Credit transactions Flashcards
(8 cards)
whats a purchases journal?
Accounting record that summarises all transactions involving the purchase of materials or supplies on credit.
How to calculate accounts payable balance(reported in balance sheet)
An Account Payable is a supplier to whom the business owes a payment for goods or services bought by them on credit.
Accounts Payable balance at the start
+ Credit Purchases inc GST
- Payments to Accounts Payable
How to calculate accounts receivable balance(reported in balance sheet)
An account receivable is a customer who owes debt to the business for goods or services sold to them on credit
Accounts Receivable balance at start (from previous balance sheet)
+ Credit Fees/Sales incl GST (from credit sales journal)
- Receipts from Accounts Receivable (from cash receipts journal)
whats a credit fee?
A credit sale is a transaction that involves the sale of inventory to a customer who is not required to pay until a later date.
whats a credit sale?
A credit sale is a transaction that involves the sale of inventory to a customer who is not required to pay until a later date.
whats recognising and reporting GST?
GST is recognised and reported only at the time the purchase or sale is made, rather that when cash is paid to an Account Payable or received from an Account Receivable
how to calculate GST
Start with:
GST Payable balance at start (or GST Receivable as a negative)
Add:
GST charged from Credit Fees (from Sales Journal)
GST received from Cash Fees (from Cash Receipts Journal)
Subtract:
GST incurred from Credit Purchases (from Purchases Journal)
GST paid with Cash (from Cash Payments Journal)
Then include:
GST settlement paid (from Cash Payments Journal – sundries) OR
GST refund received (from Cash Receipts Journal – sundries)
Result:
End Balance of GST Payable (if positive) or GST Receivable (if negative)
➜ This becomes the new Balance Sheet amount.
how to calculate owners equity
Capital -name
+ capital contribution
-/+ net profit/loss
-drawings
