The double entry model Flashcards
What are the source documents?
Purchase invoice, sales invoice, credit notes, check counterfoils, till rolls, paying in slip counterfoils, Cash receipts and bank statements
What does a bank statement contain
Standing orders, direct debits, credit transfers, dishonoured checks Debit card transactions and direct transfers
How many source documents are there
Eight
How many books of prime entry are there
Six
What are the books of prime entry
Purchase journal, sales journal, purchase returns journal, sales returns journal, general journal and three column cashbook
How many Ledgers are there
three
What are the ledger accounts
Receivables ledger, payables ledger and general ledger
What is the recording of double entry transactions based on
Source documents and the use of the main books of prime entry and ledger accounts for service and or trading businesses
What sort of transactions will be recorded as double entry
Credit transactions, trade and cash discounts, Disposal of non-current assets, irrecoverable debts and contra entries between accounts of credit customers and credit suppliers
What is revenue expenditure
short-term expenses used in the current period or typically within one year
What is capital expenditure
money spent by a business or organization on acquiring or maintaining fixed assets, such as land, buildings, and equipment.
What is revenue income
total amount of income generated by the sale of goods or services related to the company’s primary operations.
What is capital income
income generated from the sale of non-current assets.
What adjustments need to be done to the ledger accounts and financial statements
Accruals and prepayments of expense, Income received in advance and due, Provision for doubtful debts, Depreciation charges, disposal of non-current assets and opening and closing inventory
What headings must a statement of financial position contain
Non-current assets, current assets, capital (equity), non-current liabilities and current liabilities
