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A Level Accounting

Books of Prime Entry

QuestionAnswer
What is the Sales Journal? A list of all credit sales based on sales invoices received during the day.
What is the Purchases Journal? A list of all credit purchases based on purchase invoices received during the day.
What is the Purchases Returns Journal? A list of credit notes received from suppliers for goods returned.
What is the Sales Returns Journal? A list of credit sales returns based on credit notes issued during the day.
In a Sales Ledger, which side increases the amount a customer owes? Debit side.
State three accounts found in the General Ledger Sales Account, Purchases Account, Sales Returns Account, Purchases Returns Account.
Goods sold on credit appear on which side of the Sales Ledger? Debit side.
In a Sales Ledger, which side decreases the amount a customer owes? Credit side.
In a Purchases Ledger, which side decreases the amount a business owes? Debit side.
In a Purchases Ledger, which side increases the amount a business owes? Credit side.
How is a Sales Return recorded? Credit Sales Ledger and Debit Sales Returns Account.
How is a Purchases Return recorded? Debit Purchases Ledger and Credit Purchases Returns Account.
Which side can transactions appear on in the Sales Account? Credit side only.
Which side can transactions appear on in the Sales Returns Account? Debit side only.
Which side can transactions appear on in the Purchases Returns Account? Credit side only.
Which side can transactions appear on in the Purchases Account? Debit side only.
What four accounts are represented in the Cash Book? Cash, Bank, Discount Allowed and Discount Received.
Which side of the Cash Book records money coming into the business? Debit side.
How is 'Banked £500 cash from the till' recorded? Dr Bank £500, Cr Cash £500.
Which side of the Cash Book shows a bank overdraft? Credit side.
How is £1,475 received from Murphy Ltd in settlement of a debt of £1,490 recorded? Dr Bank £1,475 and Dr Discount Allowed £15.
Which side of the Cash Book contains Discount Allowed? Debit side.
Where are transactions from source documents first recorded? Books of Prime Entry.
What transactions are commonly recorded in the General Journal? Sale of non-current assets on credit, purchase of non-current assets on credit, and correction of errors.
With Discounts Allowed, which account is credited? Customer's Account (Sales Ledger).
With Discounts Allowed, which account is debited? Discount Allowed Account.
With Discounts Received, which account is credited? Discount Received Account.
With Discounts Received, which account is debited? Supplier's Account (Purchases Ledger).
State three features of a Trade Discount Offered to businesses in the same trade, encourages bulk purchases, and is not recorded in accounting records.
How is a cheque received from Gholar for £600 with a £30 discount recorded? Dr Bank £600 and Dr Discount Allowed £30.
Where are cash discounts recorded? In the accounting records through customer/supplier accounts and Discount Allowed or Discount Received accounts.
State three source documents used for the Cash Book Cheque counterfoils, supplier receipts, and till rolls.
How is a cash sale recorded? Dr Cash Book and Cr Sales Account.
Source document and book of prime entry for faulty goods returned to supplier Credit Note Received and Purchases Returns Journal.
Source document and book of prime entry for payment made by cheque to a supplier Cheque Counterfoil and Cash Book.
Source document and book of prime entry for purchase on credit of a machine Purchase Invoice and General Journal.
Source document and book of prime entry for bank transfer received from a customer Bank Statement and Cash Book.
State three examples of entries on the credit side of the Cash Book Standing Orders, Direct Debits, Bank Charges, Bank Interest, Debit Card Payments, Dishonoured Cheques.
A business issues a credit note. What are the ledger entries? Cr Trade Receivables and Dr Sales Returns Account.
How is the return of faulty goods to a supplier recorded? Dr Trade Payables and Cr Purchases Returns Account.
Define a Sales Invoice A document issued by a seller when goods or services are sold.
Define a Credit Note A document issued by a seller to reduce the amount owed due to returns or overcharging.
Define a Cheque Counterfoil A record of cheques issued showing cheque number, payee and amount.
Define a Bank Statement A report from the bank showing money paid into and out of an account.
Define a Purchase Invoice A document received when goods or services are purchased on credit.
Define a Paying-in Slip Counterfoil A record of cash and cheques deposited into the bank.
Define a Till Roll A record of daily cash sales and receipts.
When should a Bank Statement be used as a source document? For transactions not evidenced by counterfoils, such as direct debits, standing orders, bank charges and credit transfers.
Define a Dishonoured Cheque A cheque rejected by the bank because there are insufficient funds.
State two facts about a Trade Discount It is often given for bulk purchases and is shown on the invoice but not recorded in the books of account.
Where are cash discounts recorded? In the Cash Book and in Discount Allowed or Discount Received accounts in the General Ledger.
Define the Sales Journal Lists invoices for credit sales.
Define the Purchases Journal Lists invoices for credit purchases.
Define the Sales Returns Journal Lists credit notes issued by the business.
Define the Purchases Returns Journal Lists credit notes received from suppliers.
State three items found on the credit side of a Sales Ledger Receipts, Discount Allowed, Credit Notes, Contra Entries.
Define Capital Expenditure Expenditure on acquiring, improving or extending non-current assets.
Define Revenue Expenditure Expenditure on day-to-day running costs such as repairs, insurance and maintenance.
What does LIDIA stand for? Legal costs, Installation, Delivery, Improvement, Asset cost.
Distinguish between Capital Income and Revenue Income Capital income comes from selling non-current assets. Revenue income comes from normal trading activities and other income such as rent, commission and interest received.
Created by: durquhart1
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