Accounting for Sales and Sales Returns

Question 1

What is the purpose of the sales ledger?

Answer 1

The sales ledger is comprised of the subsidiary accounts of the trade receivables.

Question 2

What is the purpose of the general ledger in terms of the sales and sales returns process?

Answer 2

An individual sales accounts including the sales returns
A sales ledger control account
A VAT account

Question 3

How often is the sales day book totaled?

Answer 3

Daily, weekly or monthly

Question 4

How are entries in the sales day book made?

Answer 4

They are taken from the invoice after it has been checked and authorized.

Question 5

What is the accounting system for credit sales?

Answer 5

An invoice is issued to the customer
This is recorded in the book of prime entry- the sales day book.
These are then transferred to the double entry accounts in the general ledger (debit; sales ledger control account. credit; VAT account, and sales account)
The total is then split and debited between the relevant subsidiary accounts in the sales ledger.

Question 6

What is the accounting system for credit sales returns?

Answer 6

A credit note is issued to the customer
This is recorded in the sales returns day book
These are then transferred to the double entry accounts in the general ledger (debit; VAT and sales returns accounts credit; sales ledger control account)
The total is then split and credited between the relevant subsidiary accounts in the sales ledgers.

Question 7

How is coding used in the ledger accounts?

Answer 7

General ledger accounts are often numbered and arranged in a particular order.
0100-1399 Assets
2100-2399 Liabilities