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;
20 Cards in this Set
- Front
- Back
|
Books of original entry |
Business Transactions are recorded on source documents. Documents which record the business transactions in the 'books of account' include: Sales order Purchase order Invoices Credit note Debit note Goods received notes |
|
|
What is a book of original entry? |
Books of original entry are books (or computer files) in which we first record transactions. The main ones are: Sales day book Purchases day book Sales returns (or returns inwards) day book Purchases returns (or returns outwards) day book Journal Cash book Petty Cash book |
|
|
Sales day book |
The book of original entry for credit sales. It is used to keep a list of all invoices sent out to customers each day. |
|
|
Purchases day book |
The book of original entry for credit purchases. It is used to keep a list of all invoices received from creditors each day. |
|
|
Sales returns day book |
When customers return goods for some reason, the returns are recorded here. |
|
|
Purchase returns day book |
Records goods which the business sends back to its suppliers |
|
|
Cash book |
This records all transactions (receipts and payments, transfers) that go through the bank account. |
|
|
Petty Cash book |
The cash float that is kept on premises to make occasional small payments in cash for things like staff refreshments, postage stamps e.t.c. |
|
|
Ledgers (books of T accounts) |
Accounts have two sides like the cash book. These accounts are kept in a book called a ledger. There are several types of ledgers, each intended for a different type of account. |
|
|
There will be accounts for: |
Non-Current Assets Land and buildings Plant and Machinery Motor Vehicles Office Equipment Current Assets Inventories Receivables Cash Liabilities and Capital Payables Loans Proprietor's capital Expenses Purhases Rent Salaries Income Sales |
|
|
Ledger accounts presentation |
|
|
|
(Usual effects)
Asset = Debit Capital = Credit Liability = Credit Revenue = Credit Expense = Debit |
Therefore... an increase in.... Assets = debit Capital = credit Revenue = credit Expense = debit and a decrease in... Assets = credit Capital = debit Revenue = debit Expense = credit |
|
|
PRACTICE... Sally brings in £1000 extra capital during year, what do we do?
1) dr capital £1000, cr cash £1000 or 2) cr capital £1000, dr cash £1000 |
Answer = 2 |
|
|
Paul buys £5000 worth of tables & chairs via bank transfer. What do we do? |
Answer = dr Furniture £5000, cr Bank £5000 |
|
|
Paul buys £5000 worth of tables & chairs on credit from A&A ltd. What do we do? |
Answer = dr Furniture £5000, cr A&A ltd (trade payables) £5000. |
|
|
The trial balance |
Is essentially a list of all the balances on each account at the end of a period.
If you have posted correctly the dr and cr side will always balance.
If they do not, try halving the figure it's out by, and finding a posting for that amount... |
|
|
Carriage expenses |
Carriage in = add on to purchases in cost of goods sold
Carriage out = classed as expenses in bottom of income statement |
|
|
Returns in and returns out |
Returns outwards = take total off of purchases During year: dr relevant suppler, cr returns outward Returns inwards = take total off of sales during year: dr returns inward, cr relevant customer acct
|
|
|
Drawings |
Cash Drawings = dr drawings, cr bank
Goods taken for personal use = dr drawings, cr purchases |
|
|
Discounts |
Discounts allowed = classed as expense in income statement during year: dr discounts allowed, cr relevant customer Discounts received = add on as other income under gross profit during year: dr relevant suppler (payables), cr discounts received |
