Recording Financial Transactions Flashcards
Source Documents
Documents recording sales/purchases. The only source documents are sales invoices, purchase invoices, and credit notes.
Books of original entry
The records in which a business first records transactions.
Examples: sales day book, purchases day book, cash book, petty cash book, payroll, and journal.
Sales day book
The book of original entry in respect of credit sales. For credit sales the VAT will be recorded in the sales day book.
Purchases day book
The book of original entry in respect of credit purchases. For credit purchases the VAT will be recorded in the purchases day book.
Cash book
The book of original entry for receipts and payments in the business’s bank account. Includes discounts allowed (receipts side) and discounts received (payments side).
Petty cash book
The book of original entry for small payments and receipts of cash. VAT can be reclaimed on expenditure made via petty cash.
The imprest system of petty cash
The amount of money in petty cash is kept at a fixed ‘float’ amount. Float = cash still held in petty cash + receipts for payments
Payroll
The book of original entry for recording staff costs
Nominal ledger
An accounting record which analyses the financial records of a business and summarises all the entity’s financial transactions.
Receivables ledger
The collection of individual customer memo accounts. It is not part of the nominal ledger, thus not on TB, hence does not affect P/L
Payables ledger
The collection of individual supplier memo accounts. It is not part of the nominal ledger, thus not on TB, hence does not affect P/L
Trial Balance
A list of nominal ledger balances shown in debit and credit columns.
Extended Trial Balance
In the ETB, the debits and credits from the TB along with any adjustments are extended into additional columns for SPL and SFP.
Capital account
The capital is comprised of cash introduced, net profit/loss, less any drawings.
