unit 1 Flashcards
DEAD CLIC
Debit
Expense
assets
Drawings
Credit
Liability
Income
Capital
the three ledgers
sales- credit sales which shows trade receivables
purchases-credit purchases which shows trade payables
general- everything else
trial balance accuracy
checks the arithmetical accuracy of the ledgers
debit and credit column must equal
errors a trial balance can find
undercast/overcast
two errros of different amounts
suspense
used to balance the tb when errors occur error of commission omission principal original entry compensating error reversal of entries
nca, ca, cl, ncl
nca- good bought for a long term basis e.g. car
ca- good usually held for 12 months e.g. inventory
ncl- payable after 12 months bank overdraft
cl- to be paid within 12 months e.g. loan
deprecation methods
straight line- value- residual divided by the year
reducing balance- value divided by the year, new value divided by the next year and so on.
accruals and prepayments
accruals- money owed
prepayments- money paid in advanced
bad debts recovered
goes in the income statement after gross profit as other bits of income
bad debts
in the income statement as an expense
provision for doubtful debts
always cr value, the level of provision is determined by experience or economic cycle.
subsidiary books
sales day book, sales returns day book, purchase day book, purchase returns day book, cash book, general journal
source document
credit note, invoice, till rolls, cheque counterfoils, bank information, cheque book
bank reconciliation statement
balance as per cash book outstanding lodgements ( amounts to be paid, not recorded in the bank statement yet) unpresented cheques ( cheques issued not recorded in the bank statement)
structure of a bank reconciliation
balance as per cash book
add unpresented cheques
less outstanding lodgement
balance at bank as per cash book
