Double entry bookkeeping Flashcards
Quotation?
To establish price form various supplier and cross refer to purchaces
Purchase order?
Sent to supplier as a request for supply. To check quotation and delivery note.
Sales order?
Cross checked with the order placed by customer. Sent to stores/warehouse department for processing of the order.
What is GDN?
Goods despatch note
Provided by supplier. Checked with goods received and purchase order.
What is GRN?
Goods received note
Produced by entity receiving the goods as proof of receipt. Matched with delivery note.
Statement?
Issued by supplier to ensure amount owing is correct.
What is invoice?
A request of payment issued by the supplier of goods. Name and address of supplier and customer, details of goods, etc.
Called sales invoice from the supplier and purchase invoice from the customer
Steps regarding financial information?
Data sources
Books of prime entry
ledger accounts
trial balance
financial statements
Different type of Books of prime entry?
Sales day book (Credit sales)
Purchases day book (Credit purchases)
Sales returns day book (Return of goods sold on credit)
purchase return day book (Return of goods bought on credit)
Cash book (All bank transactions)
Petty cash book ( All small cash transactions)
The journal ( All transaction not recorded elsewhere
Why is purchase day books credit?
The purchases day book is used to record all the purchase invoices for goods and services supplied on credit to the firm. In modern business a considerable proportion of the purchases will be made on a credit basis (the goods are received immediately, but payment is made at a later date).
Sales day book and purchase day book columns?
Sales day book Purchase day book
Date
Invoice
Customer Supplier
Ledger Ref.
$
What is recorded in the cash book?
All transaction of cash at bank are recorded in this book.
A note of cash discounts
Types of cash books?
A cash payment book and Cash receipt book
Method of recording in a cash book?
Columnar format
What is petty cash book?
In this book people will record small cash transaction. The cash receipts will be recorded together with the payments.
It uses Imprest system.
What is imprest system?
The Imprest system is an accounting system that’s used to track how your business is spending cash. In most cases, Imprest systems are used to account for petty cash (a small amount of money used for expenditure on smaller items, i.e. office supplies, catered lunch, cards for customers, etc.).
Sundry meaning
of various kinds; several.
What is petty cash float?
It is an amount withdrawn from the bank account used to pay for the various sundry expenses.
What is journal?
The journal is a book of prime entry which records transactions which are not recorded in other books of prime entry i.e. not routine.
Things included in journal entry?
Year end adjustments.
- Depreciation charge for the year.
- Irrecoverable debt write off.
-record movement in the allowance for receivables
-accruals and prepayments
-closing inventory
Acquisitions and disposals of non-current assets.
Opening balances for statements of financial position items.
correction of errors
Some Controls and security over petty cash in business?
Cash must be kept in petty cash box and secured in a safe.
The responsible party must be reliable and understand what they are required to do.
All petty cash must be supported by invoices.
Petty cash vouchers must be signed by the claimant and the person responsible for running petty cash.
Regular spot checks must be carried out for accuracy.
Each individual account in a system is referred to as ledger.
Each individual account in a system is referred to as ledger.
Ledger accounts definition?
They are the principle books for recording and totalling monetary transactions by account using double entry method.
An entity’s financial statements are generated from summary totals in the ledgers.
What is general ledger?
It is used to refer to the overall system of ledger accounts within a business.
What is the accounting equation?
Asset = Liability + (Owner’s) Equity
If someone commences business with cash how is the accounting equation formed?
The cash is given to the business so it becomes an Asset.
The business owes “someone (owner)” cash this is equity.
Asset = known
Equity = known
find liability.
