Practice Questions
Practice Questions: The Ledger
This practice set tests the core skills of the Ledger chapter: classifying accounts, applying the Double-Entry System, balancing accounts and preparing Control Accounts. All businesses are fictional, for practice only.
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How to practise Ledger effectively
- Before recording, ask three questions: Which two accounts are involved? Which increases/decreases? Which side is debited and which credited? This is the basis of the Double-Entry System.
- Memorise normal balances: assets and expenses have DEBIT balances; liabilities, owner's equity and revenue have CREDIT balances. If your answer breaks this rule, re-check it.
- Practise classifying accounts: Real Accounts (assets) versus Nominal Accounts (revenue and expenses). Correct classification lets you know the normal balance quickly.
- For Control Accounts, remember the source is the Books of Prime Entry. Group items by effect: increases on one side, decreases on the opposite side, then balance off.
- For long, complete account statements, refer to the Worked-Example sets; here we focus on the logic and quick computation so you understand the reasoning instead of just copying.
Common mistakes to avoid
- Reversing debit and credit, e.g. crediting Cash when money is received. Remember: an increase in an asset is debited.
- Forgetting the second entry. Every transaction must have an equal debit and credit; otherwise the accounts will not balance.
- Placing Control Account items on the wrong side, e.g. putting discount allowed on the debit side. Ensure each item correctly increases or decreases the balance.
- Not labelling Balance b/d and Balance c/d. The Balance c/d closes the period and is brought down as the Balance b/d of the next period.
| Details (Dr) | RM | Details (Cr) | RM |
|---|---|---|---|
| Balance b/d | 500 | Purchases | 300 |
| Sales | 1,000 | Balance c/d | 1,200 |
| Total | 1,500 | Total | 1,500 |
The debit side shows increases in the cash asset; the credit side shows decreases. The Balance c/d of RM1,200 is brought down as the next period's Balance b/d.
Practice Questions
Question 1
Question 1 (Classification & normal balance). Seri Muda Sundry Shop has these accounts: Motor Vehicle, Inventory, Office Equipment, Sales, Rent Received, Commission Received, Salaries Expense and Insurance Expense. Classify each account as a Real Account or a Nominal Account, and state its normal balance (debit or credit).
Answer
Real Accounts (assets), normal balance DEBIT:
- Motor Vehicle
- Inventory
- Office Equipment
Nominal Accounts:
- Sales (revenue), CREDIT
- Rent Received (revenue), CREDIT
- Commission Received (revenue), CREDIT
- Salaries Expense (expense), DEBIT
- Insurance Expense (expense), DEBIT
Tip: assets and expenses have debit balances; revenue (and liabilities and equity) have credit balances.
Question 2
Question 2 (Identify accounts & double entry). Transactions of Auto Maju Enterprise in April 2025:
(a) Bought furniture for cash RM2,000.
(b) Sold goods on credit to Zaki RM1,500.
(c) Paid shop rent by cheque RM800.
(d) Owner took cash RM300 for personal use.
For each transaction, state the account debited and the account credited, with amounts.
Answer
(a) Debit: Furniture RM2,000; Credit: Cash RM2,000
(b) Debit: Zaki (Trade Receivable) RM1,500; Credit: Sales RM1,500
(c) Debit: Rent RM800; Credit: Bank RM800
(d) Debit: Drawings RM300; Credit: Cash RM300
Each entry has an equal debit and credit. This is the Double-Entry System.
Question 3
Question 3 (Balancing an account). The Bank account of Delima Enterprise for May 2025 has these items:
- Balance b/d (debit) RM3,000
- Received from debtors RM2,500
- Paid creditors RM1,800
- Paid salaries RM1,200
- Purchases by cheque RM900
Balance off the Bank account and state the balance brought down (b/d) on 1 June 2025.
Answer
Debit side: Balance b/d 3,000 + Received from debtors 2,500 = RM5,500
Credit side: Creditors 1,800 + Salaries 1,200 + Purchases 900 = RM3,900
Balance c/d = 5,500 − 3,900 = RM1,600
Total of both sides = RM5,500.
Balance b/d on 1 June 2025 = RM1,600 (a debit balance, normal for the Bank asset).
Question 4
Question 4 (Trade Receivables Control Account). Data of Sinar Kasih Enterprise for June 2025:
- Balance b/d (receivable) RM8,000
- Credit sales RM15,000
- Receipts from debtors RM12,000
- Discount allowed RM500
- Sales returns RM700
- Bad debts written off RM300
- Dishonoured cheque RM400
Calculate the closing balance c/d of the Trade Receivables Control Account.
Answer
Items that INCREASE receivables (debit side): Balance b/d 8,000 + Credit sales 15,000 + Dishonoured cheque 400 = RM23,400
Items that DECREASE (credit side): Receipts 12,000 + Discount allowed 500 + Sales returns 700 + Bad debts 300 = RM13,500
Balance c/d = 23,400 − 13,500 = RM9,900 (a debit balance).
Note: a dishonoured cheque restores the debtor's debt, so it goes on the debit side.
Question 5
Question 5 (Trade Payables Control Account). Data of Teguh Jaya Enterprise for July 2025:
- Balance b/d (payable) RM6,000
- Credit purchases RM10,000
- Payments to creditors RM8,500
- Discount received RM400
- Purchases returns RM600
- Contra entry (set off) RM500
Calculate the closing balance c/d of the Trade Payables Control Account.
Answer
Items that INCREASE payables (credit side): Balance b/d 6,000 + Credit purchases 10,000 = RM16,000
Items that DECREASE (debit side): Payments 8,500 + Discount received 400 + Purchases returns 600 + Contra 500 = RM10,000
Balance c/d = 16,000 − 10,000 = RM6,000 (a credit balance).
Question 6
Question 6 (Contra Entry). Mr Rahman is a debtor of Wira Enterprise (he owes the business RM1,200) and at the same time a creditor (the business owes him RM800). Explain what a contra entry means, show the double entry, and state Rahman's net balance after the contra.
Answer
A contra entry is the process of setting off the smaller amount when the same person is both a debtor AND a creditor, so that only the net balance remains.
Amount set off = RM800 (the smaller amount).
Double entry (in the control accounts):
- Debit: Trade Payables Control Account RM800
- Credit: Trade Receivables Control Account RM800
Rahman's net balance = 1,200 − 800 = RM400. Rahman still owes the business RM400 (a net debtor).
Question 7
Question 7 (Minority balance & implications). (a) Explain TWO reasons why a Trade Receivables Control Account may show a credit balance (a minority balance). (b) State TWO implications for a business if Control Accounts are not prepared.
Answer
(a) Reasons for a credit (minority) balance in the Trade Receivables Control Account include:
1. A debtor has overpaid the amount owed.
2. A debtor pays in advance before goods are delivered, or returns goods after paying in full.
(For the Trade Payables Control Account, a debit balance can arise from overpaying a creditor or returns after full payment.)
(b) Implications if Control Accounts are not prepared:
1. Errors in the subsidiary ledger are hard to detect quickly because there is no summary check.
2. Fraud is harder to detect, and financial statements are slower and less reliable because there is no control total to verify debtor/creditor balances.