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L2: Bookkeeping Transactions > Business Documents > Flashcards

Business Documents Flashcards

1
Q

Name as many business documents as you can…

A
  • Price Quote
  • Purchase Order
  • Sales Order
  • Delivery Note
  • Goods Received
  • Sales/Purchase Invoice
  • Credit Note
  • Receipts
  • Remittance Advice
  • Statements
  • Petty Cash Voucher
  • Fine
  • Payslip
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2
Q

Accounting System Overview…

A

Business Transaction&raquo_space; Business Document&raquo_space; BOPE&raquo_space; Ledger Accounts&raquo_space; Trial Balance

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3
Q

Output Tax & Input Tax…

A

Output Tax = tax on a sale (charge customers)

Input Tax = tax on a purchase (claim back, unless exempt)

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4
Q

Goods/service exempt from Tax…

A
  • Certain land/buildings
  • Insurance
  • Post office services
  • Museum/gallery entry
  • Betting/gambling/lotto
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5
Q

Rates of VAT…

A 
Standard = 20%
Zero-rated = water & food (unless eating out as it's a service)
books/newspapers
drugs/medicine
childrens clothing/footwear
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6
Q

Non-Deductible VAT

A

Cannot be deducted from what’s owed to HMRC. Business must bear VAT as expense. E.g. Business entertainment

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7
Q

Taxable Person =

A

Individual/Partnership/Company intending to make taxable supplies that exceed specified amount within 12 months.

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8
Q

Net & Gross Amount…

A 
Net = excludes VAT (100%)
Gross = includes VAT (120%)
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9
Q

Calculating Gross…

A

Net Price x 1.2 = Gross

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10
Q

Calculating Net…

A

VAT / 0.2 = Net

Gross / 1.2 = Net

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11
Q

Calculating VAT…

A

Net x 0.2 = VAT

Gross / 1.2 x 0.2 = VAT

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12
Q

VAT for bulk, trade and prompt payment discount

A

VAT calculated after bulk and trade discounts applied

PPD doesn’t affect original invoice prices or VAT. Only adjusted after PPD is claimed - usually credit note issued.

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13
Q

E & OE

A 
E = errors
OE = omissions excepted
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14
Q

Carriage Paid

A

Invoice value includes delivery

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15
Q

Ex Works

A

Prices quoted do not include delivery. Customer must organise.

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16
Q

Cash on Delivery

A

Customer pays when delivered

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17
Q

Reasons for credit notes (5)

A
  • return of faulty/damaged goods
  • undamaged but refund agreed
  • refund short deliveries
  • settle dispute
  • prompt payment discount

(credit notes must be authorised by supervisor)

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18
Q

Codes for… (6)

A 
Ledger code 
General ledger code
Nominal ledger code
Customer account code
supplier code
product code
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19
Q

Name the BOPE (8)

A 
Sales DB
Purchases DB
Sales Returns DB
Purchase Returns DB
Cash Book
Petty Cash Book
Discounts Allowed DB
Discounts Received DB
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20
Q

Sales Day Book (SDB)

A

Credit sales to be processed

21
Q

Sales Returns Day Book (SRDB)

A

Credit notes (sometimes recorded in SDB as negative amount if infrequent)

22
Q

Purchase Day Book (PDB)

A

Purchase orders to be processed

23
Q

Purchase Returns Day Book (PRDB)

A

Credit notes received from supplier

sometimes included as negative amounts in PDB if infrequent

24
Q

Cash Book

A

Cash receipts (receivables) and cash payments (payables) - may be spilt into 2 books. Extra columns for analysed CB

25
Q

Discounts Allowed DB

A
  • Discounts not deducted at point of invoicing (PPD)
  • Credit notes issued due to PPD
  • Reduction of goods & VAT
  • Total (gross) deducted from receivables balance
26
Q

Discounts Received DB

A

Not deducted at point of invoice (PPD)
Credit notes received due to PPD
Reduction of goods and VAT
Gross amount deducted from payables balance

27
Q

Petty Cash Book

A

All petty/small payments made throughpetty cash.

Format of a ledger

28
Q

2 Main Financial Statements…

A

Statement of profit or loss = summary of transactions (income & expenses) within a period
Statement of Financial position = statement of assets & liabilities. Same date range as Statement of profit & loss

29
Q

Statement of profit & loss includes…

A

Sales revenue = income from trading activities
Cost of sales (COS)
Gross profit = profit remaining after COS
Sundry income = not from trading (interest…)
Expenses = day-to-day running of business
Net profit/loss = after expenses deducted

30
Q

Statement of Financial Position includes…

A 
Current Assets
Non-current Assets
Receivables (debitors, credit customers) 
Non-current liabilities (long term)
Liabilities (short-term)
Payables (creditors, credit suppliers)
Capital 
Drawings
31
Q

Capital & Revenue Expenditure

A

Capital Expenditure = Purchase/improvement of non-current asset
Revenue Expenditure = running costs

32
Q

Capital & Revenue Income

A

Capital Income = sale of capital assets

Revenue income = sales of goods/services

33
Q

Dual effect principle

A

Every transaction has two financial effects

34
Q

Separate entity principle

A

Business owner separate from business

Capital owed to them, reduced by drawings

35
Q

4 accounting equations, simple to long

A

Assets = Liabilities
Assets = Liabilities + Capital
Assets - Liabilities = Capital
Assets - Liabilities = Capital + Profit - Drawings

36
Q

(L) DEAD CLIC (R) (in ledger / trial balance)

A

Debits Increase:
Expenses
Assets
Drawings

Credits Increase:
Liabilities
Income
Capital

37
Q

What does debit side increase and decrease?

A

Increases what we are owed.

Decreases what we owe.

38
Q

What does credit side increase and decrease?

A

Increases what we owe.

Decreases what we are owed.

39
Q

Examples of debit sided entry increasing what we are owed

A

Invoice to customer

40
Q

Examples of debit sided entry decreasing what we owe

A

Credit note from supplier.

41
Q

Example of credit sided entry increasing what we owe

A

Purchase order to supplier.

Invoice from supplier.

42
Q

Example of credit sided entry decreasing what we are owed

A

Credit note to customer

43
Q

where are liabilities owed to supplier recorded?

A

Purchase ledger

44
Q

where are credit notes from suppliers entered?

A

In the purchase ledger as a debit entry

45
Q

What is the trial balance

A

A trial balance is a list of all the general ledger accounts (both revenue and capital) contained in the ledger of a business. This list will contain the name of each nominal ledger account and the value of that nominal ledger balance. Each nominal ledger account will hold either a debit balance or a credit balance.

46
Q

What is the nominal ledger?

A

The nominal ledger (also commonly referred to as the general ledger) to is the main area where all of your accounting transactions are held. The ledger contains the records of all of the payments, expenses, and assets of a company that take place over the lifetime of the business.

47
Q

Nominal ledger examples

A

Nominal Accounts are accounts related and associated to losses, expenses, income or gains. Examples include purchase account, sales account, salary A/C, commission A/C etc.

48
Q

The nominal ledger is split into two parts:

A

the Balance Sheet and the Profit & Loss account. This is always ongoing. It contains details of your assets (e.g. debtors, bank account, cash in hand, stock) and liabilities (e.g. creditors, bank overdrafts, loans, VAT).

L2: Bookkeeping Transactions (8 decks)

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