Chapter Two

Question 1

Where do documents get placed into at end of day?

Answer 1

Book of prime entry

Question 2

Where are the totals of the book of prime entry inserted?

Answer 2

The general ledger

Question 3

Examples of books of prime entry?

Answer 3

Sales day book
Sales return day book
Purchases day book
Purchases returns day book
Cash book
Pretty cash book
Discounts allowed day book
Discounts received day book

Question 4

What is the sales day book

Answer 4

All the businesses invoices sent to credit customers are listed

Question 5

What is a sales return day book

Answer 5

Where are the credit notes issued by the company are listed

Question 6

How will the business get a net income figure in a given period?

Answer 6

Combining the info in the sales day book and the sales return day book

Question 7

What is a cash book

Answer 7

A book of prime entry used to record money, received and paid for out the business

Question 8

What does the cash book debit side show

Answer 8

This records money received by the business

Question 9

What does the cash book credit side show

Answer 9

The money paid out

Question 10

What is a debit

Answer 10

Something the business owns

Question 11

What is a credit

Answer 11

Something the business owes

Question 12

Why is not VAT entry made when money is received from a credit customers

Answer 12

Vat was entered in the sales book at time of sale

Question 13

What is the purchases day book

Answer 13

Where are the supplier invoices received by the business are listed

Question 14

What do the analyst columns show

Answer 14

The net value

Question 15

What are the two different analyst columns a purchase order will show

Answer 15

Expenses - expenditure and bills, and purchases - things brought for business

Question 16

What is the purchases returns day book

Answer 16

A list of all credit notes received

Question 17

What is receivable ledger used for

Answer 17

Customers

Question 18

What is payables ledger used for

Answer 18

Suppliers

Question 19

What are subsidiary accounts

Answer 19

Payable ledger and receivable ledger

Question 20

What does a receivable ledger account show

Answer 20

Ledger accounts for every credit customer, showing the amount owed by that customer

Question 21

What does payable ledger show

Answer 21

Contains ledger account for every credit supplier, helps the business know how much and when to pay

Question 22

Each credit customers ledger contains two sides, showing?

Answer 22

Left side, invoices, increasing amount owed
Right side, credit note, PPD, payments revived, decreasing amount owed

Question 23

How do you work out how much a credit customer owes?

Answer 23

Total the right side and left side of the receivables ledger and take the right from the left

Question 24

Is the payables ledger displayed the same as receivables with two columns

Answer 24

Yes