Recording sales and sales returns

Question 1

what is single entry?

Answer 1

keeping records through receipts and payments, usually by small businesses

Question 2

list one advantage and disadvantage on single entry?

Answer 2

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

Question 3

what is the double entry system?

Answer 3

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

Question 4

which accounts make up the integrated ledger? (4)

Answer 4

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

Question 5

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

Answer 5

receivables
payables
cash book
general

Question 6

what is the receivables ledger?

Answer 6

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

Question 7

what is the receivables ledger also known as?

Answer 7

sales or debtors’ ledger

Question 8

which purchase transactions does the receivables ledger not record?

Answer 8

cash sales only credit sales

Question 9

what is the payables ledger?

Answer 9

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

Question 10

what is the payables ledger also known as?

Answer 10

purchase’s/ creditors ledger

Question 11

which purchase transactions does the payables ledger not record?

Answer 11

cash purchases

Question 12

what is the cash book?

Answer 12

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

Question 13

what is a general ledger?

Answer 13

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

Question 14

what is the general ledger also known as?

Answer 14

main/ nominal ledger

Question 15

what does a sale?

Answer 15

a sale of goods or services the business trades in

Question 16

what is a sales day book?

Answer 16

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

Question 17

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

Answer 17

date
invoice numbers
name of the customer

Question 18

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

Answer 18

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

Question 19

what must all the debits be equal to?

Answer 19

the credits

Question 20

what are individual accounts called due to the layout?

Answer 20

‘t’ accounts

Question 21

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

Answer 21

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

Question 22

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

Answer 22

debits as they are owing a money

Question 23

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

Answer 23

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

Question 24

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

Answer 24

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

Question 25

what are control accounts?

Answer 25

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

Question 26

what will a receivables control account do?

Answer 26

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

Question 27

which accounts does the receivables ledger have?

Answer 27

customer accounts

Question 28

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

Answer 28

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

Question 29

which ledger would the receivables control account be?

Answer 29

general ledger

Question 30

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

Answer 30

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

Question 31

where should a credit note be recorded?

Answer 31

sales returns day book

Question 32

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

Answer 32

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

Question 33

why must accounts be balanced regularly?

Answer 33

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.