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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…

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purchase invoices for capital expenditure and sales invoices for
sales of capital items.

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…

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5. Use the new cash book balance to start the bank reconciliation
statement
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…

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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
side

Example:

Cash Payments to suppliers Opening balance of money owed to
Discounts received suppliers
Returns out Credit purchases
Contra to sales ledger
Balance…

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b) 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…

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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
profit.

Opening Inventory

+purchases

+carriage in

- Returns out

- closing stock



Gross Profit

Less Expenses if these increase Net profit
decreases.

Net profit



Things…

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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…

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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…

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Balance Sheet Example

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Balance Sheet for X as at 31st March XXXX

£ £ £




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