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aat level 2 > bookkeeping > Flashcards

bookkeeping Flashcards

1
Q

a GRN IS

A

goods recived note

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2
Q

sales day book records

A

credit sales

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3
Q

a business must keep track of what transactions?

A
  • Expenses and purchases
  • Wages paid
  • What each customer owes, and when the money is due
  • Amounts owed to supplier, and when the payment is due
  • Amounts paid into the bank and out of bank
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4
Q

examples of a financial document are

A

a invoice or credit note, a cash book, petty cash book

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5
Q

cash sales

A

involves money changing hands at the time of transaction

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6
Q

credit sales happen when

A

when a customer does not pay for the goods or services until some time after they have been supplied

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7
Q

vat is usualy

A

20%

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8
Q

a trade discount is

A

is a discount to encourage new customers or customers in the same trade as the seller

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9
Q

a bulk discount is

A

a percentage deduction from list price for large orders

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10
Q

a prompt payment discount is

A

a discount of price is invoice is paid early

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11
Q

u can check the accuracy of a invoice using what

A
  • Price list
  • Customer order
  • Delivery note
  • Discount policy
  • Quotation
  • Po (purchase order)
  • Delivery note
  • Goods received note
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12
Q

common discrepencies in customer receipts are

A
  • Underpayment/overpayment
  • Deducting wrong prompt payment discount
  • Customer taking prompt payment discount after deadline
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13
Q

day books are for

A

*Credit sales and sales returns e.g. transactions with customers
*Credit purchases and purchase returns e.g. transactions with suppliers

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14
Q

what do cash books record

A

all payments into and out of the bank accounts

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15
Q

petty cash book record

A

all payments into and out of cash flow used for making small purchases and other small payments

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16
Q

The ledger accounts are

A

are formal bookkeeping records of the business and kept either manually or by a digital bookkeeping system.

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17
Q

A ledger is

A

traditionally larger book that each business transaction is entered into individual accounts.

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18
Q

Receivable ledger (also know as sales sledger) contain

A

personal accounts for each customer which contains records of sales made on credit, any goods returned, and payments received

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19
Q

Payable ledger (also known as purchase ledger) contains

A

a person account for each supplier which contains records of purchases made on credit, any returned goods and payments made to the supplier

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20
Q

a general ledger contains

A

a collection of accounts which record all other transactions of a business

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21
Q

what transactions are record in the general ledger

A
  • Assets – these are items owned by the business
  • Liabilities – items owed by a business.
  • The owners capital (equity) – this includes the amount invested and profits made by the business
  • Expense items – money going out
  • Income items – money coming in
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22
Q

The general ledger is sometimes also known as what

A

the ‘main ledger or ‘nominal’ ledger.

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23
Q

control accounts are

A

totals’ accounts which summarise a number of other accounts. They are set out in the same way as all other ledger accounts

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24
Q

examples of control accounts are

A

-Receivables ledger control account
-Payables ledger control account

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25
Q

Payables ledger control account contains

A

the totals of all the trade payable accounts in the payable ledger - this tells the business how much is owing to all its suppliers

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26
Q

-Receivables ledger control account contains

A

the total of all the trade receivables accounts in the receivable ledger- this tells the business how much is owing from all customers

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27
Q

where are the contol accounts contained

A

in the general ledger

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28
Q

profit =

A

income - expenses

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29
Q

capital =

A

assests - liabilities

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30
Q

a price quotation is somthing

A

which the seller may be asked to provide

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31
Q

a purchases order is

A

somthing the seller receives from the buyer

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32
Q

a delivery note goes with what

A

the goods from the seller to the buyer

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33
Q

a invoice

A

lists goods and tells the buyer what is owed

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33
Q

a return note

A

is sent with any goods that are being returned

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34
Q

credit notes

A

are sent to the buyer if any refund is due

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35
Q

a statement of account

A

sent by the seller to remind the buyer what is owed

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36
Q

a purchase order includes

A
  • a reference number
  • product code
  • quantity of goods
  • description of good
  • signed ad dated by person in charge of purchasing
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37
Q

a delivery note is

A

a document dispatched with the goods when the order is ready

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37
Q

a delivery note includes

A
  • has a numerical reference
  • method of delivery is stated
    -purchase order number
  • quantity suplied
  • product code
  • description of goods
    -signed by person who received the goods
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37
Q

a invoice is a

A

its a financial document sent by the seller to the buyer stating how much is owed by the buyer of goods or services

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38
Q

a invoice includes

A
  • adresses
  • date
  • references
  • ammount owed
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39
Q

goods total is

A

the amount due to the seller

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40
Q

Value added tax (vat) is

A

usually calculated at 20% of the goods total, VAT is added to produce the final invoice total

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41
Q

net monthly means

A

that full payment of the invoice should be made within a month of the invoice date

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42
Q

carriage paid means that

A

the price of the goods include delivery charges

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43
Q

E & OE Stands for

A

‘error and omissions excepted’

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44
Q

a credit note is

A

a ‘refund’ document, it reduces the amount owed by the buyer. The credit note is prepared by the sellers and sent to the buyer

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45
Q

a credit note includes

A

-The invoice number of the original consignment is quoted
-The reason for the issue of the credit note is stated at the bottom of the credit note
-The details are otherwise the exactly the same as on the invoice

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46
Q

a statment of accounts contains

A
  • balances at the beginning of the month
  • any payments recived
  • invoices issued
  • refunds made
  • running ballance
    bank details
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47
Q

credit limtis is

A

The credit limits of a customer is the maximum amount that the seller will allow the customer to owe at any one time

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48
Q

what needs to be check on a invoice

A
  • The purchasing order relating to the invoice
  • The seller’s own record of any price quoted
  • The sellers file record of the buyer which should give the credit limit and the discounted amount
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49
Q

books of prime entry record what

A

financial transactions and are prepared from business documents, which include invoices and bank payments

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50
Q

what do double entry accounts record

A
  • what is owed on credit by individual customers as a result of sales
  • what is owed on credit to individual suppliers as a result of purchases
  • income items
  • expense items
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51
Q

double entry accounts can be

A
  • accounts for types of income (sales, rent received) or expenses (purchases, insurance, wages)
  • accounts for assets (items owned)
  • accounts for liabilities (items owed)
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52
Q

recievables ledger contains

A

accounts for customers
- who buy from the business
- who owe money to the business

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53
Q

payable ledger contains

A

accounts for suppliers
- who supply on credit to the business
- to whom the bussiness owes money

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54
Q

general ledger contains

A
  • assets (items owned)
  • liabilities (items owed)
  • owner’s capital
  • expenses
  • income
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55
Q

double entry T accounts have two sides they are

A
  • a debit side (often written as ‘dr’) on the left
  • a credit side (often written as ‘cr’) on the right
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56
Q

bank accounts show

A

transactions passing through the account held at the bank. they will need recording in the accounts of the business

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57
Q

a bank see a debit as?

A

as a payment out of a customer’s account

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58
Q

a bank sees a credit as?

A

as a payment into a customer’s account

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59
Q

a business shoud think of a debit as

A

money paid into the bank is always a debit in the accounting system of the business

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60
Q

a business should think of a credit as

A

money paid out of the bank is always a credit in the accounting system of the business

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61
Q

payments into the bank are

A

debits

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62
Q

payments out of the bank are

A

credits

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63
Q

transactions included on the credit side of the bank account include

A
  • purchases — goods bought for resale or materials used for manufacturing
  • expenses — expenses of running the business, e.g. rent, advertising, insurance
  • assets bought - items bought for use in the business, e.g. computers, vehicle
64
Q

transactions included on the debit side of Bank Account include

A
  • sales — money received for goods sold or services provided
  • capital — money paid in by the owner
  • loans — money borrowed from the bank or other sources
65
Q

cash sales are recived

A

straight away

66
Q

credit sales are recived

A

at a later date

67
Q

cash purchase are paid

A

straight away

68
Q

credit purchases are paid

A

at a later date

69
Q

a double entry rule is that an increase in an asset

A

is always a debit entry

70
Q

a double entry rule is that a decrease in an asset

A

is awalys a credit entry

71
Q

a double entry rule is that an increase in liability is

A

always a credit entry

72
Q

a double entry rule is that a decrease in a liability is

A

always a debit entry

73
Q

a double entry rule is that an increase in capita

A

always a credit entry (capital — which includes profit — is effectively a liability of the business which is owed to the owner)

74
Q

purchases made from the supliers are entered on what side of payables ledger

A

on the credit side (right hand side)

75
Q

faulty goods returned (purchases retured) are entered on what side of payables ledger

A

entered on the debit side (left hand side)

76
Q

stock

A

goods held by a business | traditional

77
Q

trade payable

A

a supplier you owe money to |international

78
Q

creditor

A

a supplier you owe money to | traditional

79
Q

trade receivable

A

a customer who owes you money | international

80
Q

debtor

A

a customer who owes you money | traditional

81
Q

statement of profit or loss

A

financial statement calculating profit (or loss) made by a business | international

82
Q

profit and loss account

A

financial statement calculating profit (or loss) made by a business | traditional

83
Q

balance c/d is

A

balance carried down

84
Q

inventory

A

goods held by a business

85
Q

ballance b/d is

A

ballance brought down

86
Q

statement of financial position

A

financial statement showing the assets, liabilities and capital of a business | international

87
Q

both columns in a payables ledger should

A

ballance and equal the same

88
Q

balance sheet

A

financial statement showing the assets, liabilities and capital of a business | international

89
Q

day books

A

the place in the books of a business where a financial transactions, eg sales, sales returns, purchases, purchases returns, discounts allowed and discounts received

90
Q

digital bookkeeping systems

A

electronic methods of recording financial transactions

91
Q

cash books

A

book of prime entry which lists payment in and out of the bank accounts

92
Q

a balanced payables ledger shows

A

how much a suplier is owed by the customer

93
Q

petty cash book

A

book of prime entry which lists small cash (notes and coins) business expense payments from an office cash fund

94
Q

financial document

A

a term given to a document - such as an invoice - which results from transaction

95
Q

the customer balance on a receivables ledger is on the

A

debit side

96
Q

ledger account

A

the formal accounting record (often in double-entry format) for financial transactions involving individuals (customers and suppliers) and business assets, expenses, income, liabilities and capital

97
Q

‘cash’ and ‘credit’ sales/purchases

A

a ‘cash’ sale/purchase is where payment is made straightaway; a ‘credit’ sales/purchase is where payment is made at a later date

98
Q

double-entry accounts

A

ledger accounts set up on the double-entry system (ie two entries - a debit and a credit - are made for each transaction)

99
Q

on a general ledger the the debit balance shows

A

where money is spent by the business

100
Q

the ledger

A

‘book’ which contains the individual accounts; it is often subdivided into different ledgers, eg receivables ledger, payables ledger, general ledger

101
Q

on a general ledger the the credit balance shows

A

where money is received by the business

102
Q

control accounts

A

‘totals’ accounts contained in the general ledger

103
Q

features of a digital bookeeping system are

A
  • on-screen preparation of sales invoices, which can be sent electronically to the customer, with automatic updating of accounts in the receivables ledger
  • electronic recording of purchases invoices, with automatic updating of accounts in the payables ledger
  • electronic importing of transactions from bank records
  • electronic payments to suppliers and for expenses
104
Q

trade receivable

A

customer who owes a business money

105
Q

books of prime entry

A

the place in the books of a business where a financial transaction is recorded for the first time, eg day books, cash book, petty cash book

106
Q

trade payable

A

supplier owed money by a business

107
Q

benefits of didgital bookeeping

A
  • reconciliation of the receivables and payables ledgers to their respective control accounts
  • creation of a trial balance from the general ledger accounts
  • processing of recurring entries, such as regular payments for rent
  • reports available on demand, such as trial balance, supplier and customer lists, customer statements
108
Q

drawbacks of digital bookeeping

A
  • transactions could be duplicated by recording the same transaction twice
  • creation of errors when a recurring entry changes, e.g. the amount or frequency of the transaction
  • other errors such as omitting a transaction, entering the wrong amount, and recording the entry to the wrong account
109
Q

Discounts allowed’ (or prompt payment discount)

A

is a discount offered by a supplier to customers in order to encourage customers to settle up straightaway or in a short time from the invoice date; it is discounts allowed in the accounting system of the seller

110
Q

the day books used for credit sales, sales returns and discounts allowed are:

A
  • sales day book
  • sales returns day book
  • discounts allowed day book
111
Q

why are they called book of prime entry

A

because they are the first place in the accounting system where financial documents are recorded

112
Q

a sales day book lists

A

the credit sales made by a business

113
Q

the gerneral legder contains

A

sales account, sales returns account, receivables ledger control account, Value Added Tax account, together with other accounts kept by the business

114
Q

After the sales day book has been prepared and totalled, the information from it is transferred to

A

the double-entry system in the general ledger

115
Q

total before discount

A

quantity x unit price

116
Q

subsidiary accounts are

A

used to provide a note of how much each trade receivable owes to the business

116
Q

the sales day return book stores

A

information about sales returns transactions until such time as a transfer is made into the double-entry accounts system

117
Q

discount

A

total before discount x discount %

118
Q

goods total

A

total before discount - discount

119
Q

the sales returns book is prepared with

A

credit notes issued to customers

120
Q

VAT

A

goods total x VAT %

121
Q

invoice total

A

goods total + VAT

122
Q

he total of the net column of the sales return book tells a business

A

the amount of sales returns for the period

123
Q

REMITTANCE ADVICE is

A

this is an advice which states the amount of money sent by a credit buyer to the seller in full or part settlement of an account

124
Q

general rule with allocating receipts

A

is that receipts are allocated to older transactions first, in the following order:
- opening balance
- invoices, in full or part payment
- credit notes, utilised in full or part against invoices

125
Q

the purchasing process

A

1.purchase order
2. delivery note
3. goods recived note
4. purchase invoice
5. purchase credit note

126
Q

a statment of account is

A

issued by a suplier listing all the payents, invoices and credit notes on the account, giving total amount due

127
Q

reconsiliation

A

a comparison and tying up of transactions in two documents

128
Q

discrepeancy

A

a diffrence between the transactions recored in two seperte documents

129
Q

alloction of payments

A

process of matching up payments made to outstading items on teh suppliers account in playable ledger

130
Q

the cash book is used to record

A

money transactions of the business - both in cash and through the bank

131
Q

there are two ways the cash book is used in accounting they are

A
  • the cash book combines the roles of the book of prime entry and double-entry book keeping
  • the cashbook is the book of entry only and a seperate bank account is kept in gerneral ledger in order to complete double-entry bookeeping
132
Q

recipts in the cash book are

A
  • cash sales
  • trade recivables (customers)
  • loans from bank
  • vat refunds
  • capital introduced by the owner
133
Q

payments in the cash book are

A
  • cash purchases
  • trade payables (customers)
  • expenses
  • bank loan repayments
  • vat payments
  • purchaes of assests
  • drawings
134
Q

vat is usualy

A

20% of the total goods

135
Q

the debit side of the cash book is for

A

money in i.e recipts

136
Q

the credit side of the cash book is for

A

money out i.e payments

137
Q

the cash book record

A

money transactions of the business in the form of cash and bank receipts and payments

138
Q

transactions recorded in th cash book include

A
  • cash sales
  • cash purchases
  • receipts from customers
  • payments to credit suppliers
  • other payments and recipts
139
Q

drawings

A

when the owner takes money from the business for personal use

140
Q

the petty cash book is used to

A

recored low-value cash payments for purchases and expenses

141
Q

a petty cash book is a

A

book of prime entry for low value cash payments

142
Q

the petty cash books operates with a

A

imprest system

143
Q

the purpose of a petty cash voucher is

A

to enable payments to be made out of petty cash

144
Q

petty cash vouchers contain the following

A
  • the date, details and ammount of expenditure
  • the signiture of the person authorising the payment
145
Q

the petty cash book

A

records low-value cash payments for small purchases and expenses

146
Q

petty cashire

A

the person responsable for the petty cash book

147
Q

petty cash voucher

A

finacial document against wich payments are made out of petty cash

148
Q

imprest system

A

where money held in the petty cash float is restored to the same ammount for the begining of each week or month

149
Q

non-imprest system

A

where the petty cash supply is not topped up to the same value each time

150
Q

a trial balance is

A

a list in two columns of the balances of all general ledger accounts, with debit balances on the left, credit balances on the right, and
showing the total of each column

151
Q

debit balances

A
  • cash
  • drawings
  • expenses, eg discounts allowed, -general expenses, rent paid, wages
  • non-current assets, eg machinery, office equipment, premises, vehicles
  • petty cash
  • purchases
  • receivables ledger control
  • sales returns
152
Q

credit balances

A
  • bank loan
  • capital
  • income, eg commission received, discounts received, rent received
  • payables ledger control
  • purchases returns
  • sales
153
Q

bank transactions are debited when

A

the business has money in the bank, ie an asset of the business

154
Q

bank transactions are credited when

A

when the business is overdrawn at the bank, ie a liability of the business

155
Q

value added tax (vat) is debited when

A

when VAT is due to the business by HM Revenue & Customs

156
Q

value added tax (vat) is credited when

A

when the business owes VAT to HM Revenue & customs

157
Q

trial balance

A

a list in two columns of the balances of all general ledger accounts, listing debit balances on the left, credit balances on the right, and showing the total of each column

158
Q

c/d and b/d

A

carried down and brought down — used when balancing accounts at the period end

159
Q

c/f and b/f

A

carried fonvard and brought fonvard - used when often when
subtotalling money amounts, a page is full

160
Q

financial statements

A

statement of profit or loss, and statement of financial position

aat level 2 (2 decks)

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