Bookkeeping 1

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Financial document	A term given to a document which results from a financial transaction.
'Cash' and 'Credit' sales	A cash sale is a sale where payment is made straightaway. A credit sales is where payment is made at a later date.
Books of prime entry	The place in the books of a business where a financial transaction is recorded for the first time.
Day books	A book of prime entry which lists the details of various financial transactions.
Cash book	The book of prime entry which lists payments in and out of the bank account
Petty cash book	The book of prime entry which lists small cash business expense payments from an office cash fund
Ledger account	The formal accounting record for financial transactions involving individuals and business assets, expenses, income, liabilities and capital
Double-entry accounts	Ledger accounts set up on the double entry system.
The ledger	'The book' which contains he individual accounts; it is often subdivided into different ledgers
Control accounts	'Total' accounts contained in the general ledger
Trade receivable	A customer who owes the business money
Trade payable	A supplier who is owed money by the business
Assets	Items owned by a business
Liabilities	Items owed by a business
Capital	The investment made in a business by the owner
Trial balance	A list of the balances of the ledger accounts drawn up in two columns, the total of which should be the same
Purchase order	A document issued by the buyer of goods and services, sent to the seller, indicating the goods or services required
Delivery note	A document sent by the seller to the buyer with the goods, detailing what has been sent
Invoice	A document issued by the seller of goods or services indicating the amount owing and the required payment date
Credit note	A document issued by the seller of the goods or services reducing the amount owed by the buyer
Statement	A document issued by the seller to the buyer summarising invoices, credit notes issued and payments received and stating the amount owed
Trade discount	A percentage reduction in the selling price given by the seller to the buyer because of the trading relationship
Bulk discount	A discount given by the seller to the buyer for bulk purchases
Settlement discount	A percentage reduction in the selling price given to a buyer if the buyer pays within a specified short space of time
Value Added Tax	A government tax on sales, normally calculated on invoices and credit notes
Credit limit	The maximum amount the seller will allow the customer to owe at any one time
Coding	Document references using numeric, alphabetic or alpha-numeric identification systems
Document retention policy	The requirement for an organisation to keep documents for a specified minimum period of time, normally six years plus the current year.
Books of prime entry	The first place in the accounting records of a business where financial transactions are recorded using details from business documents
Day books	A book of prime entry which lists the details of various financial transactions
Cash book	The book of prime entry which lists payment in and out of an account at the bank; it can also act as the 'bank account' ledger account in the double entry system
Double-entry	An accounting system which normally involves two entries for each transaction - a debit and a credit.
Ledger accounts	Double-entry accounts for financial transactions involving individuals, assets, purchases, expenses, income, liabilities and capital
The ledger	'The book' which contains the individual ledger accounts; it is normally subdivided into different categories: - Sales ledger - Purchases ledger - General ledger
Statement of financial position	One of the final accounts of a business; it shows the owner's capital in the business calculated as total assets minus total liabilities
Accounting equation	Total assets- Total liabilities = Capital
Account balancing	The process of calculating the difference between the totals of the debit and credit columns of a ledger account in order to provide information to management about the financial activity of the business.
Financial documents	Source documents for the accounting records
Books of prime entry	The first accounting books in which transactions are recorded
Coding	Cross-referencing methods used to trace transactions through the accounting system
Ledger	Section of an accounting system
Sales	the sale of goods in which the business trades
Revenue income	Income from the goods in which the business trades
Capital income	Income from items other than the gods in which the business trades
Sales returns	Goods previously sold on credit which are returned to the business by its customers
Sales day book	Book of prime entry prepared from sales invoices
Sales returns day book	Book of prime entry prepared from credit notes issued to customers
Analysed sales day book	Day book which incorporate analysis columns
General ledger	Ledger section which includes: - Sales account - Sales returns account - Sales ledger control account - Value added tax account
Sales ledger	Subsidiary ledger section which contains the subsidiary accounts of the trade receivables
Subsidiary account	A subsidiary ledger account which provides a record of individual amounts
Remittance advice	An advice received from a customer telling the seller that a payment has been made
BACS	Bankers Automated Clearing Services - A bank computer based system which makes payment direct from one bank account to another - often used for bulk payments
Faster payments	A bank electronic payment system which makes transfers direct from one bank account to another - often used for individual payments
Settlement discount	A percentage reduction in the selling price given to the buyer if the buyer pays within a specified short space of time; this discount is also known as 'cash discount'
EDI	Electronic Data Interchange is an electronic system of ordering goods and services using secure private computer links
E-commerce	Buying and selling on the internet by businesses and personal customers
Purchase order	A document issued and authorised by the buyer of goods and services, sent to the seller, indicating the goods or services required
Delivery note	A document listing and accompanying the goods sent to the purchaser
Goods received note	A document used by purchasers to record receipt of inventory and any returns made
Purchases invoice	A document issued by the seller of goods or services to the purchaser indicating the amount owing and the required payment date
Returns note	A document sent to the supplier with any faulty goods
Credit note	A document issued by the seller of goods or services to the purchaser reducing the amount owing.
Purchases	The purchase of goods with the intention that they should be resold at a profit
Revenue expenditure	The cost of purchases and running costs of the business
Capital expenditure	The cost of asset items other than for resale, purchased in connection with the running of the business
Purchases day book	Book of prime entry prepared from purchases invoices
Purchases returns	Goods purchased on credit which are returned to the supplier
Purchases returns day book	Book of prime entry prepared from credit notes received from suppliers
Analysed day books	Day books which incorporate analysis columns
General ledger	Ledger section which includes; - Purchases account - Purchases returns account - Purchases ledger control account - Value added tax account
Purchases ledger	Subsidiary ledger section which contains the subsidiary accounts of the trade payables
Subsidiary account	A subsidiary ledger account which provides a record of individual amounts
Statement of account	Document issued by a supplier listing all the payments, invoices and credit notes on the account, providing a total of the amount due
Purchases ledger account	The account of the supplier in the accounting records of the buyer; it will also list the transactions on the account
Reconciliation	A comparison and 'tying up' of transactions in two documents - in this case the statement of account and purchase ledger - in order to check for any discrepancies
Discrepancy	A difference between the transactions recorded in two separate documents
Remittance advice	An advice sent to a supplier advising the sending of an amount of money, either by cheque or direct to the supplier's account through the banking system
Cash book	Records cash and bank receipts and payments; can combine the roles of the book of prime entry for bank receipts and payments and the double-entry account for cash and bank, or can be a book of prime entry only.
Three column cash book	Cash book with columns for settlement discount, cash and bank
Capital	The amount of money invested in the business by the owner
Non-current assets	Items purchased by a business for use on a long term basis
Drawings	When the owner takes money from the business for personal use
Cash sales	Where a customer buys goods or services and pays in full immediately
Cash purchases	Where a business buys goods or services from a supplier and pays in full immediately
Discount allowed	Amount allowed by a business to its trade receivables who settle amounts due within the period for cash discount stated on the sales invoice
Discount received	Amount received by a business from its trade payables for quick settlement within the period for cash discount stated on the supplier;s invoice
Analysed cash book	A cash book which divides receipts and payments between a number of analysis columns
Receipts analysis columns	- Cash sales - VAT on cash sales and other income - Receipts from trade receivables - Other income
Payments analysis columns	- Cash purchases - VAT on cash purchases and other expenses - Payments to trade receivables - Other expenses
Dishonored cheque	A cheque which is paid into a bank account but is returned unpaid by the bank; it is credited in the cash book bank columns and debited to the account of the business or person that paid it in and to the sales ledger control account.
Cash control account and bank control account	double-entry accounts in the general ledger used when the cash book is treated solely as the book of prime entry; they show the total receipts and payments made in cash or through the bank during the period, together with the opening and closing balances
Petty cash book	Records low value cash payments for small purchases and expenses; is the book of prime entry for low value cash payments
Petty cashier	The person responsible for the petty cash book
Petty cash voucher	Financial document against which payments are made out of petty cash
Imprest method	Where the money held in the petty cash float is restored to the same amount for the beginning of each week/month
Petty cash float	Amount of money held at any one time by the petty cashier
Analysis columns	Used in the petty cash book to record expense payments under various headings to suit the circumstances of the business
Petty cash control account	Double-entry account in the genera ledger used when the petty cash book is treated solely as the book of prime entry; it shows the total payments made by the petty cashier during the week or month, and records receipts from bank account, together with the opening and closing balances
Initial trial balance	List of the balances of every account from the general ledger, distinguishing between those accounts which have debit balances and those which have credit balances
Debit balances	Include assets, expenses, drawings, purchases , sales returns
Credit balances	Include liabilities, income, capital, sales, purchase returns
Capital expenditure	Expenditure incurred on the purchase, alteration or improvement of non current assets
Revenue expenditure	Expenditure incurred on purchases made by the business and on running expenses
Capital income	Income received from non-regular transactions
Revenue income	Income received from sales made by the business and other regular amounts of income

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