If £2000 is placed into a bank account that pays 3% compound interest per year, how much will be in the account after 2 years?

For compound interest, you need to add 3% interest onto the interest already put into the account- In this case, £2000. 
So, you find what £2000 + 3% interest is equalling £2060 (£60 interest per year) 
Now that you've found the £60 interest, you add 3% onto that, too. Equalling £61.8 (£1.80 interest per year) 
So, add the £120 for the two years normal interest to the initial amount - Equalling £2120. 
Add the two years interest on the interest (£1.80 x 2 = £3.60)

The final amount = £2123.60