Lecture Seven

Question 1

What are t accounts usually recorded in

Answer 1

one nominal / general ledger

Question 2

Problems with the nominal ledger

Answer 2

real businesses have a few diff ledgers
-if the business was any real size with loads of transactions would’ve been massive.
-loads of ppl needed to look after the book, gain accesses to bookkeep one book
-everyone would need to know the rules - lots of training

Question 3

what was put into place to solve nominal ledger problems

Answer 3

books of original entry

Question 4

what is books of oringal entry

Answer 4

separate book for different types =

solves the problem of b. different jobs allocated
-totals can be posted to the nominal ledger = solving the problems

Question 5

6 main books of the books of oringial entry

Answer 5

1. sales daybook
2. purchase daybook
3. returns inward daybook
4. returns outward daybook
5. cash books (x2)
6. the journal

Question 6

sales daybook

Answer 6

lists all sales made on CREDIT terms

Question 7

what info is kept in example on sales daybook

Answer 7

date, name, invoice, £

Question 8

what entered on the double entry for the sales daybook

Answer 8

DR Recieveables
cr sales

Question 9

where are total sales on credit terms

Answer 9

debited to the recieveables control account

Question 10

what is receivables control acc also known as

Answer 10

sales ledger control a/c, debtors ledger control ac

Question 11

what do we need to reord in the sales daybook

Answer 11

what is due from each individual customer

Question 12

where is the information ab what is due from individual customers recorded, what is it known as

Answer 12

in seperate set of individual customer acc- known as recievables ledger

Question 13

what happens when invoice listed in sales daybook

Answer 13

single sided debit entry made in the individual customers account in the recievables ledger

Question 14

What must be equal when the sales book is recorded

Answer 14

the balance on recievables control acc (made up of the nominal ledger acc) = to the total list of balances (which is the balanced customer acc and list balances)

Question 15

What are the alternatives to this ystem about the sales daybook

Answer 15

the control acc is part of double entry

Question 16

Purhcases Daybook?

Answer 16

Lists all the goods & services bought on the credit (not just purchases)

Question 17

What is recorded in purhcases daybook

Answer 17

date, details, ref, total, purchases, gases, water

Question 18

the double entry system for the purchases daybook

Answer 18

DR pUrchases
DR Gas
DR WATER

CR Payables control a/c

Question 19

where is the totalm purchase daybook credited

Answer 19

to payables comtrol acc

Question 20

paybales comntrol ac also known as

Answer 20

purchase ledger control ac

Question 21

what must we record for the purchase daybook as well

Answer 21

what is owed to each indidual supplier

Question 22

where would the invidual suplier owed amount be recorded?

Answer 22

sperate set of indivual supplier accounts known as payables ledger acc

Question 23

what happens everytime invoice for purchase daybook listed

Answer 23

single sided CREDIT entrt made in the indidual suppliers acc, in the payables ledger

Question 24

what must equal in the purchase credit daybook

Answer 24

balance on payables control account = total of list of balances

Question 25

cash book?

Answer 25

purpose of two cash books

Question 26

what are the two cash books

Answer 26

1- cash book, 2- petty cash book

Question 27

what is cash book (1 of the books)

Answer 27

-contains bank transactions

Question 28

what does the petty cash book contain

Answer 28

records payments made with notes and coins

Question 29

what are the two sides of the cash books

Answer 29

recepits and payments

Question 30

how many formats used for the cash books

Answer 30

various formats e.g. two collumn or three

Question 31

what format used mainly for small businesses - cash book

Answer 31

columnar (or analysis)

Question 32

data stored in cash book in recepits side

Answer 32

date, details, total, recepits from credit customer, cash sales, interest

Question 33

whats the total posed to double entry in the cash book reciept side

Answer 33

DR cash at bank CR recievables controll CR sales CR interest income

Question 34

data stored in cash book in payments

Answer 34

date, details, total, payments to credit suppliets, rent, cleaning

Question 35

whats the total posed to double entry in the cash book payment side

Answer 35

DR pyables control, DR Rent DR cleaning CR Cash at bank

Question 36

The journal

Answer 36

used for any transaction & adjustments that arent recorded in any other book of orignal entry e.g depreicatiomn and stuff that arent sales

Question 37

example of double entry for tje journal of depreication

Answer 37

DR depreication expense CR accumulated depreation

Question 38

What are the two control accounts

Answer 38

1- recieveables control account 2- payables control account

Question 39

what are the reasons for the two control accounts

Answer 39

1- keep no of accounts in the nominal ledger in a manageable size 2-provides a total balance for recievables/payables quickly rather then adding up hundred of customer/suplplier balances 3- provides a check on accuracy of enteies - reconsilliations can be perfomed regularly - can double check everything 4- can segregae duties between staff and can focus on different accounts

Question 40

what does reconciliation mean

Answer 40

checking to make sure the total and receivables is equal to the total amount Don’t want mistakes / errors

Question 41

where could there be a difference that could arise an error

Answer 41

balance on receivables cotrol ac & total of list in the ledger

Question 42

what may the differecnes between the control and ledger account arise due to

Answer 42

a- errors in recievale control acc b- errors in personal acc in receliables ledger c- errors in both control acc and recieavle ledger

Question 43

control acc reconcilliations typical approach, what must they do to sort out the errors to make sure they equal

Answer 43

a- correct control acc b- correct total list of balances c-agree the corrected balance on the control acc w the corrected total list of balances 2- errors cud include transpostion errors, omissons or errors in additions 3- if total is added p wrong say: miss cast, over or undercast

Question 44

debit entries for the payable control account

Answer 44

-returns outward -payment to credit supplier -discount recieved -contras with recievables control -balance c/d (end )

Question 45

credit entries for payables control account

Answer 45

-balance b/d (start) -good/services bought on credit -refund of debit balance --balance b/d

Question 46

debit entries for recievables control account

Answer 46

-balance b/d -sales on credit -refund of credit balance -interest charged on overdue debt -dishonered cheque

Question 47

credit entries for recieveables control account

Answer 47

-return inward -bad debt written off -cash recieved from credit customer -discount allowed -contras with payables control acc -balance c/d(end)

Question 48

what would irredemable preference shares be treated as

Answer 48

equity

Question 49

what would redemable preference shares be treated as

Answer 49

liability