Recording Financial Transactions

Question 1

Accounting/Financial records consist of….

Answer 1

1) Source document
2) Accounting system
3) Ledger/subsidiary ledger account
4) Financial statement

Question 2

Module that interacts with general ledger

Answer 2

1) Receivable ledger
2) Payable ledger
3) Non current asset register
4) Inventory system

Question 3

Purchase/Sale invoice match with ??

Answer 3

Purchase/Sale order

Question 4

Before paying a supplier invoice, we should match GRN with ??

Answer 4

Purchase order

Question 5

Other purpose of GRN

Answer 5

Estimating company figure for accrued expense (accruals)

–> act as an evidence of liabilities to pay for good received not yet invoiced [GRNI]

Question 6

Taking advantage of settlement discount is a matter of trading policy

YES / NO

Answer 6

NO

Settlement discount is a matter of FINANCING policy, because it is optional

Question 7

Direct debit

Answer 7

Payer gives the recipient the authority to take variable payments from their bank account

Question 8

Standing order

Answer 8

Payer authorises the bank to make regular payments of a fixed amount to a recipient.

Question 9

IAS 15 : 5 Steps to Recognise Revenue

Answer 9

1) Identify the contract(s) with a customer
2) Identify the performance obligations in the contract
3) Determine the transaction price
4) Allocate the transaction price to the performance obligations in the contract
5) Recognise revenue when (or as) the entity satisfies a performance obligation

Question 10

Good credit control

Answer 10

• Initial screening of potential credit customers
• Terms of credit (credit limit & credit period)
• Invoices should be issued quickly and should be accurate

Question 11

Effect of change in sales tax rate

Answer 11

• Business’s cash flow
• Customer need to be informed
• Update in accounting system

Question 12

Is sales tax always a current liability?

Answer 12

NO

Depending on its financial balance, can be current asset/liability

Question 13

Purpose of asset register

Answer 13

Acts as a source of supporting documentation to verify the accuracy of balances in the ledger accounts.

Question 14

Reasons to maintain financial record

Answer 14

1) Business planning
2) Regulations (taxes)

Question 15

‘Determine transaction price’

Explain 3rd step in IFRS 15 Steps to Recognise Revenue

Answer 15

Amount to which an entity expects to be entitled in exchange for the transfer of goods and services. When making this determination, an entity will consider past customary business practices

• Does NOT include amounts collected on behalf of third parties (Sales Tax) !!

Question 16

Variable consideration in determining transaction price when prompt payment discount are offered

Answer 16

Expected consideration is variable as the amount the entity will actually receive is dependent upon the customer choice as to whether it will take advantage of the discount

Question 17

Information required on sales tax invoices

Answer 17

• Unique sequential number, identifying invoices
• Analysis of amount payable by VAT rate
• Description & quantity of goods/service supplied

Question 18

Key features of computerised accounting system

Answer 18

• Account codes
• Standing data
• Control

Question 19

Examples of source document

Answer 19

• Invoices
• Credit notes
• Petty cash vouchers
• Wages records
• Cheque stubs