ACCA FA1

What is a ledger

A book of accounts in which data from transactions recorded in journals are posted and thereby summarized.

Purchase order

A business place and order for with an business for the purchase of goods or services.

Storage of information

A company's retention policy sets down how long different kinds of information are retained

Double-Entry Bookkeeping/Credit Entry

A credit is one of following: An increase in an liability An increase in an income An decrease in an asset

Credit notes

A credit note is effectively a negative invoice

Sales orders

A customer writes out an order or sign an order for goods or services they wish to buy

Double-Entry Bookkeeping /Debit Entry

A debit is one of following: An increase in an asset An increase in an expense A decrease in a liability

The statement of profit and loss

A formal financial statement which presents the income, expenses, and resulting net profit or net loss for a given period.

Purchase return day book

A kept record of credit notes received in respect of goods which the business sends back to its suppliers

The sales day book

A list of all invoice sent out to credit customers each day

The statement of financial position

A report that summarizes all of an entity's assets, liabilities, and equity as of a given point in time.

Petty Cash

A small amount of CASH that a company keeps on hand to pay for minor expenses in an office.

Petty cash book

A small fund of money for incidental expenses, as in an office. ( milk , newspapers, stamps)

T-account

A tool used to learn the double-entry accounting system. It has the appearance of the letter T. The left side is for debit entries and the right side is for credit entries. The account title appears at the top of the T.

What are liabilities to a business

Accounts Payable , Sales taxes

Contra accounts

An account whose value offsets the value of an equivalent account which it is paired with.

Account Receivable

An amount due from a customer which are owed to a business .(Account receivable is a assets of business)

Bank Statement

An itemized listing prepared by the bank of additions to and subractions from a depositor's account.

What is a Business

An organization or economic system where goods and services are exchanged for one another or for money.

Impersonal accounts

Are accounts in the general ledger relate to type of income such as expense , asset , liabitily, rent, rates, sales ,ect

IOU

Are equivalent to cash

Compensating errors

Are errors which are, coincidentally equal and opposite to one another

Source Document

Are the source of all information recorded by a business (hard copy documents)

Control total

Are used to make sure the there have been no errors when the batch is input. It also used the total value of transactions input is the same as that previously calculated

Error of commission

Are where the bookkeeper make a mistake in carrying out his or her task of recording transactions in the accounts

Accounting Equation

Assets = Liabilities + Capital + Revenue - Expenses - Drawings

Balance b/d

Balance brought down /Opening balance

Balance c/d

Balance carried down / Closing balance

Cash transactions

Buyer pays cash to the seller at the time the goods or services are transferred.( simplest form of business)

Debit To own/have AN ASSET INCREASES eg: new office furniture CAPITAL/A LIABILITY DECREASES eg: pay an account payable INCOME DECREASES eg: cancel a sale AN EXPENCE INCREASES eg: incur advertising cost Left hand side

CERDIT To owe AN ASSET DECREASES eg: pay out cash CAPITAL/A LIABILITY DECREASES eg: buy good on credit INCOME INCREASES eg: make a sale AN EXPENCE DECREASES eg: cancel a purchase Right hand side

What are assets to a business

Cash , Accounts receivable

What are the two main type of business transactions

Cash or Credit.

Drawings

Cash taken for personal use, in business by owner(s), treated as a reduction of ownership interest.

Cash

Coins, currency (paper money) checks, credit card receipts, and money orders received from others, as well as money deposited in the bank.

Expenditure (cost)

Decrease in owner's equity resulting from the cost of goods, fixed assets, and services and supplies consumed in the operations of a business.

Coding

Each account in an accounting system has a unique code to identify the correct account for posting. (Red skirt 100021 Black skirt 100022)

EFTPOS

Electronic funds transfer at point of sale.

Bank Reconciliations

Ensure that the balance in the cash book of a business is reconciled to the balance on the bank statement provided by the bank.

What are the different types of business

Entity , Company , Firm

Error of omission

Failing to record a transaction at all, or making a debit or credit entry but not corresponding double entry

Personal accounts

Include in details of transactions which have already been summarized in ledger accounts. eg. sales invoices

Personal data

Information about a living individual, including facts and expression of opinion about him or her

Data Protection

Information stored about individuals is regulated by Data Protection legislation

Capital

Investment of money in the Company to earn a profit

Error of principle

Involves making a double entry in belief that the transaction is being entered in the correct account but violating the fundamental principles of accounting principle or concept.

Payables ledger control account / total payables account

Is a control account in which records are kept of transaction involving all payables, being posted with totals from the purchase day book and the cash book

Receivables ledger control account / total receivable account

Is a control account in which records are kept of transaction involving all receivables. its posted with totals from the sales day book and the cash book

What is a invoice

Is a demand for payment

Till receipts / written receipts

Is a document given by the seller to the buyer when good change hands in exchange for payment.

Trial balance

Is a list of ledger balance shown in debit and credit columns

Trade Accounts Payable

Is a person to whom a business owes money for debts incurred in the course of trading operations. ( the term might refer to debts still outstanding)

Trade Account Receivable

Is a person who owes the business money for debts incurred in the of trading operations.(Business has sold its goods or services)

Modules

Is a program which deals with deals with one particular part of business accounting system. ( payroll)

Journal

Is a record of unusual movement between accounts. It is used to record any double entries made which do not arise from the other books of prime entry.

Petty cash voucher

Is a standard form used as a receipt whenever cash is withdrawn from a petty cash box

Payable ledger

Is a sub-ledger like receivables ledger consists of a number of personal payable account .They enable a business to keep a continuous record of how much the business owes each supplier

Receivables ledger

Is a sub-ledger that contains the detailed data of the accounts receivable; e.g. the invoice number, invoice amount, customer name etc.

Imprest system

Is a system in which there is a maximum amount of money in petty cash.

Debit

Is always on the left-side of the column

Credit

Is always on the right-side of the column

Control accounts

Is an account in the general ledger in which a record is kept of total value of a number of similar but individual items

Suspense account

Is an account showing a balance equal to the different in trial balance

Debit note

Is issued by a customer to a supplier as a means of formally requesting a credit note

Receivables control account / Sales ledger control account

Is maintained in general ledger to record in total the amount which are posted to customers' individual personal memorandum account in the receivables ledger

Purchase day book

Is record of all the invoice received the suppliers

Liabilities (OWE)

Is something owed by a business (loans , trade accounts government taxes)

General ledger/ Nominal ledger

Is the accounting record which summaries the financial affairs of the business. It contains details of assets, liabilities, income and expenditure and profit and loss. It consists of a large number of different ledger account, each account having its own purpose or "name" and identity or code.

Profit (income)

Is the excess of income over expenditure.

Journal voucher

Is used to record the equivalent of one entry in the journal

Revenue Expenditure

Is when goods which will be used up - such as inventory, stationery, electricity.

Capital Expenditure

Is when money it spent to acquire or upgrade physical assets ( machinery ,building )

Batch processing

Is where similar transactions are gathered into batches and then each batch is sorted and processed by computer

Assets (OWN)

Items of value that are owns by a business (such as inventory ,accounts receivable and cash)

Long term liabilities to business

Loans

Posting

Means to enter transactions in ledger account in the general ledger from the books of prime entry.

What is on a statement of financial position

Name of Company

Net assets

Net assets =Total assets - Total Liabilities

Cash discount

Optional reduction in the amount of money payable by a customer

Data controllers

Organizations or individual who control the contents of files of personal data and the use of personal data which are processed or intended to be processed automatically.

Sales tax (input /output)

Output sales tax is charges on sales(credit) Input sales tax is incurred on purchases(debit)

Accounts Payable

Person or a business has purchased items who owes money to ( Account payable is a liability of the business)

Memorandum account

Personal accounts

Trade discount

Reduction in the amount of money payable by a customer( during the negotiations )

Credit transactions

Sale or a purchase which occurs some time earlier than cash is received or paid.

Main books of prime entry

Sales day book Sales return day book Purchase day book Purchase return day book Cash book Petty cash Journal

Sales taxes formula ( not included in the amount)

Sales tax = Amt x Sale tax% (Always put sales tax in decimal form)

Sale taxes formula ( include in the amount )

Sales tax = Amt x Sale tax% + 100 + .Sales Tax% (Always put sales tax in decimal form)

Retention Policy

Set down rules for how different kinds of information are retained

Remittance advice

Shows which invoice a payment covers.

Computer program

Software

What are Lodgement

The act of depositing money or cheques in an account

Books of prime entry(meaning)

The record of all documentary transactions sent and received by the company

Double-Entry Bookkeeping

The system of accounting which reflects the fact that: Every financial transaction gives rise to two accounting entries, one debit and the other credit; The total value of debit entries is therefore always equal any time to total credit entries

Revenue (income)

The value of income supplied by customers.

What is the purpose of the Accounting System

To record , summaries and present information contained in the documentation generated by transations

Cash book

Used to keep a cumulative record of money received and paid out by the business via its bank account

The sale return day book

When customer return good, the return are record in this book

Error of transposition

When two digits in an amount are accidentally record the wrong way around (divisible by 9 )