6- Receipts & Payments

Question 1

Receivable statement

Answer 1

A statement that shows all the invoices & credit notes that have been issued to a particular credit customer for that month, together with any amounts outstanding from previous months. The statement also shows any payments received from the customer.

Question 2

Payable statement

Answer 2

A statement that shows all the invoices & credit notes that have been received from a particular credit supplier for that month, together with any amounts outstanding from previous months. The statement also details any payments sent to the credit supplier.

Question 3

What is the procedure for preparing a statement of account?

Answer 3

1. Find the customer’s account in the receivables ledger
2. Work through the account in date order listing each transaction
3. Calculate the running balance

Question 4

Bank statement

Answer 4

A document that is sent by the bank to the account holder, usually on a monthly basis, summarising the transactions on an account during the month.

Question 5

Bank reconciliation

Answer 5

A bank reconciliation is the process of matching the balances in a business’s accounting records to the corresponding information on a bank statement.

Question 6

Cheque

Answer 6

An order to a bank written on a specially printed form that States a sum to be paid from the drawer’s account.

Question 7

BACS

Answer 7

BACS (banker’s automated clearing services) is an electronic system to make payments directly from one bank account to another. They are mainly used for direct debits & direct credits. Transfers usually take 3 working days.

Question 8

Faster payment service

Answer 8

FPS is an electronic system which makes payments directly from one bank account to another. Transfers typically take a few seconds.

Question 9

Standing order

Answer 9

An instruction to a bank by an account holder to make regular fixed payments to a particular person or organisation.

Question 10

Direct debit

Answer 10

An instruction to a bank by an account holder, authorising the organisation the account holder wants to pay, to collect varying amounts from the account. The payee must give advanced notice of the amounts & dates of collection.

Question 11

Remittance advice

Answer 11

A blank document that the customer completes when making a payment to the supplier. It shows the total payment being made & which invoices the payment is paying off.

Question 12

How to check the validity of a cheque?

Answer 12

1. Date: they are only valid for 6 months from the date of issue
2. Payees name: should be the same as the one shown on the account the cheque is being paid into
3. Words & figures agree for the amount being paid
4. Cheque is signed