Chapter 10 Flashcards
sales cycle
sales order from customer detailing goods required
goods sent to customer together with goods delivery notes (GDN)
sales invoice sent to customer as request for payment
credit note issued if customer overcharged or goods returned
purchase cycle
purchase order sent to the supplier fro request of goods
goods received - GRN completed
purchase invoice received from supplier and matched to GRN
debit note may be issues in order to request credit note from supplier
What entries are made in the sales and purchase cycle?
only invoices and credit notes actually result in entries to the trade receivables and payable ledger accounts
What is a nominal ledger?
used to produce a trail balance and from this, a financial statement for the business
What does a nominal ledger contain?
separate ledger account for each type of income, expense, asset, liability or capital balance
What is a receivables ledger?
it contains a separate ledger account for each credit customer
What does a receivables ledger allow?
allowing the business to manage outstanding receivable balances and chase late payments
What should the total of all receivables accounts equal the balance to?
it should equal to the balance in the nominal ledger for trade receivables
What does the payable ledger contain?
a separate ledger account for each credit supplier allowing business to ensure that they make payments to suppliers within agreed credit terms
What should the total of all payable accounts equal the balance to?
it should equal the balance in the nominal ledger for trade payables
two examples of other modules that we might find in the accounting system
recording and processing payroll
maintaining a record of a non-current asset in the non-current asset register
inputs
source documents
standing data
source documents
documents that will trigger an accounting entry such as the generation of invoice to a customer
standing data
reference data that does not regularly change, such as name and registered address of the business, credit limited, VAT registration number and relevant VAT rates, employee PAYE tax coding etc.
accounting system processes
calculations
ledgers
journal entries
record keeping
outputs
trail balances
reports
the processing of transactions in the computerised accounting system
inputs
accounting system processes
outputs
processes
transactions that are undertaken by business needs to be entered into the system
calculations
ledgers
record keeping
journal enteries