Share this content
0
785

I know the answer but I don't get why?

Expense account question

Didn't find your answer?

Search AccountingWEB

Financial transactions Question 16 : An expense account has the following transactions recorded in it: Opening debit balance of £100, Debit transaction of £500, Credit transaction of £150.

What is the closing balance?

Replies

Please login or register to join the discussion.

20th Jan 2019 23:25

James Wheatley wrote:

What is the closing balance?

The closing balance is the balance at the end of the period. It is transferred to the opening balance of the subsequent period.

Thanks (0)
avatar
21st Jan 2019 01:28

Do your own homework!

Thanks (0)
avatar
to Accountant A
21st Jan 2019 08:50

I always thought it was a sign of trying to do homework properly by not only getting the answer but understanding why. So what's the problem?

Thanks (0)
avatar
21st Jan 2019 07:09

First sentence: “I know the answer but I don't get why?”

Final sentence: “What is the closing balance?”

So do you or don’t you? It’s simple arithmetic. See comment by AA

Thanks (0)
21st Jan 2019 08:40

Think of it as though it were money you were claiming off your employer.

Suddenly it all seems clearer when it's money in your own pocket.

Thanks (0)
avatar
21st Jan 2019 08:49

Are you viewing the expense account as a cost account of the entity or as an employee's expense account? I would agree the entries are odd if it is the latter although it could be as a result of advances. The former is more straightforward.

Thanks (0)
avatar
21st Jan 2019 09:24

I thought it was debit balance of 450. And that it was a cost on the entity e.g. stationery. But the answer is 450 credit balance. It's from the AAT skills test.

Thanks (1)
to James909
21st Jan 2019 09:33

I agree with you.

Thanks (0)
to James909
21st Jan 2019 10:08

Either the answer is wrong, or you have misinterpreted something about the question and not recounted it properly in your post.

Add all the debits, subtract all the credits, if you have a positive it's debit, a negative is credit.

If the question were something like "what's the entry needed to zero the account", then the answer would be a credit of £450.

Thanks (0)
avatar
to James909
21st Jan 2019 10:28

James Wheatley wrote:

I thought it was debit balance of 450. And that it was a cost on the entity e.g. stationery. But the answer is 450 credit balance. It's from the AAT skills test.

Well I got that question "wrong" more than 3 years ago. Can't believe they haven't corrected it. Is the VAT discount question still wrong?

https://www.book-keepers.org.uk/t60846194/aat-skills-test/

Thanks (0)
avatar
21st Jan 2019 09:54

Poor editing/proof reading by the provider can seriously undermine your confidence as well as wasting your time.

Thanks (0)
Share this content