1
Q
purpose of accounting system is to ___, _____, ______ the info contained in documentation generated by transactions
A
record, summarise, present
2
Q
discount
A
reduction in price of goods below amt at which those goods would normally be sold to other customers of the supplier
3
Q
trade discount
A
reduction in amount of money demanded from a customer
4
Q
settlement discount
A
optional reduction in amount of money payable by a customer
5
Q
data+software held remotely on computer servers of service provider hosting software is known as
A
cloud accounting
6
Q
accounting packages can update ledgers simultaneously as the ledgers are
A
INTEGRATED
7
Q
customer+supplier info which is stored is subject to ___________ legislation
A
data protection
8
Q
the _____ is a record of unusual movement between accounts
A
journal
9
Q
an error of _______ denotes mistake which breaks the ‘rules’ of an accounting concept/principle (posting to wrong type of account)
A
principle
e.g. plant+machinery debited to purchase(expense) a/c instead of asset
10
Q
posting to correct a/c but wrong amount is an error of
A
original entry
11
Q
posting entry to wrong a/c is an error of
A
commission
e.g. receipt of $25 from J. Gee entered in G Jay’s a/c
e.g. plant+machinery credited to asset a/c
12
Q
trial balance is a list of
A
A list of ledger a/c balances extracted from the general ledger which helps to ensure that the accounting system has been accurate
- not NEEDED but makes financial doc preparation easier
- records CLOSING balances representing effect of transactions ind recorded in ledgers
13
Q
corrections involving equal debits+credits made using a
A
suspense a/c NO
journal
14
Q
posting to wrong a/c can be caused by incorrect
A
coding*
15
Q
possible pitfalls
A
- confusing cash+Credit transactions
- confusing trade + settlement discounts
- ignoring sales tax in double entries
- unable to distinguish NCA and CA
- not understanding purpose+format of journals
- not knowing which a/cs normally have a Dr or CR balance
16
Q
sales tax is administered by ___ but collected by _____
A
gov
collectors/regulators
17
Q
how is interest accounted for in accounting eq
A
payment of interest represents a business expense reducing profit(capital)
18
Q
expense charged to profit/loss
A
expense incurred in ordinary course of business
19
Q
1.21
in receivables ledger of Xetel Co, the a/c of Yox Co has a credit balance of $5000. what does this mean
A
- Yox Co has been sent an invoice for $5,000 ->invoice would be debited to Yox Co’s account
- Yox Co has supplied goods to Xetel Co and these have been correctly recorded by Xetel Co ->purchase has been recorded in the payables ledger correctly however the question asks about a receivables ledger balance
- Yox Co has paid Xetel Co $5,000 twice in error = duplicate payment could result in a credit balance
- Yox Co has an overdue balance of $5,000 owing to Xetel Co->if the balance is owed to Xetel Co then it would appear as a debit balance
20
Q
what reports can be generated from a receivables ledger on a computerised system
A
- SOA
- list of customer a/cs
- customer mailing lists
- age analysis of receivables
21
Q
1.24 is output tax debited to sales tax a/c + why
A
no bc it’s a liability owed to gov/authorities
must be Cr to salex tax a/c
22
Q
1.24 If the sales tax account has a debit balance at the end of the sales tax quarter, the balance is recoverable from the government.
t/f and why
A
true
means that inputs exceed outputs and the tax is recoverable.
23
Q
1.24 The sales figure in the statement of profit or loss of a sales tax registered business includes sales tax.
A
double entry to record a sale (for a sales tax registered trader) is debit: receivables, credit: sales, credit: sales tax; so the sales account balance transferred to income and expense account must exclude sales tax
24
Q
1.25 peter makes sales in quarter of $42 000 including sales tax at 20%
total purchases net sales tax is $9600
how much tax paid to gov
A
- net price is the price the product is sold for — before the government gets involved
Sales tax owed relating to the sales invoices: $42,000 × (20%/120%) = $7,000 Sales tax due back on purchase invoices: $9,600 × 20% = $1,920
correct answer is: $5,080 ($7,000 – $1,920)
25
1.28 what's the correct entry to record discounts received in general ledger
Dr payables
Cr discounts received (reduce expense)
26
1.30 info from which docs can be found in receivables ledger
sales invoice
27
1.33 which should appear on Cr side of suppliers a/c in payables ledger
payments made, cash received, discounts received, purchase invoices received
purchase invoices received
decrease in liabilities
28
list of ledger balances extracted from customer a/cs
receivables ledger
29
where do sales returns appear in TB (Dr/Cr)
DR
30
where do purchase returns appear in TB (Dr/Cr)
Cr
31
where does loan interest paid appear in TB (Dr/Cr)
Dr
loan interest = expense
32
1.47 module
computer program that deals with 1 particular part of business accounting system
33
1.48 features of data protection
- encrypt personal info when electronically sent to prevent unauthorised access
- store IND info, not company info
- right for ind to access+erase info
- ACCA ethics doesn't apply to businesses
34
Asset
A present economic resource controlled by the
entity as a result of past events
35
An economic resource is
a right that has the
potential to produce economic benefits
36
Liability
A present obligation of the entity to transfer an
economic resource as a result of past events
37
Equity
The residual interest in the assets of the entity
after deducting all its liabilities.
38
Income
Increases in assets, or decreases in liabilities,
that result in increases in equity, other than
those relating to contributions from holders of
equity claims.
39
Expenses
Decreases in assets, or increases in liabilities,
that result in decreases in equity, other than
those relating to distributions to holders of
equity claims.
40
Other changes in economic resources and claims
– Contributions from holders of equity claims,
and distributions to them.
– Exchanges of assets or liabilities that do not
result in increases or decreases in equity.
41
what could appear on SOFP
A, L, Eq
- sales tax owed
COGS/purchased (assets) -> inventory
e.g. buying a van
42
what could appear on SOPL
- rental income
expense 9wages, cost of repairing machine
interest paid on bank loan
43
recording+accounting for bank transactions
44
payment for goods sold can be made by ____, ____ or ___
other types of customer payments can be
cash, cheque, credit card
banker's draft, SO, DD
45
internet payments are made using ____ cards and ____ cards by ___
credit/debit
direct transfer
46
clearing is the mechanism for obtaining ____ for cheques
PAYMENT
47
security procedures when banking cash should include
___ time of visit to bank
varying the ___ taking money there
sending more than 1 person
using a ____ firm
varying
member of staff
security
48
_________ help to identify which receipts+payments have not cleared the bank statement but are included in the bank general ledger a/c
BANK RECONCILIATIONS
49
controls over payments include
_____ of the payment
cheque requisition forms
_____ documents
AUTHORISATION of payment
cheque requisition forms
SUPPORTING documents
50
an ____ is used to reimburse employee's expenses
expenses claim form
51
Payment can be made in the same ways that the business receives monies for goods sold. Of particular importance are cheques and _____.
BACS
52
When recording payments, a computerised system will split payments between sales tax, payments to payables, expenses, discounts ____, cash purchases and petty cash.
sales tax,
payments to payables,
expenses,
discounts received,
cash purchases and
petty cash.
53
Petty cash should be used for
small items of expense
54
Petty cash must be kept secure and all payments must be properly ______
authorised
55
An ______ system has a maximum amount of money in petty cash, usually enough to cover payments for about ___________
imprest
one month
56
Petty cash transactions are recorded and analysed in the ______ record
petty cash record
57
A _____ __________ compares the balance per the bank general ledger account in the business records to the balance held by the bank
bank reconciliation
58
Any errors or ______ found should be adjusted in the accounting system.
omissions
59
The corrected balance in the accounting system should be reconciled to the balance on the bank statement by taking account of _______ differences.
timing
60
possible pitfalls for recording+accounting for cash transactions
- Forgetting that all the ways of receiving money can also be used to make payments.
- Bank reconciliations are important as there may be computational questions in the exam.
- Ignoring controls procedures. Exam questions often ask about these.
- Ignoring sales tax
61
features of EFTPOS
Funds are transferred automatically from a customer's bank account to the organisation's bank, when goods are purchased
- no contact w/ bank required
- no delays in payment received
cheques unecessary
62
when customer deposits cash at a bank, what is the nature of the contractual relationship
customer is a payable in the bank's books of account, and vice versa
63
what is the situation when a customer stores property in bank's safety deposit facilities
bailor/bailee
64
what's the situation when a bank lends money to customer with customer's property as security
mortgagor/mortgagee
65
duties customer owes to bank
- inform bank when cheque book stolen/lost (operating a/c responsibly)
- repay overdrafts on demand in required
- operate a/c w care to minimise risk of fraud
NOT
- check statements received from bank
66
valid reasons for bank disclosure of customer info
- customer gives permission to 3rd party to obtain 'banker's reference'
- public duty to make disclosure
- bank suspects customer is engaged in illegal activities
INVALID reason
disclosure specifically required by statute
67
bank clearing system (specifically)
- mechanisim for obtaining payment for cheques
68
other functions of the banking system
- moves cash between banks
- sets credit levels for bank's business customers
- arranges long term loans for bank customers
69
reasons a bank will dishonour a cheque
- words + figures differ
- cheque book reported as stolen
- cheque unsigned
will honour large round sum amounts
70
how to record discount received
Dr AP
Cr Discount (considered income or a reduction in expenses)
71
what's classed as variable data in a customer a/c
- a/c balance
fixed: a/c number, credit limit, customer name
72
what ISNT control over payments made by an organisation
- scrutiny of adverse spending variances on budget report
controls:
- ensuring each request for payment supported by documentary evidence
- making sure each payment authorised
- limiting authority of people approving payments
73
what isnt a valid reason for using cheque requisition form to initiate a payment
The accounts department has lost the invoices
This is unacceptable, the supplier should be asked for a duplicate invoice and the weakness which has led to the invoice being lost should be investigated.
suppliers dont issue invoices: some organisations, such as government departments, do not issue invoices but will send a receipt after payment.
If invoice hasn't been received but supplier must be paid immediately: occurs, an invoice must follow the payment.
necessary to send a cheque with order for suppliers: should only happen on rare occasions but, where it does, an invoice should follow from the supplier.
74
what's a bank mandate form
- Names and specimen signatures of individuals authorised to sign cheques supplied to a bank
- mandate will also specify how many of the authorised signatories must sign and any limits
- informs bank of authorised signatures
- list of personnel within a company authorised to sign cheques(internal document)
not an instruction to bank to make payment direct to supplier
not request to open bank a.c
75
direct debit payments
- picked out from the bank statement and recorded in the bank general ledger account
- Direct debit payments are usually identified as part of the bank reconciliation procedure on a regular basis
- MUST be entered into bank general ledger before appearing on bank statement
- aren't initiated by paying company- receiving company initiates DD on paying company's bank
- not totalled at year's end and entered into bank general ledger as annual figure bc the bank general ledger account balance would be overstated by the amount of the unrecorded payments during the year and it would make bank reconciliation difficult
76
characteristics of banker's draft
- cannot be stopped after issue
but bank wont issue one if there are insufficient funds in customer's a/c
- signed by directors of the company making payment/bank officials
- secure form of payment for recipient, not a raising finance
77
characteristics of standing order
- used to make regular payments from an a/c (rental)
- payment amount FIXED
- amount of payment can be varied (can be altered though must notify bank abt changes)
- order can only be made by business making payment's instruction
78
characteristics of DD
recipient of payment initiates each payment
used for regular payments
amt of each payment is UNfixed
DD instruction is sent to company by supplier
79
what is a 'pro forma' advice
document which is provided by a supplier where payment with order is required
- also used for 'sale or return' transactions.
- an order acknowledgement is a diff document
- No invoice will be issued until a price/discount terms are agreed (option 3).
doc used for export sales is incorrect: the supplier's normal documentation will still apply, but with additional procedures
80
what is a 'remittance advice'
A document sent with a payment explaining what a payment represents
why other options are wrong
doc sent to supplier containing detailed delivery instructions: the order will usually confirm delivery instruction, or these will be set out in a letter to the supplier quoting the order number.
doc sent out to confirm telephone order: a purchase order would be used.
doc prepared by supplier on regular basis listing outstanding amounts+received payments in trading period: describes a supplier's statement.
81
term used to describe deployment of staff so that no one person has overall control over financial transactions
segregation of duties
82
rules concerning payments to credit suppliers
- amount after discounts received is entered in the bank general ledger account + discounts received are entered allocated to the general ledger.
analysed according to payment type/of the different categories of purchases: will have been done when the invoices were originally received
- payments are recorded as credit entries
83
correct accounting entry for cheque received from customer in payment which is banked. cheque is then returned as unpaid
Dr receivables general ledger account, Cr bank general ledger account
- customer balance is still outstanding in the receivables general ledger account. There is a credit entry made to the bank general ledger account to reverse the previous receipt entered
84
example of payment most appropriate for settlement using BACS
Paying wages and salaries to employees
- would not be cost effective to use BACS for irregular payments
85
describe petty cash
- Small payments in cash not dealt with through the business bank account + reimbursed
e.g. expenditure
- some control should be exercised over the float
- all types of minor expenses are paid from petty cash
- petty cash float will impose a maximum amount on the expenditure.
86
what will/will not appear on a petty cash voucher
- purpose and details must be clear and should be supported by a receipt for the expenditure where possible
-may be different persons to authorise payment and the cashier should check the authorising signature against a list of specimen signatures.
petty cashier will NOT usually sign the payment voucher+musn't authorise payment
87
what would be revealed when a BR is performed
- UC
- SO/DD
- interest + charges
A bank reconciliation does not identify missing cheques (item (ii) since they would be assumed to be unpresented unless a supplier queries non payment.
88
bank statement
One sent to customers of a bank itemising the account balances, payments and receipts for an account in a month (regularly)
89
what statement is produced to agree bank balance with BGLA balance for a business
reconciliation
90
what is a record showing bank balance of business
what is analysis of payments + receipts for a business
BGLA
analysis document
91
appropriate docs to send with a payment, to inform recipient what payment is for + whom it's from
- remittance advice
- bank giro credit form
- covering letter
NOT A cheque requisition form (item (iv) is an internal document raised by the payer when primary documentation such as a supplier's invoice has not been received.
92
what docs should be prepared when an ind hands over cash to be paid into their bank a/c
- paying in slip
lists notes+coins being paid in denomination as well as cheques
93
what errors can be corrected in BR
- omitted DD payment (diff between 2 balances)
- only when affects BGLA balance
- if recording in wrong EXPENSE a/c then no need
- contra agreed with supplier who was also a customer but not recorded in accounting system- no effect on bank balance
94
purpose of BR
- check the accuracy of transactions recorded in the bank general ledger accounts + identify any errors -> correct
- differences are investigated.
95
what doc helps ensure that the business has enough money to pay its suppliers
cash flow forecast
96
why cant BR identify any credit sales and credit purchases which have not been recorded correctly in the accounting system
since these are NOT recorded in the bank a/c
97
why cant BR identify customers who are late paying their invoices
aged trade receivables report is needed for this
98
recording+accounting for credit transactions
99
receivables general ledger a/c shows the
total owed to business by credit customers
100
if business is sales tax registered, sales tax needs to be accounted for.
sales postings would be
Dr receivables general ledger a/c
Cr Sales(net of sales tax)
101
the ___ ledger contains ind personal accounts showing what each customer owes the business
receivables
102
an ____ of receivables breaks down the receivables balances on receivables general ledger a/c into diff periods of outstanding debt
age analysis
103
old debts may be written off to
irrecoverable debts
104
payables general ledger a/c shows
total the business owes to credit suppliers
105
_____
106
Sales Return
dr sales returns
cr AR
107
purchase return
dr ap
cr purchase returns
108
discount received
dr ap
cr discount received
109
sales discount given
dr sales discount
cr ar
FA1
flashcards
Decks in class (19)
# Cards
-
Business Transaction and Documentation77
-
Asset, Liabilities & the Accounting Equation18
-
4- completing ledger accounts and financial statements27
-
3- recording, summarising and posting transactions59
-
5- receiving + checking money42
-
6- banking monies received46
-
recording monies received15
-
8- authorising + making payments39
-
authorising+making payments arifah's11
-
9- controls over recording payments16
-
10 -maintaining petty cash records31
-
11- bank reconciliations22
-
12- sales and sales returns20
-
13- receivables ledger25
-
14- purchase + purchase returns18
-
15- payables ledger33
-
16- controls over transactions15
-
study hub / summary notes+definitions109
-
17- payroll50
