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aat level 2 > principles of bookkeeping > Flashcards

principles of bookkeeping Flashcards

1
Q

developments in technology have caused a increase in the use of what

A

plastic cards( debit and credit)
BACS

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2
Q

developments in technology have caused a decline in the use of what

A

cash , cheques

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3
Q

when writing a check u must make sure these details are correct

A
  • the date
  • the name of the person or business receiving the money
  • the amount in words
  • the amount in figures
  • authorized signature
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4
Q

BACS Stands for

A

Bankers, Automated, Clearing, Services

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5
Q

standing orders are used for

A

making regular payments of the same amount

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6
Q

CHAPS stands for

A

Clearing House Automated Payments System

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7
Q

a cheque

A

is an instruction in writing, signed by the bank’s customer (who is the paying money), telling the bank to pay an amount to a named person or business

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8
Q

a debit card is

A

a card which can be used for purchases and cash withdrawals; payment is normally taken from the bank account on the next working day

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9
Q

a electronic bank transfer is

A

a term used to describe the electronic transfer of funds through the banks computer system

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10
Q

a direct debit is

A

variable date and amount BACS payments set up by a business receiving the payments through their bank

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11
Q

a current account is

A

an account with a bank into which money can be paid from which payments can be made

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12
Q

payments into the bank are know as

A

credits

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13
Q

payments out of the bank are know as

A

debits

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14
Q

features of an overdraft

A
  • a arrangement that allows you to go overdrawn
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15
Q

normal cost of having a business bank account

A
  • bank service charges for operating the account
  • interest payable on overdrawn balances
  • fees for setting up and renewing an overdraft
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16
Q

how cash works with the bank

A

notes and coins are withdrawn, it immediately leaves the bank

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17
Q

how bank draft works with the bank

A

‘as good as cash” cheque’s issued by the bank, it immediately leaves the bank

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18
Q

how CHAPS payments work with the bank

A

large amount electronic transfer, it immediately leaves the bank

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19
Q

how faster payments work with the bank

A

electronic transfer processed by banks, it immediately leaves the bank

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20
Q

how BACS payments work with the bank

A

electronic transfer processed by BACS set up on BACS system 3 days before the actual money transfer, reduction in bank balance on the same day as the transfer reaches the account receiving payment

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21
Q

how debit cards work with the bank

A

card used for businesses expenses, normally taken from the account on the next working day

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22
Q

how cheque’s work with the bank

A

payment relies on an issued cheque, one working day after the cheque is cashed

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23
Q

how credit cards work with the bank

A

card used for businesses expenses, monthly payments of the previous month’s expenses made on the card

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24
Q

an overdraft is

A

an arrangement with a bank to allow short-term borrowing on a current account

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25
an overdraft limit is
the amount which a bank will allow a customer to borrow on an overdraft
26
a same-day deduction is
where a payment made by a business is deducted from the bank account on the same day
27
the difference that need to be found between the bank statement and cash book are
timing differences updating items for the cash book
28
the two main timing differences between the bank columns of the cash book and bank statements are
unpresented cheques and outstanding lodgments
29
unrepresented cheques are
cheques issued, not yet recorded on the bank statements
30
outstanding lodgments are
amounts paid into the bank not yet record on the bank statement
31
receipts (money in) are
- electronic receipts, including BACS direct debits, faster payments and CHAPS payments - bank interest received
32
payments (money out) are
- electronic payments made by the bank - bank charges and interest paid - unpaid cheques deducted by the bank
33
bank reconciliation is carried out by
1. tick of item that are in both cash book and bank statements 2. the unticked items on the bank statement are entered into the cash book 3. the bank columns are now balanced 4. the remaining unticked will be timing difference
34
common control accounts are
- recivables ledger control account - payables ledger control account - value added tax control account
35
an irrecoverable debt written of is
is a debt owing to a business which it considers will never be paid
36
set off/ contra entries are
occur when the same person or business has a subsidiary account in both the receivables ledger and the payables ledger
37
the totals for the receivable ledger control account comes from
- total credit sales (include vat) from total column of sales day book - total sales return (include vat) from total column of sales return day book - total payments received by customer - from total column of the analysed cash book - total discounts allowed - from total column of discounts allowed day book - irrecoverable debts - from the journal
38
the first thing to do when dealing with discrepancy's is to establish
- is the balance of receivables ledger control account greater than the total of the balance of the subsidiary accounts in receivable ledger - is the total balances of the subsidiary accounts in receivables ledger greater then the receivables ledger control account
39
Vat returns show
- the money amount due to be paid by the business when VAT collected from sales is greater then the VAT paid on purchases - the money amount due as a refund from HM Revenue & Customs to the business VAT collected from sales is less then the VAT paid on purchases
40
control accounts are
a 'masters' account which controls a number of subsidiary accounts
41
receivables ledger control account are
the general ledger account which controls the receivable ledger
42
payables ledger control account are
the general ledger account which controls payables ledger
43
value added tax control accounts are
the general ledger account which brings together totals of VAT from the books of prime entry
44
set off / contra entries are
where balances in the receivables ledger and the payables ledger are set of against one another
45
What is aged trade receivables/payables analysis
A summary of each customer/supplier balance analysed into columns showing how long the amounts have been outstanding
46
the purpose of the journal are
- to provide a book of rpime entry for non-regular transactions - to reduce the risk of fraud - the esnure entries can be traced back to an authorised financial document
47
an irrecoverable debit is
a debt owing to a business which it conciders will never be paid
48
for the inrecoverable debts account u
debit the ammount
49
for the value added tax account you
debit the ammount
50
for recievable ledger controll account
credit the ammount
51
payroll transactions are
the accounting entries which record wages and salaries piad to employees
52
payroll tranasations require journal and and accouting entries for
- gross pay -net pay - income tax - employers and employee NIC - employers and employee pension contrubutions
53
accounts used in payroll transaction
- bank - wage control accounts - wages expense - hm revenue and customs - pension fund
54
the wages control account contains
all payroll transactions
55
the wages expense account contains
gross pay, employer's National insurnce pnsion controbution, volentary donations
56
hm revnue and custom account contains
income tax (PAYE) and employee and employers NIC
57
pension fund account contains
pension contrubution from employee and employer
58
voluntary deductions conains
voluntary deductions from employees
59
the journal entries are as follows
1. record the wages expense 2. record the net pay 3. record the liability to HM revenue and customs 4. record the liability to the pension fund 5. record the liabiity for voluntary deductions
60
the journal is a book of
prime entry
61
an initial trial balance is extracted for the purpose of
checking the accuracy of the double entry bookkeeping
62
a trial balance is
a list of the balances of every account from general ledger, distinguishing between those accounts which have debit balances and credit balances, theses are totaled to show that debits equal credits
63
certain accounts always have debit balances, debit balances are assets and expenses, and include
- purchases account - sales return account - non-current assets accounts - inventory account - expenses accounts - drawings account - receivables ledger control account - petty cash accounts - cash account
64
the non-current assets account contains
premises motor vehicles machinery office equipment
65
the inventory account contains
the inventory valuation
66
expenses account contains
wages telephone rent paid discount allowed
67
certain accounts always have credit balances, credit balances are liabilities, income and capital, and include
- sales account - purchases returns account - income accounts - capital accounts - loan accounts - payables ledger control account
68
the income accounts contain
- rent received - commissions - fees received - discount received
69
value added tax will be a debit when
vat is due to the business
70
value added tax will be a credit when
the business owes VAT to HM revenue and customs
71
the procedure to finding error's is
- check the addition of the trial balance - check balances have been entered correctly - check all accounts have been included - calculate the amount is out by and they to find that amount
72
error of omission is
when a financial transaction has been completely left out from the accounting records
73
error of commission is
a transaction is entered into the wrong account
74
wage expense
is when it comes from the employer
75
error of principle is
when a transaction has been entered in the wrong type of account
76
error of original entry is
when the wrong amount is entered
77
reversal of entries is
when the debit and credit have been put on the wrong side of the accouns
78
compensating error is
when 2 errors cancel each other out
79
Money goin into an account for assets or expenses is a
debit
80
Money going out an account for assets or expenses is a
credit
81
money going into a account for liabilities or income is a
credit
82
money going out a account for liabilities or income is a
debit

aat level 2 (3 decks)

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