Balancing Accounts Activities 3.1 Query

DannyT90

In the Osborne books on page 49 for the balancing accounts chapter activity , task 3.1 it asks 'At 31 January 20-7 the balance of the account is' and the answer given is C) Debit £325. I am certain it should be A) Credit £325 as this is the carried down balance and the answer they give, debit £325 balance would be on the 1 February 20-7.

Has anyone got the book to hand to See the question and see what they think?

DannyT90

Bank Account.
Debits:
20-7. £.
1 Jan Capital 1,000.
19 Jan Sales. 650.

Credits:
20-7. £
9 Jan. Computer 500
12 Jan. Purchases. 400
27 Jan. Purchases. 350
29 Jan. Electricity. 75

At 31 January 20-7, the balance of the account is:
A) Credit £325
b) Debit £1,650
C) Debit £325
D) Credit £1,325

DannyT90

But the balance on the 31 Jan is carried down which is on the credit side?

DannyT90

So the carried and brought down balances are irrelevant?

DannyT90

It's very clear the overall balance is £325 debit, as you say by adding and subtracting but the end of the month is always the carried down balance and then the first of the month is the brought balance as you know. So the balance at the end of the month is the carried down balance which is on the credit side, so the account balances.

N4T

Hi @DannyT90,

I can see what is causing your confusion. There is a distinction between the "balancing figure" which is the carried down figure you refer to in a T account and the balance of the account at 31 Jan.

You asked whether the carried and brought down balances are irrelevant?

For the purpose of this question, it doesn't ask for the carried down figure. A T account is useful but not necessary to work out this question.

The balance of account at 31 Jan is £325 debit.

The c/d balance at 31 Jan is £325 credit (this is the balancing figure to make the credits and debits equal). This £325 credit balance is needed to close off the month end accounts as the DR and CR have to balance (double entry) and therefore it means the opposite of the balance on the bank account at that date.

I hope you can see why the answer is £325 dr.
You would have worked out some T accounts leading up to this question so it is easy to automatically assume the answer was the carried down balance. I would advise read the exam questions carefully.

Ask yourself what is the balance on your own bank account at 31 August 2017, you are not going to give a carried down balance.

AlisonSwanson

Something to watch out for though in AAT exams - sometimes the question asks specifically for the balance brought down OR the balance carried down.

At Level 2 they mostly ask for the balance carried down.

Also if you do have to balance off an account in an exam the AAT don't give room to post the balance carried down, and students post the carried down into the TB by mistake.

With AAT exams you need to learn the material, and then learn how to answer the exam questions!!

Draw up your T account in full as a working, read the question carefully, then answer the question from your working.

DannyT90

Thanks for all the feedback guys. Like I said it's very clear the bank account has a debit balance of £325, I think the question threw me off with asking for the balance at the 31st Jan.

So to be clear for future exams, unless the question is asking for the B/D or C/D balance, it will always be the total balance once everything is accounted for that is the answer?