A refreshers guide to bookkeeping
Wesleigh O’Hagan, ACA, PGDE, BAAF
“We can't go over it.We can't go under it.
Oh no!We've got to go through it!”
(excerpt from We're Going on a Bear Hunt by Michael Rosen & Helen Oxenbury)
4 out of 20 SQs on average are
Books of First Entry
They also come up throughout the exam as
Part c’s
Patterns – on average 4 SQs
2013 2012 2011 2010General Journal
General Journal
General Journal
General Journal
Control Account
(Creditors)
Control Account
(Creditors )
Control Account
(Debtors)
Control Account
(Creditors)
Ledger Account
(Sales)
Ledger Account
(Purchases)
Ledger Account
(Purchases)
Ledger Account
(Sales)
Day Book
(Purchases)
Day Book
(Sales)
Day Book
(Purchases)
Day Book
(Sales Returns)
Lets take the first steps….
What goes on what side?
DEBIT CREDIT
EARL sits in the T Account
DEBIT CREDIT
E R
A L
What does EARL mean?
DEBIT CREDIT
EXPENSE REVENUE
ASSET LIABILITY
EARL is split between the P&L and the BALANCE SHEET
DEBIT CREDIT
EXPENSE REVENUE P&L
ASSET LIABILITY B/S
Revenue is income that a business earns usually from SALESIt also includes other income items like rent received, commission received etc.
Revenue?
Folios
Folios are like a MAP
They tell you were figures have come from,
or where they are going to
Folios
CB = Cash Book
ACB = Analysed Cashbook
GL = General Ledger
DL = Debtors Ledger
CL = Creditors Ledger
General Journals
2013 2012 2011 2010General Journal
General Journal
General Journal
General Journal
Control Account
(Creditors)
Control Account
(Creditors )
Control Account
(Debtors)
Control Account
(Creditors)
Ledger Account
(Sales)
Ledger Account
(Purchases)
Ledger Account
(Purchases)
Ledger Account
(Sales)
Day Book
(Purchases)
Day Book
(Sales)
Day Book
(Purchases)
Day Book
(Sales Returns)
Applying EARL GJ deals with balance sheet items only
Applying EARL GJ deals with balance sheet items only
Premises An Asset DEBIT
Creditors A Liability – and Creditors always have a CREDIT balance
CREDIT
OSC A Liability – as some day we will have to repay investors
CREDIT
600000
600000 42,0
00
600000 42,0
00583,000
600000 42,0
00583,000625,000
625,000Remember… The GJ must balance.
600000 42,0
00583,000625,000
625,000Watch the date – GJ are normally prepared on the 1st day of the month
1.01.11
600000 42,0
00583,000625,000
625,000Being, Asset, Liabilities and Share Capital of Barr Ltd on this date
600000 42,0
00583,000625,000
625,000Being, Asset, Liabilities and Share Capital of Barr Ltd on this date
Key Sentenc
e!
General Journal Worksheet
Control Accounts
2013 2012 2011 2010General Journal
General Journal
General Journal
General Journal
Control Account
(Creditors)
Control Account
(Creditors )
Control Account
(Debtors)
Control Account
(Creditors)
Ledger Account
(Sales)
Ledger Account
(Purchases)
Ledger Account
(Purchases)
Ledger Account
(Sales)
Day Book
(Purchases)
Day Book
(Sales)
Day Book
(Purchases)
Day Book
(Sales Returns)
Debtor Mantra :
Debtors ALWAYS have a Debit Balance
Debtors
DEBIT CREDIT
DEBTOR
Creditor Mantra :
Creditors ALWAYS have a Credit Balance
Creditors
DEBIT CREDIT
CREDITOR
What about the remaining items?
Once you have identified what the opening balance is you can complete the control account by asking:
Will this item INCREASE or DECREASE the amount owed…?
If the item INCREASES THE AMOUNT OWED place it on the same side as the balance
If the item DECREASES THE AMOUNT OWED place it on the opposite side
Debtors Always have a DEBIT Balance
Debtors Always have a DEBIT Balance
1.05.11 Balance 4900
For the next two entries ask the question:
Has this item INCREASED or DECREASED the amount owed?
1.05.11 Balance 4900
Credit Sales INCREASE amount owed – so put it on same side as
the balance
1.05.11 Balance 4900
Credit Sales INCREASE amount owed – so put it on same side as
the balance
1.05.11 Balance 490031.05.11 Credit Sales 5900
Cash Received DECREASE the amount owed – so put it on opposite
side of the balance
1.05.11 Balance 490031.05.11 Credit Sales 5900
Cash Received DECREASE the amount owed – so put it on opposite
side of the balance
1.05.11 Balance 490031.05.11 Credit Sales 5900
31.5.11 Cash Received 6100
Balance the Account – you know you are correct as Debtors have Debit
balances
1.05.11 Balance 490031.05.11 Credit Sales 5900
31.5.11 Cash Received 6100
10800 10800
31.5.11 Balance 4700
1.06.11 Balance 4700
Same rules: different Mantra for Creditors:
Creditors always have a CREDIT Balance…
1.5.13 Balance 4400
For the next two entries ask the question:Has this item INCREASED or DECREASED
the amount owed?
1.5.13 Balance 4400
Credit Purchases INCREASE amount owed – so put it on same side as the
balance
1.5.13 Balance 440031.5.13 Credit Purchases 9300
Cash Paid DECREASES amount owed – so put it on opposite side of the balance
1.5.13 Balance 440031.5.13 Credit Purchases 9300
31.5.13 Cash Paid 11900
Balance the Account – you know you are correct as Creditors have Credit
balances
1.5.13 Balance 440031.5.13 Credit Purchases 9300
31.5.13 Cash Paid 11900
1370013700
31.5.13 Balance 1800
1.6.13 Balance 1800
Control AccountsWorksheet
1.5.08 Balance 1400 31.5.08 Cash Rec’d 630031.5.08Credit Sales 8500
9,900
9,900
3,60031.5.08 Balance
3,600
1.6.08 Balance
1.5.12 Balance 910031.5.12 Cre. Purch. 20000
31.5.12 Cash Paid 5400
29100
29100
23700
31.5.12 Balance
1.6.12 Balance 23700
Ledger Accounts
2013 2012 2011 2010General Journal
General Journal
General Journal
General Journal
Control Account
(Creditors)
Control Account
(Creditors )
Control Account
(Debtors)
Control Account
(Creditors)
Ledger Account
(Sales)
Ledger Account
(Purchases)
Ledger Account
(Purchases)
Ledger Account
(Sales)
Day Book
(Purchases)
Day Book
(Sales)
Day Book
(Purchases)
Day Book
(Sales Returns)
In attempting the question you must firstly ask if you purchased or if you sold something
Purchases = Money Out or Creditors
Sales = Money In or Debtors
Scenario 1 : Purchases
Ask yourself
Did you buy something?
•If yes then….
Did you pay with cash?Yes - BANK
•If no then…..
Do you owe money?
Yes - Creditor
How did we pay ….
Cash:
Then it comes out of our Bank Account
Credit
Then WE OWE a Creditor
Debit CreditBANK ACCOUNT
MONEY IN MONEY OUT
Debit CreditCREDITOR ACCOUNT
Creditor has Credit Balance
{Every Debit has a Credit, Every Credit has a Debit
The beauty of double entry, is that once we know one side of the entry, we can complete the question
The second account is given the name of the item bought or sold
Go through the steps…
Money Out = Credit Side so item iii = Bank Account
Money Out = Credit Side so item iii = Bank Account
Bank Account
Item i , the remaining account takes the name of the item bought
Bank Account
Delivery Van A/c
The Details are the names of the opposite accounts
Bank Account
Delivery Van A/c
Bank
Delivery Van
Scenario 2 : Sales
Ask yourself
Did you sell something?
•If yes then….
Did you receive
payment?Yes - BANK
•If no then…..
Are you owed money?
Yes - Debtor
How were we paid….
Cash:
Then it goes into our Bank Account
Credit
Then WE ARE OWED = a Debtor
Debit CreditDebtor Account
Debtor has Debit Balance
Debit CreditBANK ACCOUNT
MONEY IN MONEY OUT
Bank Account
Money In = Debit Side so item i = Bank
Account
Bank Account
Item iii , the remaining account takes the name of the item sold – in this instance the goods are unnamed = Sales Account (being sale of trading items)
Sales Account
Bank Account
)
Sales Account
Sales
Bank
Ledger AccountWorksheet
J Foley Account
Purchases Account
J Foley
Purchases
Watch here as the bookshop owner did not
sell books
He sold equipment which is not part of his normal trade therefore is NOT
sales account
Bank Account
Equipment
Equipment Account
Bank
Day Books
2013 2012 2011 2010General Journal
General Journal
General Journal
General Journal
Control Account
(Creditors)
Control Account
(Creditors )
Control Account
(Debtors)
Control Account
(Creditors)
Ledger Account
(Sales)
Ledger Account
(Purchases)
Ledger Account
(Purchases)
Ledger Account
(Sales)
Day Book
(Purchases)
Day Book
(Sales)
Day Book
(Purchases)
Day Book
(Sales Returns)
9.5.13 10 12500
Tips:Date, CN No. and Net is as per question
Tips:Details is always the name that is not on the Day Book
9.5.13 Park Ltd 10 12500
Tips:Calculate VAT (12500 / 100 * 23)
9.5.13 Park Ltd 10 12500 2875 15375
Tips:Folio : Purchases / Purchase Returns = Creditors = Creditors Ledger (CL)
9.5.13 Park Ltd 10 CL 12500 2875 15375
Tips:Date, Inv No. and Net is as per question
9.06.2012 5 5000
Tips:Details is always the name that is not on the Day Book
9.06.2012 Lily Ltd 5 5000
Tips:Calculate VAT (5,000 / 100 * 23)
9.06.2012 Lily Ltd 5 5000 1150 6150
Tips:Folio : Sales / Sales Returns =
Debtors = Debtors Ledger (DL)
9.06.2012 Lily Ltd 5 DL 5000 1150 6150
Day Books Worksheet
Part c’s
Part c’s