Term 2 Theory Flashcards
(12 cards)
Debtors journal source doc
Invoice
Inv
DAJ source doc
Credit note
D/cn
CRJ source doc
Receipt
Rec
CAJ source doc
Debit note
D/dn
Provide THREE advantages to pay per EFT.
Convenient or easy to use
/ Cheaper bank charges
/ Less fraud
Can be done from business
/ not restricted to business hours
/ timesaving
Payment/receipts are instant
/ account is updated immediately
/No long queues to deal with
Name TWO transactions when the Cost of sales column in the
debtor’s allowances journal will be a 0.
Discount (Trade).
Goods is damaged and not return back to the business.
Credit limit
Credit limit
Credit limit is the maximum amount a debtor is allowed to buy goods on credit/may have
as an outstanding balance.
Credit limit
Credit limit
Credit limit is the maximum amount a debtor is allowed to buy goods on credit/may have
as an outstanding balance.
Credit term
Credit term
A credit term is the amount of time a debtor is allowed to take to settle his/her account,
e.g. 30 or 60 days.
Provide ONE reason why the balance in the Debtors’ Control Account must agree
with the total of the Debtors’ List.
The Debtors’ control is a summary of the Debtors’ List.
Both sets of books are prepared from the same transactions.
The totals from journals are posted to the Debtors’ control account in the General ledger.
All transactions involving debtors in the journals are posted to the individual debtors’ ledger accounts.
The same information in a different format.
Explain TWO methods that a business can use to make sure that debtors settle their
accounts on time.
Charge interest on overdue accounts of debtors.
Send statements of accounts/sms’s as reminders/send letters of demand/personal phone calls.
Offer a discount for early payments.
Offer full settlement discount, in order to get payments quickly to help cash flow.
Block/froze accounts in arrears until settled
Provide ONE reason why the balance in the Debtors’ Control Account must agree
with the total of the Debtors’ List.
The Debtors’ control is a summary of the Debtors’ List.
Both sets of books are prepared from the same transactions.
The totals from journals are posted to the Debtors’ control account in the General ledger.
All transactions involving debtors in the journals are posted to the individual debtors’ ledger accounts.
The same information in a different format.
