Lesson 10 - Consolidation

Question 1

Cash payments are recorded in the…

Answer 1

Cash receipts journal

Question 2

Cash payments are recorded in the…

Answer 2

Cahs payments journal

Question 3

After being recorded in the CRJ and the CPJ, the totals are transferred to which report?

Answer 3

Statement of Receipts and Payments (SoRP)

Question 4

What is the purpose of the Statement of Receipts and Payments?

Answer 4

To calculate the Cash Surplus/Deficit and Closing Bank Balance

Question 5

How do you calculate Cash Surplus/Deficit?

Answer 5

Cash Receipts - Cash Payments

Question 6

What is the name given to the headings of each column in the CRJ and CPJ?

Answer 6

Classification columns

Question 7

What is the name given to the classification column used for infrequent receipts and payments?

Answer 7

Sundries

Question 8

In the SoRP, how are the Sundries to be recorded?

Answer 8

Sundries should be recorded individually rather than reporting a single “Sundries” total.

Question 9

T/f - The total amount of the transaction always goes in the “Bank” column.

Answer 9

True - the total goes in Bank, then the amount is split up in the classification columns.

E.g. Purchase of cleaning supplies for $550.
Bank = $550
Cleaning supplies = $500
GST = $50

Question 10

T/f - The GST column is for recorded GST Paid or GST Received only.

Answer 10

True - some items that appear in the CRJ and CPJ do not attract GST because they are not goods or services.

E.g. Drawings, capital contribution, interest, wages

Question 11

GST Received is…

Answer 11

GST that the business has charged and collected from it’s customers following a sale.

E.g. If the business sold a sofa worth $1000 + $100 GST
GST Received = $100

Question 12

GST Paid is…

Answer 12

The amount of GST that the business has paid to it’s suppliers on its purchases.

E.g. If a business bought a new fridge for $600 + $60 GST
GST Paid = $60

Question 13

GST Settlement is…

Answer 13

An amount paid to the ATO to settle a GST Payable (i.e. the business paying the GST it owes to the ATO)

Question 14

GST Refund is…

Answer 14

An amount received by the business from the ATO when it’s GST Paid is greater than its GST Received.

It is not that common for a business to have a GST Received but can happen from time to time, particularly with small or start-up businesses.

Question 15

GST Payable is…

Answer 15

GST Payable is an amount that is owed by the business to the ATO and will be settled (with a GST settlement) in the future.

Question 16

GST stands for…

Answer 16

Goods and services tax.

Question 17

GST is levied by…

Answer 17

The Australian Tax Office

Question 18

GST is charged to consumers on the sale of Goods and Services at a rate of…

Answer 18

10%

Question 19

T/f - Only the end consumer is required to pay GST, therefore businesses are not required to pay it.

Answer 19

True - any GST that the business pays will be claimed back as a GST refund or deducted from their GST Payable when they make a GST Settlement.

Question 20

The formula for GST balance is…

Answer 20

Opening balance of GST
+ GST Received
- GST Paid
+ GST Refund
- GST Settlement

Question 21

GST balance will be either…

Answer 21

Receivable = Business owed a refund from ATO
or
Payable = Business owes ATO

Question 22

When calculating the GST Balance, the opening balance can be determined from…

Answer 22

1. The question or additional information.
2. The closing GST Balance from the previous period.