Mr T Jeyabalan Flashcards
There are 8 source documents. What are they?
- Bank statement
- Cash receipt
- Cheque counterfall
- Credit note
- Paying in slip counterfall
- Purchase invoice
- Sales invoice
- Till roll
Items on a bank statement
- Bank charges
- Credit transfer
- Debit card transaction
- Direct debit
- Dishonoured cheque
- Standing order
Standing order
A business instructs its bank to make regular payments for the same amount each month
Direct debit (hint authorisation of payments)
One business authorises another to take payments out of its bank account, the amount depending on how much is owed
Dishonoured Cheque
When a bank refuses to process a cheque you have submitted for multiple reasons
What is a standing order
When can you use it?
It allows the bank to take money regularly from your account to pay another account. You can use a standing order for many payment types, including:
Transferring money between your accounts
Sending a friend or family member money on a regular basis
Paying your rent or mortgage
Donating to a charity
Credit transfer
Receipts or payments directly in or out of the bank account
What is trade discount
Discount that is offered for buying in bulk
What is Cash discount
Discount that is offered from business to customer to encourage quick payment
What reasons can result in a dishonoured cheque
Insufficient funds in the account, mismatched signatures, errors in the date
What are bank charges. When do they happen
Fees bank deduct from a business for using the services they provide.
They happen when an account is overdrawn or a cheque, direct debit or standing order bounces
What does overdrawn mean
When you have spent more money than you have in your account. You become indebted to the bank.
Sales invoices
Issued by the seller for goods sold on credit
Purchase invoices
Received by the buyer for goods bought on credit
What is a Cheque counterfoil
The small section of a cheque that remains attached to the cheque book after a cheque has been issued.
Proves record of cheques paid by the business
Pay in counterfoils
What are they & what do they show
The part of the pay-in book kept by the business after banking money.
Shows date and amount
Cash receipts
The receipts for goods/services which have been paid for when purchased (by cash, cheque or debit card)
Till rolls
The amounts sold and paid for during a specific day and the total value of cash sales during that day
Bank statements
Sent to the business by their banks. Shows
- each individual receipt and payment
- balance in the bank account
Addition Error
There have been mathematical errors when calculating balances on accounts/totals in books of prime entry
Partial Ommission Error
An item that has only been entered once
Transposition error
An amount has been posted with two numbers the wrong way around
Error of ommission
A transaction has been completely ommitted from the trial balance
Error of principle
A transaction has been entered in the wrong type of account
(Eg motor expenses instead of motor vehicles)
Complete reversal (reversal of entries)
The debit and credit entries were made the wrong way around
Compensating errors
Two errors cancel each other out
Unequal posting error
Different amounts have been debited and credited
Error of commission
A transaction has been entered in the wrong account but the right type of account
(e.g. the wrong expense, or the wrong account in the receivables ledger or payables ledger).
