bookkeeping Flashcards
purchase order
when a purchase is going to be made
purchase invoice
receipt for when a purchase has been made and payment is needed
sales invoice
when a sales order has happened
credit note
when a sales or purchase return has been madr
statement of account
contains details of all customer transactions
remittance advice
similar to a statement, sent by buyer to supplier when making payment
petty cash voucher
when a low value purchase has been made
sales day book
used for credit revenue and credit sales
purchase day book
used for credit purchases
sales return day book
used for sales returns from customers
purchase return day book
used for purchases returned to supplier
cash book
used for receipts and payments in cash
petty cash book
used for recording small items of expenditure
contra entry
when a transaction affects both receipt and payment side, it also affects cash and bank
dishonoured cheque
when an amount has not been received in bank account
non current asset
long term asset (>1 year)
building and machinery
current asset
short term asset (<1 year)
inventory and trade receivables
capital expenditure
when buying a new non-current asset
improving an existing non-current asset
revenue expenditure
day to day business operations
short term benefit to business
depreciation
used to calculate useful life and the cost over the full life of the asset
wear and tear
technological improvements
depletion of asset
straight line method
equally distributed over useful life of asset
value of asset will go to 0 by the end of useful life
cost-residual value/useful life
reducing balance method
high depreciation in initial years
depreciation reduces each year
value of asset will never reach 0
cost-total depreciation*depreciation%
trial balance advantages
shows a summary of the business
checks the numerical errors
helps prepare financial statements
debit
asset
expense
drawings (AED)
credit
liability
income
capital (LIC)
control account
helps detect any errors in double entry system
sales ledger control account
purchase ledger control account
bank reconciliation
balance in cash book = balance in bank statement
possible timing difference
errors in cash book/bank statement
transactions unrecorded in cash book
where are irrecoverable debts recorded
journal
where would a credit note sent by a trader be recorded
purchase returns day book
what would the source document be is u received a cheque from a credit customer
payslip/cheque
