Accoutning Systems And VAT

Question 1

Sales cycle

Answer 1

1. Sales order
   Received from customer
2. Goods delivery note (GDN)
   Goods sent together
3. Sales invoice
   (4. Credit note)
   (overcharged/goods returned)

Question 2

Purchases cycle

Answer 2

1. Purchase order
   Sent to supplier
2. Goods received note (GRN)
3. Purchase invoice
   Received from supplier and matched to GRN
   (4. Debit note)
   (To request credit note from supplier)

Question 3

Documents that have accounting effects

Answer 3

Invoices
Credit notes

Question 4

Receivables ledger

Answer 4

Separate ledger account for each credit customer

Question 5

Payables ledger

Answer 5

Separate ledger account for each credit supplier

Question 6

Processing transactions in the computerised accounting system

Answer 6

1. Inputs
2. Accounting system processes (calculations, ledgers, journal entries, record keeping)
3. Outputs
   (Trial Balance, Reports)

Question 7

Accounting system inputs

Answer 7

Source documents (that trigger accounting entry)

Standing data (master file data) (reference data that doesn’t often change e.g. name+address, credit limits, VAT reg number etc.)

Question 8

Methods of recording transactions

Answer 8

1. Real time processing
   (processed by system as input)
2. Batch processing
   (Processed by system in batches)

Question 9

Journal entry definition

Answer 9

A double entry entered into the system
Often for non-routine transactions

Question 10

Electronic accounting system outputs

Answer 10

1. Trial balance
2. Reports

Question 11

What happens to unknown transactions recorded in the electronic accounting system from bank statements?

Answer 11

1. Recorded in (temporary) suspense account
2. Recorded on exception report
3. Investigated by accountant, recorded in correct account and suspense account removed

Question 12

Best petty cash system?

Answer 12

Imprest system

Question 13

Imprest system

Answer 13

1. Float amount decided and withdrawn from bank
2. Payments from float recorded in petty cash book
   Expenditure must be evidenced by an expense receipt attached to an expense voucher
3. When petty cash runs low, cheque is drawn to bring the amount exactly back to the initial float
   Expense vouchers produced to cheque signatory, voucher total should equal amount of cheque required

Question 14

Float =

Answer 14

Petty cash + outstanding expense vouchers (since last reimbursement)

Question 15

Purposes of petty cash book

Answer 15

1. Noting bank withdrawals
2. Analysing nature of each item of expenditure

Question 16

Presentation of a journal entry

Answer 16

Debit and credit with narrative

E.g.

Dr Depreciation expense £200
Cr Accumulated depreciation £200

To record depreciation for the year

Question 17

Adjusting trial balance process

Answer 17

1. Extract trial balance from ledger accounts
2. Enter journals into adjustments column
3. Add across debits and credits for each item into the final trial balance

Question 18

What form of tax is VAT?

Answer 18

Indirect

Question 19

Who pays VAT?

Answer 19

All sellers
Non VAT-registered buyers
(VAT-registered buyers can reclaim VAT)

Question 20

Output tax

Answer 20

Charged on sales

Question 21

Input tax

Answer 21

Paid on purchases
May be reclaimed

Question 22

Sales with VAT DE

Answer 22

Dr receivables
Cr Sales
Cr VAT account

Question 23

Purchases with VAT DE

Answer 23

Dr Purchases/expenses
Dr VAT account
Cr Payables

Question 24

Blocked input VAT

Answer 24

VAT cannot he recovered from:
Purchasing motor cars
Client entertaining expenses
(So VAT-inclusive cost is debited to non-current assets/expenses)

Question 25

Ways of adjusting VAT after a discount

Answer 25

1. Credit note
2. Detailing terms of the discount on the invoice

Question 26

VAT from net

Answer 26

X 0.2

Question 27

VAT from gross

Answer 27

x 20/120 = 1/6

Question 28

With discounts, what amount is VAT always calculated based on?

Answer 28

Full amount