Double Entry for Sales and Trade Recievables Flashcards
Name the 4 books of prime entry which are relevant for sales and trade recievables?
Sales Daybook
Sales returns daybook
Cashbook - debit side
Discounts allowed day book
What is the difference between a receivables ledger and a receivables ledger control account?
Receivables ledger account is a specific account for that credit customer which buys off your company. Shows how much
they owe to your business.
Receivables ledger control account is an account which shows the overall total for the sales in a period eg: Monthly. Also shows the total for sales returns and total money received from credit customers.
Where is the VAT on sales and purchases posted to in the general ledger?
VAT control account. Used to record how much is owed to HMRC and how much is due from HMRC.
How is input tax recorded in the VAT control account?
VAT on purchases is input tax meaning it is owed to the business by HMRC and there for is decreasing the LIABILITY of the business so it is debited.
How is output tax recorded in the VAT control account?
VAT on sales is output tax meaning it is owed to HMRC therefore a liability of the company and so it is credited.
Name 3 accounts which are debited and credited when recording a purchase with VAT?
DEBIT purchases
DEBIT VAT control account
CREDIT payables ledger account
Name 3 accounts which are debited and credited when recording a sale with VAT?
DEBIT Recievables
CREDIT VAT
CREDIT Sales
When posting the sales daybook to the general ledger, is the net, vat and total debited or credited?
Net - credit
VAT - credit
Total - Debit - as this is the gross amount the customer owes to the company
When posting the sales daybook to the receivables ledger, should the invoice be debited or credited to the customer account?
Debited
When posting the sales returns daybook to the general ledger, is the net, vat and total debited or credited?
Net - Debited
VAT -Debited
Total - Credited - Reducing the amounts the customer owe.
What does it mean if the assessment states that the cash book should be treated as part of the double entry bookkeeping system AND bope?
Do not post the cash and bank totals
What does it mean if the assessment states that the cash book is a book of prime entry only?
The cash and bank totals have to be posted. - debit entries to the general ledger. Also posting the other totals such as VAT to the relevant general ledger accounts.
When posting any credit sales receipts to the customers account (receivables ledger) is this a debit or credit entry?
The credit sale receipt total will be a credit to the customers account as you are reducing what they owe.
What is the first stage of the accounting process?
Enter details of transactions into the books of prime entry; Sales Daybook
What is the second stage of the accounting process?
Transfer details from the books of prime entry to the accounting records ie the general ledger and receivables ledger.
