Accounting Unit 1

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Source documents, day books and ledgers

  • Invoices - Sales or purchase day book General ledger
    • Sales - indicates a sale to a credit customer
    • Purchase - indicates a resource bought from supplier on credit
  • Credit Notes -Sales return or purchase return day book
    • Issued - stock returned by customer to trader
    • Recieved - trader returned stock to supplie
  • Cash book: Cash book ledger:
  • Cheque Counterfoils - payments from the bank my trader
  • Paying in Slips - money paid into the bank
  • Bank statement
    • Direct debit that is set up by payee for a variable amount
    • Standing order that is set up by payer for fixed amount
    • Bank charges
    • Returned cheques from customers
    • Credit transfers for wages
    • Interest paid and recieved
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Verification of double entry accuracy

Trial Balance:verifies the arthemetic accuracy by agreeing the debit and credit entires.

    • If TB disagrees suspense account can be opened
    • Errors that can still occur: Orginal enrtry, Commission, Omission, Principle, Reversal

Bank Reconcilation: Process verifies the trader's bank balance in the cash book with the bank statement.

    • Verify the opening & closing bank balances in the cash book
    • Check that unpresented items from last month have cleared this month
    • Prevents or discourages fraud by book keeper

Control Accounts: used to verift balance owed by debtors in SL/creditors in PL

    • Errors that can still occur: Omission, Commission, Orginal entry

Enables trader to determine if a profit or loss is made, calculate capital

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