hazards in the workplace: The employer should carry out a Principles of Recording, Processing Financial Transactions 3
(b) Identify and list below any three courses of action an employer should take to ensure that business premises provide their employees with a safe and healthy place in which to work: (iii) QU6 Employees also have a responsibility for their own health and safety at work. List below any three areas of responsibility relevant to employees at their place of work: (iii) QU7 On the lines provided below give a brief description of what you understand by the term money laundering : QU8 The current money laundering regulations came into force in 2007 and have an impact on a range of businesses. Indicate, using the lines below, any two types of business organisation to whom the money laundering regulations apply: Principles of Recording, Processing Financial Transactions 4
QU9 A business regulated by the Money Laundering Regulations has certain day-to-day responsibilities. Identify the two main areas of responsibility: QU10 Business organisations affected by the money laundering regulations are required to use a risk based approach to identify and prevent money laundering activities. Identify the five steps a business should take to ensure procedures are in place to identify and lessen the risk of money laundering: (iii) (iv) (v) Principles of Recording, Processing Financial Transactions 5
QU11 The money laundering regulations require businesses regulated by the regulations to appoint a nominated officer. Using the lines provided below briefly explain the role of the nominated officer and indicate who a nominated officer may be: QU12 The money laundering regulations require bookkeepers to keep a record of due diligence measures they carry out in dealing with clients. Identify below the types of record that should be kept, the format in which records can be kept and the minimum period for which records must be kept. Types of record to be kept: (iii) (iv) (v) Format of records kept: (iii) (iv) (v) Period for which records must be kept: Principles of Recording, Processing Financial Transactions 6
QU13 The money laundering regulations outline the requirements of reporting suspicious transactions or activities to the appropriate authorities: Give an example of a suspicious transaction or activity that you may encounter in your capacity as a bookkeeper: Indicate when and to whom, in the first instance, you would report your suspicions to: (iii) Which external authority should suspicions of money laundering be report to: (iv) In what form are suspicions disclosed by a business organisation to the external authority identified above: (v) How (in which form) can suspicious activity be reported Principles of Recording, Processing Financial Transactions 7
PRINCIPLES OF RECORDING AND PROCESSING FINANCIAL TRANSCTIONS (K) QU14 Several books of prime entry are normally used within a sub-divided double entry bookkeeping system. These include: Cash book Petty cash book Sales day book Sales returns day book Purchase day book Purchase returns day book You are provided below with a table giving a series of statements relating to business transactions. Using the column headed Book of Prime Entry indicate within the table the book of prime entry through which each transactions referred to in each of the statements would be processed: Statement 1 Sales invoice issued to a credit customer Book of Prime Entry 2 A payment of 5 in cash (notes and coins) for miscellaneous items of stationery 3 Credit note received from a supplier of goods on credit 4 A payment made by cheque to a supplier 5 Sales invoice received from a supplier of goods on credit 6 Credit note issued to a credit customer Principles of Recording, Processing Financial Transactions 8
QU15 A range of business documents pass between the buyer and seller when goods are bought and sold on credit, when such goods are returned and when payment for such goods is requested and made. These include: Invoice Delivery Note Remittance Advice Statement of Account Advice Note Complete the following sentences using the information relating to business documents provided above: A is forwarded to a buyer at the end of each month giving details of the amount outstanding A is normally forwarded with a cheque when payment is made to a supplier (iii) An gives the buyer details of goods supplied and the amount owed in respect of each order delivered (iv) An advises the buyer that the goods have been despatched and to expect their delivery soon. (v) A gives the buyer details of quantities and descriptions in respect of goods delivered. QU16 A petty cash voucher must be prepared in respect of each payment made from the petty cash box. Which two individuals would sign the petty cash voucher to confirm that the claim is authorised and valid and the amount spent has been reimbursed: Signature 1 Signature 2 QU17 In some bookkeeping systems accounts are given codes as well as account titles. Identify below two advantages resulting from giving accounts codes: Principles of Recording, Processing Financial Transactions 9
QU18 The following is an example of customer accounts coded by allocating a code in the form of letters and numbers to customer names in alphabetical order on a list. Identify the coding system being used in this instance: Code A0001 A0002 A0003 Account Name Abbey Ltd Acram and Co Ashley Fabrications The above is an example of coding QU19 Double entry bookkeeping is based on the assumption that what a business owns is equal to what it owes. Identify the accounting equation on which the above assumption is made: = + QU20 Identify from the list below the accounting concept which is said to be the basis of double entry bookkeeping. Give your answer by circling the letter which preceeds the concept given: (a) (b) (c) (d) Money measurement Historic cost Dual aspect Business entity QU21 A ledger account is traditionally shown as a T. Circle the letter preceeding the statements below indicating which two statements you consider give the correct description of the use of the two sides of a T account: (a) (b) (c) (d) The right hand side of the T account is the debit side. The left hand side of the T account is the debit side. The right hand side of the T account is the credit side. The right hand side of the T account is the debit side. QU22 Which of the following statements do you consider best describes the purpose of the books of prime entry. Indicate your choice by circling the letter which preceeds the statements: (a) (b) The books of prime entry are debited and credited as they are part of the double entry bookkeeping system. The books of prime entry support the double entry bookkeeping system. Information is transferred periodically from the books of prime entry into the double entry bookkeeping system. Principles of Recording, Processing Financial Transactions 10
QU23 The following totals are extracted from the Sales Day Book at 31 May 201Y: Total Invoices Goods Total VAT Total 115,776 96,480 19,296 Using the table below indicate how the above information would be posted to appropriate accounts in the General Ledger. Identify the accounts to be used, the amounts to be posted and whether the accounts used would be debited or credited. Account Name Amount Debit or Credit QU24 A credit note totalling 720 (inclusive of VAT of 120) was issued to Rogers & Co a credit customer in the month of May 201Y was listed in the Sales Returns Day Book along with other credit notes issued for goods returned that month. Indicate below how the credit note details would be posted into the Sales Ledger. Identify the account to be used, the amount to be posted and whether the account used would be debited or credited. Account Name Amount Debit or Credit QU25 The terms capital income, revenue income, capital expenditure and revenue expenditure are generally used to describe and categorise the income and expenditure of a business. Given below is a table containing four statements relating to income and expenditure. Using the column headed category of income or expenditure indicate whether the statement given is a definition of: Capital income Revenue income Capital expenditure Revenue expenditure Principles of Recording, Processing Financial Transactions 11
Statement 1 Expenditure which has a short-term affect on the profit making capacity of a business and relates to costs and expenses incurred in the day to day running of a business. Capital or Revenue Income or Expenditure 2 Income borrowed by the business for the purpose of financing the business. 3 Income earned the business from its trading and/or non trading activities. 4 Expenditure which has a long-term effect on the profit making capacity of a business and relates to the acquisition of fixed assets. QU26 The following transactions in the table below are examples of business transactions which took place during the month of May 201Y. Indicate in the column headed Capital or Revenue whether you consider the transaction represents capital expenditure or revenue expenditure: Transaction 1 Purchase of a company car for use by a sales representative of the business. Capital or Revenue 2 Payment in respect of road tax and insurance relating to the car above purchased for use by a sales representative. 3 Purchase of goods for resale to customers of the business. 4 Purchase of a personal computer for use in the sales office. Principles of Recording, Processing Financial Transactions 12
QU27 A supplier offers the following discount to its credit customers: Bulk discount Trade discount Settlement discount The statements given below describe the purpose of discounts offered to credit customers. Using the column in the table headed Type of Discount match the discounts referred to above against the description given: Description 1 The purpose of this discount is to encourage customers to pay promptly. Type of Discount 2 This discount is offered as a formality to all customers operating in the same trade sector as the supplier. It reduces the price of goods to all customers. 3 The purpose of this discount is to encourage customers to buy in large quantities. QU28 Consider the statements given below and circle the letter preceeding the statement that you consider best describes the Journal: (a) (b) (c) The Journal is list of sales invoices from which information is transferred into the main books of account. The Journal is a diary used in conjunction with all the main books of account. The Journal is a list of employees, their gross pay, deductions from pay and net pay. QU29 Give an example of two circumstances in which you would use the Journal: 1 2 Principles of Recording, Processing Financial Transactions 13
QU30 In preparing a Journal entry you would give the date the entry is being prepared, the title of the accounts to be debited and credited and the amounts to be posted. Identify below which other piece of information a Journal entry should contain: 1 QU31 Identify using the line below the ledger in which you would find the Sales Ledger Control Account: QU32 Using the lines below briefly explain the purpose of the Sales Ledger Control Account and the Purchase Ledger Control Account: QU33 Briefly describe the purpose of an aged debtor analysis: QU34 Indicate using the lines below four transactions you would expect to see posted to a Sales Ledger Control Account: 1 2 3 4 Principles of Recording, Processing Financial Transactions 14
QU35 The following are four transactions you would expect to see posted to a Purchase Ledger Control Account. Identify the source of each of the items of information. The first item has been completed for you by way of an example: Item Total of Purchase on credit in month Total of purchase returns in month Total of cheques paid to creditors in month Total of discounts received in month Source of Posting Purchase Day Book QU36 Which of the following errors would cause: A discrepancy between the balance on the Sales Ledger Control Account and the total of balances on the personal accounts of trade debtors in the Sales Ledger. Circle the letter preceeding the item you consider would result in a discrepancy: (a) (b) (c) An invoice total of 2,350 was posted from the Sales Day Book to the wrong customer account. The invoice was debited to the account of Lister and Co instead of Lester and Sons. The Sales Day Book total of 16,250 was posted to the Sales Ledger Control Account as 16,520. The book-keeper had been advised by credit controller to write off the balance on a debtor control account as a bad debt but had failed to prepare the Journal entry in respect of the bad debt write off. PRINCIPLES OF VAT (V) QU37 Identify below the government agency responsible for the administration of the VAT scheme: QU38 Identify below the two main factors that determine whether or not a business must register for VAT: 1 2 Principles of Recording, Processing Financial Transactions 15
QU39 Complete the following sentences by adding the missing words: (iii) (iv) (v) VAT collected by a business on its taxable supplies is known as its tax. VAT reclaimed by a business on its purchases etc is known as its tax. If a trader uses the VAT scheme based on a system known as the accruals system then VAT would be paid or reclaimed on a basis. The VAT scheme that requires VAT to be accounted for on the basis that a business only pays over the VAT it has actually collected in the VAT period and only reclaims the VAT it has actually paid in the period is known as the accounting scheme. The VAT scheme that requires the business to submit only one VAT return at the year end is known as the accounting scheme. QU40 Identify the rates of VAT that will apply to the following goods or services: Item domestic fuel and power childrens clothing and shoes a lap top computer Rate of VAT Principles of Recording, Processing Financial Transactions 16