4) Nominal/ General Ledger Flashcards
Control accounts
Control accounts
.A control account is a general ledger account that only contains the balance of the associated subsidiary ledger accounts. The details of a company’s transactions are recorded in various subsidiary ledgers and then balanced and summarized into the corresponding control account.
.The next step after BPE then it gets transferred to the
general ledger (control accounts).
.Contains a separate record of each type of transaction that the organisation has undertaken. It has a record for sales, salary costs, rent, amounts owed to the bank, vehicles owned, purchases ect.
.Each of the records is known as a ledger (T) account. The
details column will give the name of the other account
that the transaction relates to e.g. BANK T ACCOUNT =
DEBIT LOAN and LOAN T ACCOUNT = CREDIT BANK.
Receivables ledger control account (RLCA), Sales ledger control account (SLCA), trade receivables/ trade debtors
Receivables ledger control account (RLCA), Sales ledger control account (SLCA), trade receivables/ trade debtors
.All four refer to the same ledger account which contains the amount due from customers.
.Shows sale invoices, payments of sales, or credit notes.
. DISCOUNTS ALLOWED are posted to the CREDIT SIDE OF THE RLCA. (reduce in asset)
Receivables ledger control account (SLCA)/ RLCA) DOUBLE ENTRY
Receivables ledger control account (SLCA)/ RLCA) DOUBLE ENTRY
.SLCA will only show the net values and the VAT is always credited to the VAT output account.
.SALES INVOICE TOTAL = reflects the amount the customer owes; this is an asset to the organisation increasing = DEBIT SLCA.
.SALES VAT AMOUNT = that will be collected from the customers is due to HMRC and represents a liability = CREDIT VAT CONTROL ACCOUNT
.SALES NET AMOUNT = the value of the goods or services sold. Income = CREDIT SLCA (stock coming out of the business)
.Balancing SLCA - b/d for the next month will be on the credit side of the next month’s ledger account if higher than the debit on the previous month.
Sale returns control account
Sale returns control account
.Debit entry (stock returning to business)
Purchases ledger control account
Purchases ledger control account
.ONLY used for items that are bought to be re-sold
(trading).
.Shows the amount owing to all a business’s credit
suppliers as one total. It should be reconciled with the
total of all the individual supplier accounts held in the
subsidiary purchases ledger to check the accuracy of the
transactions posted.
.DISCOUNTS RECEIVED are posted to the DEBIT SIDE of the PLCA (reduce in liability).
.In the discounts received day book it would be a credit entry (opposite to purchase entries).
.Utilities, rent ect have their own account as not reselling
expenses.
What is a general ledger (Nominal ledger)
What is a general ledger (Nominal ledger)
.A system used to record all of the financial data using debit and credit accounts.
.Provides a record of each financial transaction that takes place during the life of an operating business.
.Holds account information that is needed to prepare the
business’s financial statements. Transaction data is
separated by ‘type’ into different accounts for ASSETS,
LIABILITIES, OWNERS’ EQUITY (CAPITAL), INCOME AND
EXPENSES.
Balancing accounts
Balancing accounts
.When balancing - DON’T balance into new financial year.
GENERAL LEDGER CODE
GENERAL LEDGER CODE
.Identifies the account to which the entry is made in the
general ledger. usually, this is a NUMERICAL CODE e.g. T-
Shirts 4001.
SALES IMMEDIATE PAYMENT IN RECEIVABLES LEDGER CONTROL ACCOUNT
SALES IMMEDIATE PAYMENT IN RECEIVABLES LEDGER CONTROL ACCOUNT
SALES IMMEDIATE PAYMENT
.Sales control account = NET AMOUNT - CREDIT ENTRY
(GOODS GOING OUT OF THE BUSINESS).
.VAT control account = VAT VALUE - CREDIT ENTRY (VAT
VALUE OWED OUT TO HMRC.
.Bank/ Cash control account = GROSS AMOUNT- DEBIT
ENTRY (MONEY COMING INTO THE BUSINESS).
Double entry PURCHASES LEDGER CONTROL ACCOUNT
Double entry PURCHASES LEDGER CONTROL ACCOUNT
PURCHASES FOR RESALE IMMEDIATE PAYMENT
.Purchase account = NET AMOUNT - DEBIT ENTRY
(GOODS COMING INTO THE BUSINESS.
.VAT account = VAT VALUE - DEBIT ENTRY (VAT VALUE
OWED IN FROM HMRC).
.Bank/Cash account = GROSS AMOUNT - CREDIT ENTRY
(MONEY GOING OUT OF THE BUSINESS).
Double entry ASSET PURCHASES LEDGER CONTROL ACCOUNT
Double entry ASSET PURCHASES LEDGER CONTROL ACCOUNT
PURCHASE OF ASSETS IMMEDIATE PAYMENT
.Asset account = NET AMOUNT - DEBIT ENTRY (ASSET
COMING INTO THE BUSINESS).
.VAT account = VAT VAULE = DEBIT EBTRY (VAT VALUE
OWED IN FROM HMRC).
.Bank/ Cash = GROSS AMOUNT - CREDIT ENTRY (MONEY
GOING OUT OF THE BUSINESS).
Double entry EXPENSE LEDGER CONTROL ACCOUNT
Double entry EXPENSE LEDGER CONTROL ACCOUNT
PAYMENT OF EXPENSES
.Expense account = NET AMOUNT - DEBIT ENTRY
(EXPENSE COMING INTO THE BUSINESS).
.VAT account = VAT VALUE - DEBIT ENTRY (VAT VALUE
OWED IN FROM HMRC).
.Bank/ Cash = GROSS AMOUNT - CREDIT ENTRY (MONEY
GOING OUT OF THE BUSINESS).
VAT ledger control account
VAT ledger control account
Input VAT (coming in) = DEBIT ENTRY
.Purchases of goods on credit or by cash
.Purchase of non-current assets
.Expenses from cashbook and petty cash book
.Sales returns
.Irrecoverable debts - over 6 months old
Output VAT (coming out) = CREDIT ENTRY
.Sales
.Purchase returns
Cash book
Cash book general ledger
.There may be a post a receipt/ payment button where
we enter all the details and the system posts it to the
right accounts. Can also import from the online banking
records.
Wages control account
Wages control account
.Account used by payroll departments when they are producing the payroll for a period in time. It is a TEMPORARY ACCOUNT that allows the organisation to accurately record all of the different elements of the payroll.
