Chaoter 5 Flashcards
What is a journal book
The journal book is used to record transactions that aren’t recorded in any other book of prime entry so they can be posted to ledger
What is a journal entry
A written instruction to the book keeper to makes a double entry into the ledgers
What are journal used for
To open the accounting records for new businesses
In a new set of accounts what are assets entered as
Debit balance
What are liability and capital accounts entered as in a new set of accounts
As credit balances
What is payroll transactions?
Payment to employees regarding wages
What do wages usually form
Substantial part of a businesses expenditure
What is gross pay
Wages payable to employee before any reductions
What are statutory deductions
Deductions made relating to income tax and employees nic
What is income tax
A tax that is paid by individuals on all sources of income
What is nic national insurance contribution
A tax on employees income deducted from gross pay
What is hmrc
The government responsible for collecting tax
What is voluntary deductions
Non-statutory amounts deducted from employees pay with their consent
What is pension contribution
Employers are required to automatically enrol eligible employees in a pension scheme. Deductions are made for contributions but employees can opt out.
What is net pay
The amount actually paid to the employee
What is national insurance contribution (employers nic)
An additional tax suffered by the employer based on employees gross pay
What is wages control account
A control account for recording payroll transactions…making sure double entry is done correctly
How are payroll transactions recorded
Using a wages control account, when payroll expenses occur, the liability is initially credited to this account
What is the purpose of wages control
All payroll liabilities are credited to this account, they are then transferred to the relevant nominal ledger account
What is the purpose of wages expenses account
The expense account shows the total cost to the business of employing someone
What is hm revenue and customs
The liability account shows the account of income tax and NIC owed to the tax authorities
