Module 10

Question 1

What is VAT in financial statements?

Answer 1

Liability

Question 2

What do you receive from customers?

Answer 2

Gross value

Question 3

Gross minus VAT is

Answer 3

Net value

Question 4

If VAT included calculation

Answer 4

/120 x 20 = VAT

Question 5

If vat is excluded calculation?

Answer 5

x 0.2 = VAT

Question 6

Credit sale double entry with VAT

Answer 6

Dr SLCA (trade debtors)
Cr VAT
Cr Sales

Question 7

What are trade debtors?

Answer 7

Sales ledger control account

Question 8

What are trade creditors?

Answer 8

Purchase ledger control account

Question 9

What is the structure of accounting records?

Answer 9

Purchase Daybook
Cashbook payments 
Journal book
Cashbook receipts 
Sales Daybook
>
Purchase ledger  sales ledger 

> trial balance
P+L/B/S

Question 10

What is the sales ledger?

Answer 10

When credit sale entered into SDB customers person account in SL updated

A list of account balances that have been adjusted by individual entries from the SDB

Physically separate data base, listing and balances for every trade debtor

Total of info isn’t entries into SDB posted into SLCA in the NL

Question 11

What is in the SLCA?

Answer 11

total of the SCLA column in the CBR is posted to the SLCA in the NL

Forms a summary of all the balances in the subsidiary ledger

Question 12

Where are receipts from trade debtors recorded?

Answer 12

SLCA column of the CBR
When entry made into this column trade debtors is visual account needs to be updated
Total posted to SLCA in the NL

Question 13

What is the Purchase ledger?

Answer 13

When a credit purchase is entered into PDB suppliers personal account within the PL is updated

PL is a list of account balances that have been adjusted by individual entries from the PDB

total of individual entries entered into PDB posted to PLCA

Question 14

Payments to trade creditors recorded where?

Answer 14

PLCA Column of CBP
Entry made into this column, creditors individual account needs to be updated

Total of PLCA column in the CBP posted to the PLCA in NL

PLCA summary of all balances in PL

Question 15

Settlement discounts

Answer 15

Don’t consider VAT with settlement discounts

Offered when an early settlement of an invoice is made, an adjustment to the amount

Question 16

Trade discounts

Answer 16

Given unconditionally
Often granted when bulk buying
Doesn’t have to meet any conditions

Question 17

What is a contra entry?

Answer 17

When company is both a debtor and creditor of another company
Two transactions netted off- only one payment made

Question 18

Contra journal entry?

Answer 18

Dr Trade creditors (PLCA)
Cr trade debtors (SLCA)
Amount will always be the smaller amount due between two companies (always reduces the two balances)

Question 19

What is a credit note?

Answer 19

If a customer makes returns, credits the trade debtors a/c and the customer a/c in the SL
If customer has already paid for goods it gives customer credit to set against future purchases

Question 20

Journal entry to record a credit note in respect of a credit sale?

Answer 20

Dr VAT
Dr P+L sales
Cr trade debtors

Question 21

Double entry to record credit note in respect of credit purchase?

Answer 21

Dr trade creditors
Cr VAT
Cr P+L purchases