Accounting Online Program Certification Practice Test

At the end of December, what was Violet's trade payables account balance after various transactions throughout the month?

1. £4,350

2. £2,450

3. £6,000

4. £3,000

The correct answer is: £4,350

To determine the accuracy of the trade payables account balance, it is essential to understand how trade payables function within the context of accounts payable. Trade payables represent the amounts a company owes to its suppliers for goods and services purchased on credit. If the transactions throughout December included purchases and payments affecting this account, the final balance of £4,350 suggests that the net effect of these transactions resulted in this figure. This balance indicates how much Violet still owes her suppliers after considering all incoming and outgoing payments. A balance of £4,350 could imply that if there were purchases made on credit during the month, they would have increased trade payables, while any cash payments made to suppliers would reduce the overall balance. The correct balance reflects a proper understanding of these transactions and ensures that the company's financial statements accurately depict its current liabilities. In this context, a balance of £4,350 could also be corroborated by reviewing transaction logs or ledgers that show increases (purchases) and decreases (payments) within the month. The other figures provided as options indicate alternative balances that may not accurately represent the net effect of the month's transactions, leading to a misunderstanding of Violet's actual financial obligations at the end of December. Overall, maintaining proper records is