Key Terms

Question 1

Trade Receivables

Answer 1

Customers that owe the business money (debtors)

Question 2

Sales Day Book

Answer 2

Lists and analyses the credit sales invoices raised to our trade receivables

Question 3

Sales Returns Day Book

Answer 3

Lists and analyses the credit notes raised to our Trade Receivables

Question 4

Discount Allowed Day Book

Answer 4

Lists the credit notes raised to our Trade Receivables when they make a payment and take prompt payment discount

Question 5

Trade payables

Answer 5

Suppliers that we have bought goods or services from on credit (creditors)

Question 6

Purchase Day Book

Answer 6

Lists and analyses the credit purchase invoices from suppliers of the business

Question 7

Purchase Returns Day Book

Answer 7

Lists and analyses the credit notes issued to us from our suppliers of the business

Question 8

Discount Received Day Book

Answer 8

Lists the credit notes issued to us from our Trade Payables after we have made a payment and taken payment discount

Question 9

Cash Book

Answer 9

Lists and can analyse the payments and receipts into and out of the bank a/c of the business

Question 10

Petty Cash Book

Answer 10

Lists and analyses all payments and receipts into and out of the Petty Cash A/C

Question 11

General Ledger

Answer 11

The main ledger where all the transactions of a business are recorded and from which the trial balance is extracted

Question 12

Sales Ledger/Receivables ledger

Answer 12

The subsidiary ledger that contains all the individual Trade Receivable/Customer Accounts

Question 13

Purchase Ledger/Payables Ledger

Answer 13

The subsidiary ledger that contains all the individual Trade Payable/Supplier Account

Question 14

Coding

Answer 14

System of creating unique references for documents or accounts; can be numeric, alpha or alpha-numeric

Question 15

Dual Effect

Answer 15

‘For every DR, there must be a CR’

Question 16

Statement of Financial Position

Answer 16

Shows the assets and liabilities of the business at a given point in time

Question 17

Assets

Answer 17

Items owned by the business that are used within the business

Question 18

Liabilities

Answer 18

Items owed by the business

Question 19

Expenses

Answer 19

The everyday costs of running the business - they are always Debits (DR)

Question 20

Income

Answer 20

The everyday income of the business - normally sales - they are always credits (CRs)

Question 21

Accounting Equation

Answer 21

Assets - Liabilities = Capital

Question 22

Capital/Equity

Answer 22

The amount invested by the owner/partner of the business. It includes any profit/loss generated by the business less any Drawings taken by the owner.

Question 23

Capital Income

Answer 23

One off income streams e.g. bank loan, selling an asset

Question 24

Capital Expenditure

Answer 24

Expenditure on capital items - non-current assets

Question 25

Revenue Income

Answer 25

Everyday income of the business

Question 26

Revenue Expenditure

Answer 26

Everyday expenses of the business

Question 27

Statement of Profit or Loss

Answer 27

This statement details the sales and costs of the business for a period and would show the resulting profit or loss