bookkeeping Flashcards
1
Q
a GRN IS
A
goods recived note
2
Q
sales day book records
A
credit sales
3
Q
a business must keep track of what transactions?
A
- Expenses and purchases
- Wages paid
- What each customer owes, and when the money is due
- Amounts owed to supplier, and when the payment is due
- Amounts paid into the bank and out of bank
4
Q
examples of a financial document are
A
a invoice or credit note, a cash book, petty cash book
5
Q
cash sales
A
involves money changing hands at the time of transaction
6
Q
credit sales happen when
A
when a customer does not pay for the goods or services until some time after they have been supplied
7
Q
vat is usualy
A
20%
8
Q
a trade discount is
A
is a discount to encourage new customers or customers in the same trade as the seller
9
Q
a bulk discount is
A
a percentage deduction from list price for large orders
10
Q
a prompt payment discount is
A
a discount of price is invoice is paid early
11
Q
u can check the accuracy of a invoice using what
A
- Price list
- Customer order
- Delivery note
- Discount policy
- Quotation
- Po (purchase order)
- Delivery note
- Goods received note
12
Q
common discrepencies in customer receipts are
A
- Underpayment/overpayment
- Deducting wrong prompt payment discount
- Customer taking prompt payment discount after deadline
13
Q
day books are for
A
*Credit sales and sales returns e.g. transactions with customers
*Credit purchases and purchase returns e.g. transactions with suppliers
14
Q
what do cash books record
A
all payments into and out of the bank accounts
15
Q
petty cash book record
A
all payments into and out of cash flow used for making small purchases and other small payments
16
Q
The ledger accounts are
A
are formal bookkeeping records of the business and kept either manually or by a digital bookkeeping system.
17
Q
A ledger is
A
traditionally larger book that each business transaction is entered into individual accounts.
18
Q
Receivable ledger (also know as sales sledger) contain
A
personal accounts for each customer which contains records of sales made on credit, any goods returned, and payments received
19
Q
Payable ledger (also known as purchase ledger) contains
A
a person account for each supplier which contains records of purchases made on credit, any returned goods and payments made to the supplier
20
Q
a general ledger contains
A
a collection of accounts which record all other transactions of a business
21
Q
what transactions are record in the general ledger
A
- Assets – these are items owned by the business
- Liabilities – items owed by a business.
- The owners capital (equity) – this includes the amount invested and profits made by the business
- Expense items – money going out
- Income items – money coming in
22
Q
The general ledger is sometimes also known as what
A
the ‘main ledger or ‘nominal’ ledger.
23
Q
control accounts are
A
totals’ accounts which summarise a number of other accounts. They are set out in the same way as all other ledger accounts
24
Q
examples of control accounts are
A
-Receivables ledger control account
-Payables ledger control account
25
Payables ledger control account contains
the totals of all the trade payable accounts in the payable ledger - this tells the business how much is owing to all its suppliers
26
-Receivables ledger control account contains
the total of all the trade receivables accounts in the receivable ledger- this tells the business how much is owing from all customers
27
where are the contol accounts contained
in the general ledger
28
profit =
income - expenses
29
capital =
assests - liabilities
30
a price quotation is somthing
which the seller may be asked to provide
31
a purchases order is
somthing the seller receives from the buyer
32
a delivery note goes with what
the goods from the seller to the buyer
33
a invoice
lists goods and tells the buyer what is owed
33
a return note
is sent with any goods that are being returned
34
credit notes
are sent to the buyer if any refund is due
35
a statement of account
sent by the seller to remind the buyer what is owed
36
a purchase order includes
- a reference number
- product code
- quantity of goods
- description of good
- signed ad dated by person in charge of purchasing
37
a delivery note is
a document dispatched with the goods when the order is ready
37
a delivery note includes
- has a numerical reference
- method of delivery is stated
-purchase order number
- quantity suplied
- product code
- description of goods
-signed by person who received the goods
37
a invoice is a
its a financial document sent by the seller to the buyer stating how much is owed by the buyer of goods or services
38
a invoice includes
- adresses
- date
- references
- ammount owed
39
goods total is
the amount due to the seller
40
Value added tax (vat) is
usually calculated at 20% of the goods total, VAT is added to produce the final invoice total
41
net monthly means
that full payment of the invoice should be made within a month of the invoice date
42
carriage paid means that
the price of the goods include delivery charges
43
E & OE Stands for
'error and omissions excepted’
44
a credit note is
a ‘refund’ document, it reduces the amount owed by the buyer. The credit note is prepared by the sellers and sent to the buyer
45
a credit note includes
-The invoice number of the original consignment is quoted
-The reason for the issue of the credit note is stated at the bottom of the credit note
-The details are otherwise the exactly the same as on the invoice
46
a statment of accounts contains
- balances at the beginning of the month
- any payments recived
- invoices issued
- refunds made
- running ballance
bank details
47
credit limtis is
The credit limits of a customer is the maximum amount that the seller will allow the customer to owe at any one time
48
what needs to be check on a invoice
- The purchasing order relating to the invoice
- The seller’s own record of any price quoted
- The sellers file record of the buyer which should give the credit limit and the discounted amount
49
books of prime entry record what
financial transactions and are prepared from business documents, which include invoices and bank payments
50
what do double entry accounts record
- what is owed on credit by individual customers as a result of sales
- what is owed on credit to individual suppliers as a result of purchases
- income items
- expense items
51
double entry accounts can be
- accounts for types of income (sales, rent received) or expenses (purchases, insurance, wages)
- accounts for assets (items owned)
- accounts for liabilities (items owed)
52
recievables ledger contains
accounts for customers
- who buy from the business
- who owe money to the business
53
payable ledger contains
accounts for suppliers
- who supply on credit to the business
- to whom the bussiness owes money
54
general ledger contains
- assets (items owned)
- liabilities (items owed)
- owner's capital
- expenses
- income
55
double entry T accounts have two sides they are
- a debit side (often written as 'dr') on the left
- a credit side (often written as 'cr') on the right
56
bank accounts show
transactions passing through the account held at the bank. they will need recording in the accounts of the business
57
a bank see a debit as?
as a payment out of a customer's account
58
a bank sees a credit as?
as a payment into a customer's account
59
a business shoud think of a debit as
money paid into the bank is always a debit in the accounting system of the business
60
a business should think of a credit as
money paid out of the bank is always a credit in the accounting system of the business
61
payments into the bank are
debits
62
payments out of the bank are
credits
63
transactions included on the credit side of the bank account include
- purchases — goods bought for resale or materials used for manufacturing
- expenses — expenses of running the business, e.g. rent, advertising, insurance
- assets bought - items bought for use in the business, e.g. computers, vehicle
64
transactions included on the debit side of Bank Account include
- sales — money received for goods sold or services provided
- capital — money paid in by the owner
- loans — money borrowed from the bank or other sources
65
cash sales are recived
straight away
66
credit sales are recived
at a later date
67
cash purchase are paid
straight away
68
credit purchases are paid
at a later date
69
a double entry rule is that an increase in an asset
is always a debit entry
70
a double entry rule is that a decrease in an asset
is awalys a credit entry
71
a double entry rule is that an increase in liability is
always a credit entry
72
a double entry rule is that a decrease in a liability is
always a debit entry
73
a double entry rule is that an increase in capita
always a credit entry (capital — which includes profit — is effectively a liability of the business which is owed to the owner)
74
purchases made from the supliers are entered on what side of payables ledger
on the credit side (right hand side)
75
faulty goods returned (purchases retured) are entered on what side of payables ledger
entered on the debit side (left hand side)
76
stock
goods held by a business | traditional
77
trade payable
a supplier you owe money to |international
78
creditor
a supplier you owe money to | traditional
79
trade receivable
a customer who owes you money | international
80
debtor
a customer who owes you money | traditional
81
statement of profit or loss
financial statement calculating profit (or loss) made by a business | international
82
profit and loss account
financial statement calculating profit (or loss) made by a business | traditional
83
balance c/d is
balance carried down
84
inventory
goods held by a business
85
ballance b/d is
ballance brought down
86
statement of financial position
financial statement showing the assets, liabilities and capital of a business | international
87
both columns in a payables ledger should
ballance and equal the same
88
balance sheet
financial statement showing the assets, liabilities and capital of a business | international
89
day books
the place in the books of a business where a financial transactions, eg sales, sales returns, purchases, purchases returns, discounts allowed and discounts received
90
digital bookkeeping systems
electronic methods of recording financial transactions
91
cash books
book of prime entry which lists payment in and out of the bank accounts
92
a balanced payables ledger shows
how much a suplier is owed by the customer
93
petty cash book
book of prime entry which lists small cash (notes and coins) business expense payments from an office cash fund
94
financial document
a term given to a document - such as an invoice - which results from transaction
95
the customer balance on a receivables ledger is on the
debit side
96
ledger account
the formal accounting record (often in double-entry format) for financial transactions involving individuals (customers and suppliers) and business assets, expenses, income, liabilities and capital
97
'cash' and 'credit' sales/purchases
a 'cash' sale/purchase is where payment is made straightaway; a 'credit' sales/purchase is where payment is made at a later date
98
double-entry accounts
ledger accounts set up on the double-entry system (ie two entries - a debit and a credit - are made for each transaction)
99
on a general ledger the the debit balance shows
where money is spent by the business
100
the ledger
'book' which contains the individual accounts; it is often subdivided into different ledgers, eg receivables ledger, payables ledger, general ledger
101
on a general ledger the the credit balance shows
where money is received by the business
102
control accounts
'totals' accounts contained in the general ledger
103
features of a digital bookeeping system are
- on-screen preparation of sales invoices, which can be sent electronically to the customer, with automatic updating of accounts in the receivables ledger
- electronic recording of purchases invoices, with automatic updating of accounts in the payables ledger
- electronic importing of transactions from bank records
- electronic payments to suppliers and for expenses
104
trade receivable
customer who owes a business money
105
books of prime entry
the place in the books of a business where a financial transaction is recorded for the first time, eg day books, cash book, petty cash book
106
trade payable
supplier owed money by a business
107
benefits of didgital bookeeping
- reconciliation of the receivables and payables ledgers to their respective control accounts
- creation of a trial balance from the general ledger accounts
- processing of recurring entries, such as regular payments for rent
- reports available on demand, such as trial balance, supplier and customer lists, customer statements
108
drawbacks of digital bookeeping
- transactions could be duplicated by recording the same transaction twice
- creation of errors when a recurring entry changes, e.g. the amount or frequency of the transaction
- other errors such as omitting a transaction, entering the wrong amount, and recording the entry to the wrong account
109
Discounts allowed' (or prompt payment discount)
is a discount offered by a supplier to customers in order to encourage customers to settle up straightaway or in a short time from the invoice date; it is discounts allowed in the accounting system of the seller
110
the day books used for credit sales, sales returns and discounts allowed are:
- sales day book
- sales returns day book
- discounts allowed day book
111
why are they called book of prime entry
because they are the first place in the accounting system where financial documents are recorded
112
a sales day book lists
the credit sales made by a business
113
the gerneral legder contains
sales account, sales returns account, receivables ledger control account, Value Added Tax account, together with other accounts kept by the business
114
After the sales day book has been prepared and totalled, the information from it is transferred to
the double-entry system in the general ledger
115
total before discount
quantity x unit price
116
subsidiary accounts are
used to provide a note of how much each trade receivable owes to the business
116
the sales day return book stores
information about sales returns transactions until such time as a transfer is made into the double-entry accounts system
117
discount
total before discount x discount %
118
goods total
total before discount - discount
119
the sales returns book is prepared with
credit notes issued to customers
120
VAT
goods total x VAT %
121
invoice total
goods total + VAT
122
he total of the net column of the sales return book tells a business
the amount of sales returns for the period
123
REMITTANCE ADVICE is
this is an advice which states the amount of money sent by a credit buyer to the seller in full or part settlement of an account
124
general rule with allocating receipts
is that receipts are allocated to older transactions first, in the following order:
- opening balance
- invoices, in full or part payment
- credit notes, utilised in full or part against invoices
125
the purchasing process
1.purchase order
2. delivery note
3. goods recived note
4. purchase invoice
5. purchase credit note
126
a statment of account is
issued by a suplier listing all the payents, invoices and credit notes on the account, giving total amount due
127
reconsiliation
a comparison and tying up of transactions in two documents
128
discrepeancy
a diffrence between the transactions recored in two seperte documents
129
alloction of payments
process of matching up payments made to outstading items on teh suppliers account in playable ledger
130
the cash book is used to record
money transactions of the business - both in cash and through the bank
131
there are two ways the cash book is used in accounting they are
- the cash book combines the roles of the book of prime entry and double-entry book keeping
- the cashbook is the book of entry only and a seperate bank account is kept in gerneral ledger in order to complete double-entry bookeeping
132
recipts in the cash book are
- cash sales
- trade recivables (customers)
- loans from bank
- vat refunds
- capital introduced by the owner
133
payments in the cash book are
- cash purchases
- trade payables (customers)
- expenses
- bank loan repayments
- vat payments
- purchaes of assests
- drawings
134
vat is usualy
20% of the total goods
135
the debit side of the cash book is for
money in i.e recipts
136
the credit side of the cash book is for
money out i.e payments
137
the cash book record
money transactions of the business in the form of cash and bank receipts and payments
138
transactions recorded in th cash book include
- cash sales
- cash purchases
- receipts from customers
- payments to credit suppliers
- other payments and recipts
139
drawings
when the owner takes money from the business for personal use
140
the petty cash book is used to
recored low-value cash payments for purchases and expenses
141
a petty cash book is a
book of prime entry for low value cash payments
142
the petty cash books operates with a
imprest system
143
the purpose of a petty cash voucher is
to enable payments to be made out of petty cash
144
petty cash vouchers contain the following
- the date, details and ammount of expenditure
- the signiture of the person authorising the payment
145
the petty cash book
records low-value cash payments for small purchases and expenses
146
petty cashire
the person responsable for the petty cash book
147
petty cash voucher
finacial document against wich payments are made out of petty cash
148
imprest system
where money held in the petty cash float is restored to the same ammount for the begining of each week or month
149
non-imprest system
where the petty cash supply is not topped up to the same value each time
150
a trial balance is
a list in two columns of the balances of all general ledger accounts, with debit balances on the left, credit balances on the right, and
showing the total of each column
151
debit balances
- cash
- drawings
- expenses, eg discounts allowed, -general expenses, rent paid, wages
- non-current assets, eg machinery, office equipment, premises, vehicles
- petty cash
- purchases
- receivables ledger control
- sales returns
152
credit balances
- bank loan
- capital
- income, eg commission received, discounts received, rent received
- payables ledger control
- purchases returns
- sales
153
bank transactions are debited when
the business has money in the bank, ie an asset of the business
154
bank transactions are credited when
when the business is overdrawn at the bank, ie a liability of the business
155
value added tax (vat) is debited when
when VAT is due to the business by HM Revenue & Customs
156
value added tax (vat) is credited when
when the business owes VAT to HM Revenue & customs
157
trial balance
a list in two columns of the balances of all general ledger accounts, listing debit balances on the left, credit balances on the right, and showing the total of each column
158
c/d and b/d
carried down and brought down — used when balancing accounts at the period end
159
c/f and b/f
carried fonvard and brought fonvard - used when often when
subtotalling money amounts, a page is full
160
financial statements
statement of profit or loss, and statement of financial position
