AS Accounting Unit 1 revision notes

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Mrs Carpenter- Unit 1 Accounting Revision Notes:
Purpose of Preparing Accounts:
Accounting records all financial transactions that occur during a period
of time, for example the financial year. This is necessary so that the
owner can control their business and control how it is performing and
use the accounts to make good business decisions. It also means that
the owner can:
Provide records of information that is required by HM Revenue and
Customers for tax purposes and VAT returns
Provide records required by suppliers of additional finance, e.g.
Accounting Records: Subsidiary Books and Ledger Accounts:
o Sales Invoices-records sales made by the business
o Purchase Invoices- record the purchases made by the
Bank Statement-Records all transactions made to or from the
businesses bank account
Cash Book Counterfoil-Records any payments the business had
made via check
Paying-in Slip Counterfoil-records any payments of cash that
the business has paid into their bank account
Till Receipts-Records any sales that the business has made
Bank Statement-Evidence of standing orders (when a fixed
payment is made each month by the business bank account
under their authority), direct debits (when either a fixed or
variable amount is paid by the business through their bank
account) and bank charges.
Credit Notes-either received by the business to keep a track of
what they owe or sent out to credit customers to remind them
of their balance.
Subsidiary Books-
o General Journal-This is used when there isn't another appropriate
book of prime entry. This has six main uses: when fixed assets are
purchased on a credit basis, when fixed assets are sold on credit,
when a business first comes into existence, when a business
finally closes, for the correction of errors and for recording
inter-ledger transfers. The source documents used would be the

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Four Day Books:
o Purchase Day Book-is a list of all credit purchases made. The
source documents are the purchase invoices received
o Sales Day Book-A list of all credit sales made. The source
documents are the copy sales invoice that has been sent out to
credit customers
o Purchase Returns Day Book-A list of all the credit notes received
from suppliers. The credit notes are the source documents.…read more

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Use the new cash book balance to start the bank reconciliation
6. Add cheques that have gone out of cash book but not yet the bank
statement (un-presented cheques)
7. Deduct cheques that have come into the cash book but not yet
the bank (Lodgements)
8. Total up the Bank reconciliation statement.…read more

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Purchase Ledger Control Accounts:
Opening balance always starts on the credit side along with any further
credit purchases. Anything offsetting this amount goes on the debit
Cash Payments to suppliers Opening balance of money owed to
Discounts received suppliers
Returns out Credit purchases
Contra to sales ledger
Balance b/f
Balance c/d
Making Entries to Eliminate Errors:
Suspense Accounts:
Suspense accounts can be used to eliminate errors. The side on the trial
balance with the least should be topped up with a suspense entry.…read more

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Prepare a suspend account to correct the errors
c) State which side of the trial balance was larger before the
discovery of the errors
Journal Entries:
1. Credit rates £200 to remove entry
Debit suspense £200
Debit Rent £200
Credit Suspense £200
2. Debit wages £400 to top it up
Credit suspense £400
3. Debit Tom £146 to pay him
Credit suspense £146
4.…read more

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Less costs of goods sold this gets taken away from
sales. Anything added in this
section reduces profit. Anything Taken
Away in this section increases
Opening Inventory
+carriage in
- Returns out
- closing stock
Gross Profit
Less Expenses if these increase Net profit
decreases.…read more

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Control Accounts-
Lack of details as it is only a summary account but it does allow
checking for errors in total and can allow the cash book and other
ledgers to be checked.
The six invisible errors cannot be identified
If there are errors in any of the documents or accounts used to
make this account, the information in the account will also be
wrong.…read more

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Capital (Total money invested) + -Liabilities = Assets
Credit Sales:
1. Enter Details in Sales Day Book
2. Debit individual Customer's Account
3. Credit Sales account
Later when they pay:
4. Debit Cash Book
5. Credit Customer's account to offset what they owe.
Credit Purchases:
1. Enter details in purchase day book
2. Credit Suppliers Account
3. Debit purchases account
Later when you pay
4. Credit Cash Book
5.…read more

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Balance Sheet Example…read more

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Balance Sheet for X as at 31st March XXXX
£ £ £
XX…read more


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