Recording Credit Sales Flashcards
Where are credit sales primarily recorded?
In the sales day book
What does a credit sale entered in the sales day book entered?
Details of the nails and reference in relation to the customer and contains a breakdown of the transaction value, the net, vat and gross amount, as details on invoice
Are daybook part of the double entry system?
No
What are the totals from the day book used for?
To preform the double entry to entered into the general ledger on a timely basis
When recording a credit sale, what do the financial effects of the transaction include?
The recognition of the receivable, the income generated from the sale and the amount of VAT that has been charged and is liable to be paid to HM Revenue and customs
What has the sales day book been reproduced alongside?
Along with summaries of the accounting entries required to the general ledger
What is the total column in the sales book?
The total amount is debited to the receivables acccount
What is the VAT column in the sales day book?
The VAT amount is credited to the VAT control account
What is the NET column in the sales day book?
The net amount is credited to the sales account
The accounting entries for a credit sale with VAT are:
Receivables accounts with the gross amount
Sales amount with the net amount
Vat control account with the vat amount
What happens to the total amount on the sales day book
The total amount is debited to the receivables account… recognising the receivables asset, because a credit cust owes the business the gross amount
Where is the net amount credited to from the sales day book?
The net amount is credited to the sales account
Why isn’t the VAT collected to the sales account from the sales day book?
As this is collected on behalf of HMRC, business doesn’t make profit
Is the VAT amount a liability ?
Yes
