Session Objectives

Topic 10
Books of Prime Entry and Control Accounts

Identify and explain the function of the main data sources in an accounting system Outline the contents and purpose of different types of business documentation Understand the basic function and form of accounting records in a typical manual system Understand the purpose of control accounts for accounts receivable and accounts payable Understand how control accounts relate to the double-entry system

© SmartClasses.com 2007

Student Notes for ACCA F3-Financial Accounting

© SmartClasses.com 2007

Student Notes for ACCA F3-Financial Accounting

Session Objectives
Prepare ledger control accounts from given information Perform control account reconciliations for accounts receivable and accounts payable Identify errors which would be highlighted by performing a control account reconciliation Identify and correct errors in control accounts and ledger accounts Record cash transactions in ledger accounts

Session Objectives
Understand the need for a record of petty cash transactions Describe the features and operation of a petty cash imprest system Account for petty cash using imprest and nonimprest methods Understand the importance of, and identify controls and security over the petty cash system

© SmartClasses.com 2007

Student Notes for ACCA F3-Financial Accounting

© SmartClasses.com 2007

Student Notes for ACCA F3-Financial Accounting

the invoice always represents sales.com 2007 Student Notes for ACCA F3-Financial Accounting Business Documentation Debit Note: Note to a person or a company signifying an amount owed. Business Documentation Delivery Note (Goods Delivery Note): A written document from the seller to the buyer that accompanies a delivery of goods and specifies type of goods and quantity.com 2007 Student Notes for ACCA F3-Financial Accounting © SmartClasses. whereas a debit note is used for deducting money without a sale being made.com 2007 Student Notes for ACCA F3-Financial Accounting .Recording credit purchases Sales returns day book – Recording sales returns Purchases returns day book . Credit Note: A monetary instrument issued by a seller that allows a buyer to purchase an item or service from that seller on a future date. A sales order may be for products and/or services. Used for establishing price from various suppliers Purchase order: A written authorization prepared by a buyer for the purchase of goods or services at a specified price.Recording purchases returns Cash book . Although it is very similar to an invoice. If denied. Sales order: An order received by a business from a customer. Remittance Advice: A statement sent to providers showing that claims were processed and the amount for which the beneficiary is responsible.All cash / bank transactions Petty cash book – All small cash transactions Journal – All transactions not recorded elsewhere © SmartClasses. Receipt: Details of payments received Books of Prime Entry Sales Day Book – Recording credit sales Purchases day book . an explanation of denial is provided. © SmartClasses.com 2007 Student Notes for ACCA F3-Financial Accounting © SmartClasses. Purchase Invoice: Produced by company receiving the goods as a proof of receipt.Business Documentation Quotation: Asking price.

Sales Ledger Control Account Cr.Contains an account for each credit customer.com 2007 Student Notes for ACCA F3-Financial Accounting .Contains an account for each credit supplier. is normally contained in the General ledger Accounts payable ledger.500 Sales Day Book Double Entry Sales Ledger Control Account part of double entry: Dr.com 2007 Student Notes for ACCA F3-Financial Accounting © SmartClasses. Purchase ledger control account.com 2007 Student Notes for ACCA F3-Financial Accounting © SmartClasses.com 2007 Student Notes for ACCA F3-Financial Accounting Sales Day Book Double Entry Double entry will depend on whether individual accounts are maintained in individual ledger or sales ledger control account in general ledger Individual accounts part of double entry: Dr.000 $14. Sam Dr. Sales ledger control account.500 Each entry also posted to individual memorandum accounts in accounts receivable ledger (Total sales posted to sales ledger control account) © SmartClasses. Sales $14. An account to summarise this information . John Cr Sales $4500 $10. An account to summarise this information . is normally contained in the General ledger Sales Day Book Format © SmartClasses.500 $14.Ledger Accounts General ledger – Contains all accounts or a summary of all accounts necessary to produce the trial balance and financial statements Accounts receivables ledger.

Individual accounts in accounts payable ledger Cr.com 2007 Student Notes for ACCA F3-Financial Accounting . Purchases Cr. Purchases returns Each entry posted to individual memorandum accounts in accounts payable ledger Control Accounts Sales Ledger Control Account Purchases Ledger Control Account Purchases returns day book Dr.com 2007 Student Notes for ACCA F3-Financial Accounting © SmartClasses. Purchase ledger control account Cr. Individual Accounts in accounts payable ledger Total purchases posted to purchases ledger control account Sales Returns Day Book Individual accounts part of double entry Control accounts part of double entry Dr Sales Returns Cr Sales ledger control account Control accounts part of double entry Dr. Purchases returns Total returns posted to purchases ledger control account © SmartClasses. Individual accounts part of double entry Purchases Day Book Dr. Purchases Returns Day Book Format is similar to that of sales day book.com 2007 Student Notes for ACCA F3-Financial Accounting © SmartClasses.com 2007 Student Notes for ACCA F3-Financial Accounting Purchases Returns Day Book Individual accounts part of double entry Control accounts part of double entry Dr.Purchases Day Book. Purchases Cr. Purchase ledger control account Each entry also posted to individual memorandum accounts in accounts payable ledger Sales returns day book Dr Sales Returns Cr Individual accounts in accounts receivables ledger Total returns posted to sales ledger control account Each entry posted to individual memorandum accounts in accounts receivable ledger © SmartClasses. Sales Returns Day Book.

Sales Ledger Control Account Format Purchases Ledger Control Account Format © SmartClasses. Purchase ledger control account Cr. © SmartClasses. Many businesses may have separate books for cash receipts and cash payments A note of cash discounts is also made in the cash book Businesses generally use a columnar format of cash book Individual receivables and payables must also be updated to reflect this.com 2007 Student Notes for ACCA F3-Financial Accounting © SmartClasses.com 2007 Student Notes for ACCA F3-Financial Accounting .com 2007 Student Notes for ACCA F3-Financial Accounting © SmartClasses. Dr. Sales ledger control account Cash Book All transactions involving cash and bank are recorded in cash book.com 2007 Student Notes for ACCA F3-Financial Accounting Contra Entries These are entries made when a customer is also a supplier.

Bank Step 2: As petty cashier makes payments he records them in the petty cash book.com 2007 Student Notes for ACCA F3-Financial Accounting © SmartClasses.Petty Cash Book All transactions involving small amounts are recorded in the petty cash book Petty cash is maintained using Imprest System Imprest System Step 1: Business decides on an amount to be held as a float Dr. All expenditure must be evidenced by an expense receipt Step 3: Cheque is drawn to return the petty cash to the original float level Float = Cash in petty cash box + Sum total of expense vouchers since last disbursement © SmartClasses.com 2007 Student Notes for ACCA F3-Financial Accounting . Petty Cash Cr.

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