Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
19 Cards in this Set
- Front
- Back
|
Carriage Outwards
|
- carriage paid on goods sold
- treated as an expense - goes to income statement |
|
|
Carriage Inwards
|
- carriage paid on goods paid
- goes into trading account |
|
|
Trade discount
|
Disount that once offered cannot be taken away and so just a lower amount charged and recorded
|
|
|
Cash discount
|
Discount if payment received promptly, removed if not received on time. At time of sale no account is made. Expense which goes into income statement
|
|
|
Explain input sales tax
|
Sales tax paid to suppliers on goods purchased. Is an asset.
|
|
|
Explain output sales tax
|
Sales tax received from customers on goods sold. This is a liability to the company
|
|
|
Entries for:
Purchased goods from Jim for £360 subject to 20% trade discount |
Debit purchases £288
Debit sale tax £50.40 Credit Jim £338.40 |
|
|
Entries for:
Sold goods to Stu for £80 |
Credit sales £80
Credit sales tax £14 Debit Stu £94 |
|
|
Treatment of sales tax:
Input sales tax |
Total invoice credited to payables
Sales tax debited to sales tax account Value of goods debited to relevant account |
|
|
Treatment of sales tax:
Output sales tax |
Total invoice debited to receivables account
Sales tax credited to sales tax account Value of goods sold credited to sales account |
|
|
Treatment of sale tax:
Sales tax on goods returned |
Returns inwards = Sales tax account debited
Returns outwards = Sales tax account credited |
|
|
Sales tax on passenger cars and entertainment expenses
|
Cannot be claimed and so is included with the cost in the accounts
|
|
|
Non-registered businesses (excempt)
|
Cannot claim input sales tax (are at a disadvantage when compared to standard and zero-rated businesses)
|
|
|
Zero-rated businesses
|
Add zero sales tax to their outputs, can still claim input sales tax
|
|
|
Ledger entries to record the following:
Gross pay: £1200 Employees SS tax: 9% gross Pension: 6% of gross Income tax: £185 Employers SS tax: 10% of gross Trade uniun subsc: £5 per week |
Debit wages expense 1200 (gross wages)
Debit wages expense 120 (employers ss) Credit income tax payable 108 (employees ss), 120 (employers ss), 185 (income tax) credit pensions payables: 72 Credit trade union payable: 5 Credit wages payable: 830 (net wages owing) Debit wages payable: 830 (net wages paid) credit bank: 830 |
|
|
Define Accrued Expenses
|
Expense brought into a period, eg electricity paid in arrears, is a liability
|
|
|
Define Prepayment
|
Opposite of accrual, and so is an asset
|
|
|
Define matching
|
Comparing the revenue earned during a period with the expenditure incurred in earning that revenue.
|
|
|
Estimate techniques for calculating allowance for receivables? (4)
|
1. experience & knowledge of customers & economic climate
2. Scrutinising each receivable individually 3. Calculate an overall % of the outstanding receivables balance 4. Schedule according to length of time of outstanding debt, and use diff % for diff times. Known as aged receivables schedule |
