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An introduction to bookkeeping final
- 1. A refreshers guide to bookkeeping Wesleigh O’Hagan, ACA, PGDE, BAAF
- 2. “We can't go over it. We can't go under it. Oh no! We've got to go through it!” (excerpt from We're Going on a Bear Hunt by Michael Rosen & Helen Oxenbury)
- 3. 4 out of 20 SQs on average are Books of First Entry
- 4. They also come up throughout the exam as Part c’s
- 5. 2013 2012 2011 2010 General Journal General Journal General Journal General Journal Control Account Control Account Control Account Control Account (Creditors) (Creditors ) (Debtors) (Creditors) Ledger Account Ledger Account Ledger Account Ledger Account (Sales) (Purchases) (Purchases) (Sales) Day Book Day Book Day Book Day Book (Purchases) (Sales) (Purchases) (Sales Returns) Patterns – on average 4 SQs
- 6. Lets take the first steps….
- 7. DEBIT CREDIT What goes on what side?
- 8. DEBIT CREDIT E R A L EARL sits in the T Account
- 10. DEBIT EXPENSE ASSET CREDIT REVENUE LIABILITY P&L B/S EARL is split between the P&L and the BALANCE SHEET
- 11. Revenue is income that a business earns usually from SALES It also includes other income items like rent received, commission received etc. Revenue?
- 12. Folios
- 13. Folios are like a MAP They tell you were figures have come from, or where they are going to Folios
- 14. CB = Cash Book ACB = Analysed Cashbook GL = General Ledger DL = Debtors Ledger CL = Creditors Ledger
- 15. 2013 2012 2011 2010 General Journal General Journal General Journal General Journal Control Account Control Account Control Account Control Account (Creditors) (Creditors ) (Debtors) (Creditors) Ledger Account Ledger Account Ledger Account Ledger Account (Sales) (Purchases) (Purchases) (Sales) Day Book Day Book Day Book Day Book (Purchases) (Sales) (Purchases) (Sales Returns) General Journals
- 16. Applying EARL GJ deals with balance sheet items only
- 17. Applying EARL GJ deals with balance sheet items only
- 18. Premises An Asset DEBIT Creditors A Liability – and Creditors always have a CREDIT balance CREDIT OSC A Liability – as some day we will have to repay investors CREDIT
- 19. 600000
- 20. 600000 42,000
- 22. 600000 42,000 583,000 625,000 625,000 Remember… The GJ must balance.
- 23. 1.01.11 600000 42,000 583,000 625,000 625,000 Watch the date – GJ are normally prepared on the 1st day of the month
- 24. 600000 42,000 583,000 625,000 625,000 Being, Asset, Liabilities and Share Capital of Barr Ltd on this date
- 25. Key Sentence! 600000 42,000 583,000 625,000 625,000 Being, Asset, Liabilities and Share Capital of Barr Ltd on this date
- 31. 2013 2012 2011 2010 General Journal General Journal General Journal General Journal Control Account Control Account Control Account Control Account (Creditors) (Creditors ) (Debtors) (Creditors) Ledger Account Ledger Account Ledger Account Ledger Account (Sales) (Purchases) (Purchases) (Sales) Day Book Day Book Day Book Day Book (Purchases) (Sales) (Purchases) (Sales Returns) Control Accounts
- 32. Debtor Mantra : Debtors ALWAYS have a Debit Balance DEBIT DEBTOR Debtors CREDIT
- 33. Creditor Mantra : Creditors ALWAYS have a Credit Balance DEBIT CREDIT CREDITOR Creditors
- 34. What about the remaining items?
- 35. Once you have identified what the opening balance is you can complete the control account by asking: Will this item INCREASE or DECREASE the amount owed…?
- 36. If the item INCREASES THE AMOUNT OWED place it on the same side as the balance If the item DECREASES THE AMOUNT OWED place it on the opposite side
- 37. Debtors Always have a DEBIT Balance
- 38. 1.05.11 Balance 4900 Debtors Always have a DEBIT Balance
- 39. 1.05.11 Balance 4900 For the next two entries ask the question: Has this item INCREASED or DECREASED the amount owed?
- 40. 1.05.11 Balance 4900 Credit Sales INCREASE amount owed – so put it on same side as the balance
- 41. 1.05.11 Balance 31.05.11 Credit Sales 4900 5900 Credit Sales INCREASE amount owed – so put it on same side as the balance
- 42. 1.05.11 Balance 31.05.11 Credit Sales 4900 5900 Cash Received DECREASE the amount owed – so put it on opposite side of the balance
- 43. 1.05.11 Balance 31.05.11 Credit Sales 4900 31.5.11 Cash Received 6100 5900 Cash Received DECREASE the amount owed – so put it on opposite side of the balance
- 44. 1.05.11 Balance 31.05.11 Credit Sales 4900 5900 10800 1.06.11 Balance 31.5.11 Cash Received 6100 31.5.11 Balance 4700 10800 4700 Balance the Account – you know you are correct as Debtors have Debit balances
- 45. Same rules: different Mantra for Creditors:
- 46. 1.5.13 Balance 4400 Creditors always have a CREDIT Balance…
- 47. 1.5.13 Balance 4400 For the next two entries ask the question: Has this item INCREASED or DECREASED the amount owed?
- 48. 1.5.13 Balance 4400 31.5.13 Credit Purchases 9300 Credit Purchases INCREASE amount owed – so put it on same side as the balance
- 49. 31.5.13 Cash Paid 11900 1.5.13 Balance 4400 31.5.13 Credit Purchases 9300 Cash Paid DECREASES amount owed – so put it on opposite side of the balance
- 50. 31.5.13 Cash Paid Balance 4400 31.5.13 Credit Purchases 31.5.13 Balance 11900 1.5.13 9300 1800 13700 13700 1.6.13 Balance 1800 Balance the Account – you know you are correct as Creditors have Credit balances
- 53. 1.5.08 Balance 31.5.08Credit Sales 1400 31.5.08 Cash Rec’d 8500 31.5.08 Balance 9,900 1.6.08 Balance 3,600 6300 3,600 9,900
- 55. 31.5.12 Cash Paid 31.5.12 5400 1.5.12 Balance 31.5.12 Cre. Purch. Balance 23700 29100 1.6.12 Balance 9100 20000 29100 23700
- 56. 2013 2012 2011 2010 General Journal General Journal General Journal General Journal Control Account Control Account Control Account Control Account (Creditors) (Creditors ) (Debtors) (Creditors) Ledger Account Ledger Account Ledger Account Ledger Account (Sales) (Purchases) (Purchases) (Sales) Day Book Day Book Day Book Day Book (Purchases) (Sales) (Purchases) (Sales Returns) Ledger Accounts
- 57. In attempting the question you must firstly ask if you purchased or if you sold something
- 58. Purchases = Money Out or Creditors Sales = Money In or Debtors
- 59. Scenario 1 : Purchases
- 60. Did you buy something? • If yes then…. Did you pay with cash? • If no then….. Yes - BANK Do you owe money? Yes - Creditor Ask yourself
- 61. Cash: Then it comes out of our Bank Account Debit Credit BANK ACCOUNT MONEY IN Credit Then WE OWE a Creditor Debit Credit CREDITOR ACCOUNT MONEY OUT How did we pay …. Creditor has Credit Balance
- 62. The beauty of double entry, is that once we know one side of the entry, we can complete the question { Every Debit has a Credit, Every Credit has a Debit The second account is given the name of the item bought or sold
- 64. Go through the steps…
- 65. Money Out = Credit Side so item iii = Bank Account
- 66. Bank Account Money Out = Credit Side so item iii = Bank Account
- 67. Delivery Van A/c Bank Account Item i , the remaining account takes the name of the item bought
- 68. Delivery Van A/c Bank Bank Account Delivery Van The Details are the names of the opposite accounts
- 69. Scenario 2 : Sales
- 70. Did you sell something? • If yes then…. Did you receive payment? • If no then….. Yes - BANK Are you owed money? Yes - Debtor Ask yourself
- 71. Cash: Then it goes into our Bank Account Debit Credit Credit Then WE ARE OWED = a Debtor Debit BANK ACCOUNT MONEY IN MONEY OUT Credit Debtor Account Debtor has Debit Balance How were we paid….
- 74. Bank Account Money In = Debit Side so item i = Bank Account
- 75. Bank Account Sales Account Item iii , the remaining account takes the name of the item sold – in this instance the goods are unnamed = Sales Account (being sale of trading items)
- 79. Purchases Account J Foley J Foley Account Purchases
- 81. Watch here as the bookshop owner did not sell books He sold equipment which is not part of his normal trade therefore is NOT sales account
- 83. 2013 2012 2011 2010 General Journal General Journal General Journal General Journal Control Account Control Account Control Account Control Account (Creditors) (Creditors ) (Debtors) (Creditors) Ledger Account Ledger Account Ledger Account Ledger Account (Sales) (Purchases) (Purchases) (Sales) Day Book Day Book Day Book Day Book (Purchases) (Sales) (Purchases) (Sales Returns) Day Books
- 85. 9.5.13 10 12500 Tips: Date, CN No. and Net is as per question
- 86. 9.5.13 Park Ltd 10 12500 Tips: Details is always the name that is not on the Day Book
- 87. 9.5.13 Park Ltd 10 12500 Tips: Calculate VAT (12500 / 100 * 23) 2875 15375
- 88. 9.5.13 Park Ltd 10 CL 12500 2875 Tips: Folio : Purchases / Purchase Returns = Creditors = Creditors Ledger (CL) 15375
- 89. 9.06.2012 5 5000 Tips: Date, Inv No. and Net is as per question
- 90. 9.06.2012 Lily Ltd 5 5000 Tips: Details is always the name that is not on the Day Book
- 91. 9.06.2012 Lily Ltd 5 5000 Tips: Calculate VAT (5,000 / 100 * 23) 1150 6150
- 92. 9.06.2012 Lily Ltd 5 DL 5000 1150 Tips: Folio : Sales / Sales Returns = Debtors = Debtors Ledger (DL) 6150
- 99. Part c’s
- 100. Part c’s