Mrs Snow

Question 1

Invoice

Answer 1

Invoices are receipts sent from the seller to buyer. They include details of goods bought, date of purchase and the costs. Also a source document

Question 2

What is Credit purchase

Answer 2

A financial position that allows individuals/business to purchase good/services but pay for them in a future date

Question 3

What is credit

Answer 3

The ability of a consumer to acquire goods or services prior to payment in hopes of payment in the future

Question 4

What is a sales returns journal
Aka returns in journal

Answer 4

Lists all the credit notes issued by the business
In a source document, it would be “Credit note to”

Question 5

What is the purchase returns journal
Aka returns out

Answer 5

Lists all the credit notes received by the business

Question 6

What is the sales journal

Answer 6

Lists all the invoices for credit purchases
In a source document, it would be “invoice to” because you’re selling from the business to someone else

Question 7

What is the purchases journal
What would it be in a source document?

Answer 7

Lists all the invoices for credit purchase
In a source document, it would be “invoice from” because the business is buying of someone else

Question 8

What is a credit note

Answer 8

Shows goods that have been returned. They no longer need to be paid for

Question 9

What is a receivables ledger

Answer 9

Includes T accounts for each credit customer
Shows invoices, credit notes, payments and the amount of money owed

Question 10

What is the payable ledger

Answer 10

Includes T accounts for each credit supplier
Shows invoices, credit sales, payments, discounts and the amount owed to the supplier

Question 11

What are the 5 books of prime entry

Answer 11

Sales Journal
Sales Returns Journal
Purchase journal
Purchase returns journal
Cash book

Question 12

What is the general ledger

Answer 12

Includes T accounts for every item that will appear in the financial statements statements (e.g. ‘Revenue’, ‘Purchases’ etc.).

Question 13

What is the cash book

Answer 13

The cash book is used to record bank receipts and payments

Question 14

What is on the left side of the cash book

Answer 14

1. A positive bank balance at the start of the year
2. Amounts received through the business (e.g customers)
3. Cash discounts for customers that have paid quickly

Question 15

What is on the right side of the cash book

Answer 15

1. A negative bank balance
2. Amounts paid from the business
3. Discounts received from suppliers