Recording sales and sales returns Flashcards

1
Q

what is single entry?

A

keeping records through receipts and payments, usually by small businesses

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2
Q

list one advantage and disadvantage on single entry?

A

adv: by keeping records from payments and receipts show a company’s net income
disadv: but isn’t so useful for keeping track of the financial position of a business
does not show assets or liabilities, or what is owned or owed

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3
Q

what is the double entry system?

A

recording transactions in a more sophisticated manner, this way each entry has a ‘double effect’ meaning each transaction is recorded twice
recording a sale, cash increases but inventory decreases

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4
Q

which accounts make up the integrated ledger? (4)

A

sales, purchases, and each type of expense transaction as well as an account for each credit customer

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5
Q

one ledger becomes unmanageable for businesses, how many ledgers are there and what are they? (4)

A

receivables
payables
cash book
general

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6
Q

what is the receivables ledger?

A

recording all transactions with credit customer, shows what you are owed by who

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7
Q

what is the receivables ledger also known as?

A

sales or debtors’ ledger

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8
Q

which purchase transactions does the receivables ledger not record?

A

cash sales only credit sales

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9
Q

what is the payables ledger?

A

records all the transaction between you and your credit supplier/s

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10
Q

what is the payables ledger also known as?

A

purchase’s/ creditors ledger

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11
Q

which purchase transactions does the payables ledger not record?

A

cash purchases

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12
Q

what is the cash book?

A

where all cash AND bank purchases are recorded despite being called a cash book

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13
Q

what is a general ledger?

A

where all other expenses are recorded, like expenses, loans, money put into the business and money taken out, any equipment you have bought for the bsuiness

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14
Q

what is the general ledger also known as?

A

main/ nominal ledger

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15
Q

what does a sale?

A

a sale of goods or services the business trades in

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16
Q

what is a sales day book?

A

where invoices are first recorded, and its called a sales day book because this is where sales are recorded on a daily basis

17
Q

what are the details in a sales day book? (8)

A

date
invoice numbers
name of the customer

18
Q

what are the details in a sales day book? (8)

A

date of the invoice
invoice numbers
name of the customer
total amount
VAT number
sales column
totalling the sales day book
monthly overall total
see page 2 chapter 4

19
Q

what must all the debits be equal to?

A

the credits

20
Q

what are individual accounts called due to the layout?

A

‘t’ accounts

21
Q

which details are needed to put the first entry into an account? ()

A

date of transaction
details (invoice/credit note etc)
amount

22
Q

for a customer of your company, which side would THEIR purchases be?

A

debits as they are owing a money

23
Q

to complete the double entry, where would the second entry be after the individual customer entry if the customer had made a purchase?

A

the sales account on the credits side as the company is owed money, see page 3 chapter 4

24
Q

what difference does a VAT registered business do for double entry systems?

A

the customer account will have the gross amount listed on the debited side
if the company was not registered for VAT then the second entry to complete the double entry would be the same amount but in the sales account on the credited side
however since the company is registered for VAT the other half of the double entry is split into two
only the net amount will be entered into the sales account, credited and then the remaining amount will be entered into the VAT account which is also credited. see page 7 chapter 4

25
Q

what are control accounts?

A

accounts that summarise the results of the accounts so information can be found easier

26
Q

what will a receivables control account do?

A

it would add the total the sales and VAT account (if there are many sales accounts then it would total all of them) and it will be entered into the debits side with the details of sales day book. see page 7 chapter 4

27
Q

which accounts does the receivables ledger have?

A

customer accounts

28
Q

why does having a receivables ledger control account mean that the receivables ledger is not needed for the double entry?

A

because the receivables ledger control account summarises the content of the entire receivables ledger

29
Q

which ledger would the receivables control account be?

A

general ledger

30
Q

why is the amount entered into the receivables control account debited?

A

because it replaced the receivables ledger part in the double entry, and the credits must equal the debits. see page 7 chapter 4

31
Q

where should a credit note be recorded?

A

sales returns day book

32
Q

which columns should a credit not be entered in a customer account?

A

credits as the amount the customer owes is now less so to reduce a debit you must add a credit.

33
Q

why must accounts be balanced regularly?

A

if a customer makes regular purchases then it may be confusing whether the customer balance is a debit or a credit, as well as how much you owe and how much you owe.