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00 Basic Accounting II (BAII) Level 2 Certificate in Accounting AAT.

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Presentation on theme: "00 Basic Accounting II (BAII) Level 2 Certificate in Accounting AAT."— Presentation transcript:

1 00 Basic Accounting II (BAII) Level 2 Certificate in Accounting AAT

2 11

3 22 Terminology A summary of the equivalent international version to the UK terms which are used within this assessment. UK International Fixed Assets Non-current Assets StockInventory Debtor Receivable Creditor Payable It is also important for you to be able to use the terms main ledger and general ledger interchangeably.

4 33 Ledger accounts

5 44

6 55

7 66 Debits and credits

8 77 Balancing a ledger account

9 88

10 99 The trial balance List of all the ledger balances in the main (general) ledger Debit balances and credit balances listed in difference columns Total debit balance must equal total credit balance

11 10 The trial balance

12 11 The trial balance AssetsLiabilities ExpensesIncome DrawingsCapital

13 12

14 13 Journal adjustments A written instruction by a bookkeeper to write a double entry into the general ledger accounts Generally for adjustments therefore a narrative usually accompanies the double entry as explanation for the purpose

15 14 Journal adjustments E.g. £170 has been debited to insurance instead of motor tax Journal: Dr Motor tax Cr Insurance Being motor tax posted to insurance in error

16 15 Journal adjustments Other adjustments: Bad debts Contra entries

17 16 Journal adjustments Bad debts Arise when a debtor fails to pay and the debt is written off DR Bad debt expense CR Sales Ledger Control Account Being the write off of a bad debt

18 17 Journal adjustments Contra entries A business is both a debtor and creditor of another business if it buys and sells with it. Both parties have to agree to net balances off i.e. Reduce both the creditor and debtor balances DR Purchases Ledger Control Account CR Sales Ledger Control Account Being the adjustment for a contra entry with ABC Ltd

19 18 Contra entry - example

20 19 Contra entry - solution

21 20

22 21 Suspense accounts Used as a temporary holding account when –Destination of a posting is uncertain –The Trial Balance does not balance and an error has to be investigated

23 22 The trial balance

24 23 Errors identified by trial balance

25 24 Errors not identified by trial balance

26 25 Journals Used to record unusual items such as error corrections or to clear a suspense account £XXX Account to be debited CrDr Account to be credited

27 26 Journal entry

28 27

29 28 Sales ledger control account

30 29 Purchases ledger control account

31 30 Control Account Balances Reasons for differences –Casting errors –Posting errors –Bad debts –Contra entries

32 31

33 32 Imprest system

34 33 Petty cash voucher

35 34 Petty cash book

36 35

37 36 VAT VAT is charged on the taxable supply of goods and services in the United Kingdom by a taxable person in the course of a business carried on by them.

38 37 VAT Control Account VAT INPUT VAT (on purchases) OUTPUT VAT (on sales) OUTPUT VAT > INPUT VAT = LIABILITY OWED TO HMRC INPUT VAT > OUTPUT VAT = REFUND DUE BACK FROM HMRC

39 38 Calculating VAT Net100% VAT17.5% Gross117.5%

40 39 Calculating VAT

41 40

42 41 Gross pay and deductions

43 42 Employee payslip

44 43 Entering payroll in the ledger - 1

45 44 Entering payroll in the ledger - 2

46 45 Entering payroll in the ledger - 3

47 46

48 47 Bank accounts

49 48 Cheques

50 49 Cheque crossings

51 50 Standing orders and direct debits

52 51 BACS and CHAPS

53 52 Credit and debit cards

54 53

55 54 Bank reconciliation - 1

56 55 Bank reconciliation - 2

57 56 Bank reconciliation - method


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