Chapter 10 - books of entry Flashcards
What are original enery books are what are the purpose of them?
- A way of organising transactions prior to accounting for them (not part of accounting system)
- It reduced the number of entries into accounting system reducing error.
- The totals from them are posted into double entry accounts.
All transactions are originally recorded in a book of original entry. How are these transactions organised?
(5 marks)
- Sales day book → credit sales and returns (not cash)
- Purchase day book → credit purchases and returns (not cash)
- Cash book → all bank transaction <em>(cash in and out) → </em>includes payments to credit suppliers
- Petty cash book → all cash transaction not via the bank
- The journal book → all trasactions not included anywhere else <em>(year end adjustments & correction errors)</em>
Books of original entry terminology
- What are general accounts?
- What are recievable and purchase ledger accounts?
- What are memorandum accounts?
- Accounting system leger accounts → (recievable / purchase control account)
- Ways to record sales or purchases to individuals not part ofthe accounting system
- T accounts assigned to individuals to so sales or purchases not part of the accounting system
Write up the general and recievable leger account entries using the sales day book bellow
- (use memorandum accounts to help produce the recievables ledger account)
- What is a recievable control account?
- How are sales day books used to update leger accounts?
- A ledger account of totals from the sales day books rather than recordoing every transaction. It does not show how much each costomer owes.
- The subtotal is entered as:
- Dr recievables conrtol account (trade recievables)
- Cr sales
- What is a payables control account?
- How are purchase day books used to update leger accounts?
- A ledger account of totals from the purchase day books rather than recordoing every transaction. It does not show how much each costomer owes.
- The subtotal is entered as:
- Dr Purchases
- Cr payables conrtol account (trade payables)
What are the two types of cash books?
- Cash Purchase bok
- Cash reciepts book
- (adjust debits and credits accordingly)
Write up the general and payable leger account entries using the purchase day book bellow
- (use memorandum accounts to help produce the payables ledger accounts)
How does a discount recieved due to prompt payment effect the cash book?
- Discounts are recorded in a memo colomn in the cash payments book called ‘discount recieved’
- Double entry from discount:
Dr payables contol account
Cr discount recieved.
- After every entry update you mus update individual payable or recievable ledgers.
How does a discount allowed due to prompt payment effect the cash book?
- Discounts are recorded in a memo colomn in the cash recipts book called ‘discount allowed’
- Double entry from discount:
Cr recievables contol account
Dr discount allowed.
- After every entry update you mus update individual payable or recievable ledger
Petty cash
- What is an imprest system?
- How do they work?
- A float
- A buisness decides on a float amount
As payments are made they are recorded in the petty cash book
When petty cash runs low a cheque is draen to return petty cash to orignal value.
- The layout of a petty cash book is shown bellow.
- Use it to give the double entries for the accounting system
- Cr bank 65
- Dr stationary 45
- Dr sundaries 10
- Dr travel 10
What transactions can the journal book be used to record?
How are journals recorded?
- Disposal of NCA
- recording of depreciation
- Record closing inventory
- writting off irrecoverable debts
- recording closing inventory
With a debit and credit and narrative for each entry
e.g Dr iventory 2750
Cr closing inventory 2750
Record of closing stock (narrative)
- What is an extended trial balance (ETB)?
- What credit and debit coloumns are recorded in the ETB?
- An expanded version of the trial balance
* Shows how balances from the trial balance are combined with journals to produce SPL & SFP - Trial balance, jornals, SPL, SFP
What isa credit note?
a note issued on the return of an item
