Chapter 3: Accounting for sales & sales returns

Question 1

What specific stages of recording & presenting financial transactions does the accounting system contain?

Answer 1

• Financial Documents
• Books of Prime entry
• Double Entry Book-Keeping
• Trial Balance

Question 2

The financial documents relating to credit sales are

Answer 2

• Sales invoices

- Credit notes issued

Question 3

What is the sales day book prepared from?

Answer 3

From Credit notes to customers.

Question 4

What is the sales day book for credit sales?

Answer 4

The book of prime entry.

Question 5

Recording credit sales in the double-entry system uses?

Answer 5

Financial Documents: Sales Invoices
Books of Prime Entry: Sales Day Books
Double-Entry Accounts: General Ledger
Memorandum Acounts: Sales Ledger

Question 6

Analysed Sales & Sales Returns day books are used when?

Answer 6

When a business wishes to analyse it’s sales between different departments or

Different categories of goods sold / services supplied.

Question 7

Financial Documents?

Answer 7

Source Documents for the accounting records

Question 8

Books of prime entry?

Answer 8

The first accounting books in which transactions are recorded

Question 9

Coding?

Answer 9

Cross-referencing methods used to trace transactions through the accounting system

Question 10

Ledger?

Answer 10

Collection of accounts within the accounting system

Question 11

Debit entry?

Answer 11

Records a gain in value

an asset

or an expense

Question 12

Credit entry?

Answer 12

Records the giving of value

a liability

or an income item

Question 13

Sales?

Answer 13

The sale of goods in which the business trades

Question 14

Capital Income?

Answer 14

Income from items other than than the goods in which the business trades

(eg. a shop selling its old cash till)

Question 15

Revenue income?

Answer 15

Income from the goods in which the business trades

Question 16

Sales returns?

Answer 16

Goods previously sold on credit which are returned to the business by its customers

Question 17

Sales returns day book?

Answer 17

Book of prime entry prepared from sales invoices

Question 18

Sales returns day book?

Answer 18

Book of prime entry

prepared from credit notes issued to customers

Question 19

Analysed sales day book?

Answer 19

Day books which incorporate analysis columns

(eg. between different departments

or

Different categories of goods / services sold)

Question 20

General Ledger

Answer 20

Ledger section which includes

Sales account
Sales returns account
Sales ledger control account
VAT account

Question 21

Sales Ledger

Answer 21

Subsidiary ledger section which contains the memorandum accounts of the firm’s receivables (customers)

Question 22

Memorandum account?

Answer 22

A subsidiary ledger
(eg sales ledger)

account which provides a record of individual amounts
(eg owing by receivables to the business)