Unit 1 - Introduction to Bookkeeping

Question 1

Trade Discount

Answer 1

Definite amount that is deducted from the list price of the goods for the supplies to some customers.
This encourages & rewards customer loyalty.

Question 2

Bulk Discount

Answer 2

Amount deducted from list price of goods for supplies to some customers. Given by supplier for sales orders above a certain quantity.

Question 3

Prompt Payment Discount

Answer 3

Offered to customers in order to encourage early payments/ invoices.

Question 4

Purchase Order

Answer 4

Buyer-generated document that authorises a purchase transaction.

Question 5

Sales Order

Answer 5

Seller-generated document that authorises a sale to a customer.
Issued after receipt of a purchase order.

Question 6

Delivery Note

Answer 6

Document accompanying goods despatched to a customer explaining what the delivery contains.

Question 7

Goods Received Note

Answer 7

Internal document completed by the purchaser that records the details of goods received & contains similar information to delivery note.

Question 8

Sales Invoice

Answer 8

Document that itemises a transaction between a buyer & a seller.
Request for buyer to make payment for goods sold/ services provided by seller.

Question 9

VAT (Sales Tax)

Answer 9

Consumption tax added to product’s selling price. Represents tax on the ‘value added’ to product at each stage of the production/ supply process.

Question 10

Output & Input Tax

Answer 10

Output - Tax charged on the sale of goods/ services.
Input - Tax paid on the purchase of goods/ services.

Question 11

Net Of VAT

Answer 11

Net amount excludes VAT.

Question 12

Gross Of VAT

Answer 12

Gross amounts includes VAT

Question 13

Purchase Invoice

Answer 13

Document that itemises a transaction between buyer & seller.

Question 14

Credit Note

Answer 14

Document issued by supplier to a customer cancelling part or all of a sales invoice.

Question 15

Goods Returned Note

Answer 15

Document sent to supplier by customer detailing the goods returned & reason(s) for the return being made.

Question 16

Code

Answer 16

System of numbers, letters & symbols designed to be applied to a set of items, to give a brief accurate reference.
Helps entry to accounting records, collation & analysis.

Question 17

Ledger Code

Answer 17

Unique reference given to different types of income, expenses, assets & liabilities.

Question 18

Customer Account Code

Answer 18

Unique reference given to each individual customer of an organisation.

Question 19

Supplier Account Code

Answer 19

Unique reference given to each individual supplier of an organisation.

Question 20

Product Code

Answer 20

Unique reference given to each type of product from an organisation.

Question 21

Sales Day Book

Answer 21

List of sales invoices that are to be processed for a given period.

Question 22

Sales Returns Day Book

Answer 22

List of credit notes that are to be processed for given period.

Question 23

Purchases Day Book

Answer 23

List of purchases invoices that are to be processed for a given period.

Question 24

Purchases Returns Day Book

Answer 24

List of credit notes that have been received from suppliers for a given period.

Question 25

Cash Book

Answer 25

Record of cash receipts & payments that can form part of the double-entry bookkeeping system as well as being a book of prime entry.

Question 26

Analysed Cash Book

Answer 26

Cash book with additional columns for analysing principal sources & payments for cash into types of income & expenses.

Question 27

Petty Cash

Answer 27

Small amount of cash that most businesses hold in order to make small cash payments.

Question 28

Petty Cash Book

Answer 28

All petty/ small payments made through petty cash fund are recorded systematically.

Question 29

Soletrader

Answer 29

Organisations that are owed & operated by 1 person.

Question 30

Partnership

Answer 30

Organisations owed by 2+ persons working in common with a view to making profit.

Question 31

Company

Answer 31

Organisations recognised in law as 'persons' in their own right. May own assets & incur liabilities in its own name.

Question 32

Management Accounts

Answer 32

Present timely financial & statistical information to business managers. Helping managers to run business more effectively, making day-to-day & short-term decisions.

Question 33

Financial Accounts

Answer 33

Prepared annually for business owners, HMRC, banks, customers, suppliers & government.

Question 34

Sales Revenue

Answer 34

Income generated from trading activities of business.

Question 35

Cost Of Sales

Answer 35

Cost of buying/ producing the goods for resale.

Question 36

Gross Profit

Answer 36

Profit remaining, after cost of sales have been deducted from sales revenue.

Question 37

Sundry Income

Answer 37

Types of income that aren't generated by primary trading activities of business.

Question 38

Expenses

Answer 38

Day-to-day running costs of business.

Question 39

Net Profit/ Loss

Answer 39

Profit/ loss remaining after expenses have been deducted from gross profit & sundry income.

Question 40

Asset

Answer 40

Something owed or controlled by a business, available for use in the business.

Question 41

Non-current Asset

Answer 41

Asset acquired for long-term use in the business and not resold as part of the trading activities.

Question 42

Current Asset

Answer 42

Short-term asset of business which is to be used in a business in the near future.

Question 43

Receivable

Answer 43

Someone who owes business money (current asset).

Question 44

Non-Current Liability

Answer 44

Amount owed by business & due to be repaid after more than 12 months.

Question 45

Liability

Answer 45

Amount owed by business.

Question 46

Payable

Answer 46

Someone the business owes money to (liability).

Question 47

Capital

Answer 47

Amount which the owner has invested in the business. Owed back to owner & could be regarded as a special liability of business.

Question 48

Drawings

Answer 48

Amounts withdrawn by business owner for their own personal use.

Question 49

Capital Expenditure

Answer 49

Purchase of, or improvement of, non-current assets

Question 50

Revenue Expenditure

Answer 50

Day-to-day running costs of the business.

Question 51

Capital Income

Answer 51

Income from the sale of capital assets of business.

Question 52

Revenue Income

Answer 52

Income generated from sale of goods/ services.

Question 53

Cash Purchase

Answer 53

When goods are bought & customer pays immediately using cash, debit card, credit card or cheques. Receipt is issued for amount paid.

Question 54

Credit Purchase

Answer 54

When goods are bought & customer doesn't have to pay immediately but can pay after a specified number of days. Invoice is then issued to request that payment is made.

Question 55

Trial Balance

Answer 55

List showing the balance brought down on each ledger account. It is to ensure that total debits equal the total credits & therefore the totals of trial balance columns should balance. It does not confirm that the account debited or credited is correct.

Question 56

Digital Bookkeeping

Answer 56

Sorting accounting records online, either on a local server or in cloud.

Question 57

The Cloud

Answer 57

All information that can be accessed remotely via internet.

Question 58

CSV File

Answer 58

Comma Separated Values. Plain text file that contains list of data. Used to exchange data between different applications.

Question 59

Recurring Entries

Answer 59

Journal entry that is recorded in every accounting period.

Question 60

General Ledger

Answer 60

Contains all the ledger accounts for recording transactions occurring within entity.

Question 61

Receivables Ledger Control Account

Answer 61

Shows total amount due to us from our credit customers. It contains all invoices & credit notes issued to cash receipts from credit customers for a given period.

Question 62

Payables Ledger Control Account

Answer 62

Contains the total value of all the invoices & credit notes received from cash payements made to credit suppliers for a given period.

Question 63

Subsidiary Ledger

Answer 63

Provides details behind the entries in the general ledger. Subsidiary ledgers are maintained for individual receivables & payables.

Question 64

Subsidiary Receivables Ledger

Answer 64

Set of accounts for individual receivables.

Question 65

Subsidiary Payables Ledger

Answer 65

Set of accounts for individual payables.

Question 66

Receivable (Customer) Statement

Answer 66

Shows all the invoices & credit notes that have been issued to a particular credit customer for that month, together with any outstanding from previous months. This also showed received.

Question 67

Payable (Supplier) Statement

Answer 67

Shows all invoices & credit notes that have been received from a particular credit supplier for that month, together with any outstanding from previous months.

Question 68

Bank Reconciliation

Answer 68

Process of matching the balances in business's accounting records to the corresponding information on a bank statement.

Question 69

Bank Statement

Answer 69

Document that is sent by the bank to the account holder, usually on a monthly basis, summarising the transactions on an account during the month.

Question 70

Remittance Advice

Answer 70

Blank document that the customer completes when making a payment to supplier. Shows the total payment being made & which invoices the payment is paying off.

Question 71

Petty Cash Voucher

Answer 71

Internal document that details the business expenditure that an employee has incurred personally.