Day 2 - Chapter 4 Flashcards
What is a sales return?
customer returns goods
What is purchase returns?
goods returned to supplier
Cash sales return
DR sales
CR cash
Credit sales return
DR sales
CR trade receivable
Cash purchase return
DR cash purchase
CR purchases
Credit purchase return
DR trade payable
CR purchases
What is a discount?
reduction in cost/sales price
What is under payroll?
- wages and salaries
- PAYE - income tax
- employees NIC
- employers NIC
both payable to HMRC
What are the two types of discounts?
Trade - bulk buy
Early Settlement - prompt payment
What is a trade - bulk buy?
given as reduction at point of sale
account for sale/purchase at reduced price
What is early settlement?
Account for sale/purchase based on expected settlement
if settlement not as expected, correction made at settlement
What happens if the early settlement is not as expected?
if settlement not as expected, correction made at date of payment
What happens if the early settlement is not as expected for sales?
any differences between expected proceeds and those actually received are recognised as an adjustment to revenue
What happens if the early settlement is not as expected for purchases?
any difference between those actual made are recognised as an adjustment to purchases
What is the key thing you need to remember about early settlement?
its only for credit sales/purchases
What do you do if you have accounted for an early settlement then did not settle it early?
the difference must be accounted for in an additional line to DR purchases - increasing purchases
What do you do if you have not accounted for an early settlement and fulfil the early settlement?
the difference must be accounted for in an additional line to CR purchases - reducing purchases
What does the employer pay?
gross salary
employers national insurance contributions
What is paid to the employee?
net salary
after income tax deduction and employees national insurance deduction
What is paid to the government as tax?
income tax
employee nic
employers nice
Gross Salary =?
net salary
income tax
employees nice
Net Salary =?
gross salary - income tax - employees nic
Total staff costs =?
gross salaries + employers Nic
Paid to the government as tax =?
income tax + Employees NIC + Employers NIC
What is the journal entries for accounting for payroll?
DR wages and salaries = gross salary + employers NIC - expenses
CR cash = net salary paid to employee
CR income tax payable = PAYE+ employers NIC and employee NIC
Who does the company pay PAYE and NICs to?
the government
