Describe Subsidiary Ledgers
Payables & Receivables Ledger. They sit outside the General Ledger
What is the RLCA
Receivables Ledger Control Account, aka Sales Ledger Control Account SLCA: contains the summary information of the Receivables Ledger
What is the PLCA
Payables Ledger Control Account aka Purchase Ledger Control Account: contains the summary information of the Payables Ledger
What is a Control Account?
An account which holds summarised information and can therefore be used as a check.
What is the purpose of the RLCA?
To summarise the transactions from the receivables Ledger in the Nominal (General) Ledger
How are entries from the Sales Day Book posted the RLCA?
DR RLCA
CR Sales
CR VAT
Sales Return Day Book into RLCA
DR Sales Returns
DR VAT
CR RLCA
Discount Allowed Day Book to RLCA
DR Discount Allowed
DR VAT
CR RLCA
What is the purpose of the PLCA?
To summarise the transactions from the Payables Ledger in the Nominal/General Ledger
Key Term: Control account. Describe its purpose
Act as an aid to ensure information in the accounts is as accurate as possible
Key Term: Subsidiary Ledgers. Name them and where do they ‘sit’
They are the Payables ledger and the Receivables ledger. They live outside of the General ledger
What are the 5 steps to entering payroll transactions.
1- Record the total wage cost to the employer: gross pay
2- Record the net pay - the amount actually paid to employee
3- Record HMRC liability, PAYE/Income tax, Employee NI & Employer NI
4- Record Liability to pension fund: employer & employee contributions
5- Record voluntary deductions
List & describe 6 types of errors when the Trial Balance does not balance
- Single entry: only 1 side of the transaction has been entered into the GL
- Casting error: columns added up wrong
- Transposition error: figures swapped around, eg: 54 to 45
- Extraction error: account entered into wrong column, ie: debit instead of credit
- Omission error: account omitted from TB
- Two entries on one side, eg: 2 DR on one side
What is the 4 step by step approach to reconcile the bank statement to the cash book.
Step 1 - reconcile the opening balances
Step 2 - Match the entries in the cash book to the bank statement
Step 3 - enter the bank transactions into the cash book and rebalance
Step 4 - Complete the bank reconciliation
A credit balance in the bank is the same as a debit balance in the cash book.
The bank has a liability and the business an asset
What are unpresented cheques in bank reconciliations?
They are cheques issued to a supplier that has been recorded in the cashbook as a credit but not yet taken to the bank.
What are outstanding lodgements in bank reconciliations?
These are receipts recorded in the cash book but are not yet showing on the bank statement.
Name 5 other reasons for discrepancies between the balances on the cash book and the bank statement.
Automated receipts
Automated payments
Bank charges
Interest paid
Interest received
What is a Trial Balance?
It is a list of the balances b/f of all the accounts in the GL at a specific date.
Correcting errors: a journal is a way of correcting non-regular transactions, for example (5)
-financing a new asset
-writing off irrecoverable debt
-sale of an asset
-processing payroll
-correcting errors in manual & digital accounting systems
What is an error of comission
Posted to wrong TYPE of account, eg: motor expenses instead of general expenses.
NOT disclosed in trial balance
What is an error of omission
When a transaction has been missed entirely.
NOT disclosed by Trial Balance
What is an error of original entry
Numbers have been entered incorrectly.
NOT disclosed by a Trial balance
