Accountancy jobs - what's yours?

geek84

Hi Stalwart


Many thanks indeed for your notes and links. I will try and work through them and hopefully get my trial balance to balance. A lot of my friends have indeed suggested that instead of doing this book keeping course, I should have gone straight ahead and do the AAT (like yourself). I may still do that.

For the time being, I would be gratefiul if you could help with the following points raised on the assignment (about a sole trader running a car valeting business) which I am doing-

1. The owner needs to pay his phone bill - however he does not have an invoice for the bill. In that case, for double entry purposes, would it be DR phone a/c & CR bank a/c? Do I have to work out the vat & put it in the vat a/c?

2. He has some customer cash takings for the month. In this case., should I DR cash book & CR sales a/c? Do I have to work out the vat on these takings and put it in the vat a/c?

3. He pays for petrol by cash. So would it be DR motor van expenses a/c & CR cash book? What about vat?

4. He has sent a credit note to a customer. Do I DR sales return a/c & CR debtors a/c? Do I need to do anything with the vat?


Thanks in advance for any help offered.

katebl

geek84 wrote: »

Hi Stalwart


Many thanks indeed for your notes and links. I will try and work through them and hopefully get my trial balance to balance. A lot of my friends have indeed suggested that instead of doing this book keeping course, I should have gone straight ahead and do the AAT (like yourself). I may still do that.

For the time being, I would be gratefiul if you could help with the following points raised on the assignment (about a sole trader running a car valeting business) which I am doing-

1. The owner needs to pay his phone bill - however he does not have an invoice for the bill. In that case, for double entry purposes, would it be DR phone a/c & CR bank a/c? Do I have to work out the vat & put it in the vat a/c?

Assuming he knows the correct amount (which I'm not sure he would without the invoice), you are right, it would be CR bank full amount, and DR phone a/c and VAT a/c the remainder. I believe he would need to include the VAT in case it was possible to reclaim it?

2. He has some customer cash takings for the month. In this case., should I DR cash book & CR sales a/c? Do I have to work out the vat on these takings and put it in the vat a/c?

Yes you need to work out the VAT, as this would be the first entry into your books, so DR cash, CR sales & VAT

3. He pays for petrol by cash. So would it be DR motor van expenses a/c & CR cash book? What about vat?

Again as with the phone, I believe you would need to calculate VAT, so CR cash, DR van & VAT

4. He has sent a credit note to a customer. Do I DR sales return a/c & CR debtors a/c? Do I need to do anything with the vat?

I THINK..............You would need to CR bank (as the money is going out), DR sales returns and VAT the appropriate amounts (otherwise you would end up overpaying VAT on a sale that didn't go through!). You would also need to CR the debtor a/c, but don't confuse that as being part of your double entry as the debtors a/c is in the 'subsidiary' ledger, not the main


Thanks in advance for any help offered.

Hi geek84,

I have added my thoughts in red - please anyone else feel free to correct me if I'm wrong (which I'm now worrying I am)! I really think AAT may help you, perhaps you could buy one of the books on Ebay and see what you think?

Procrastinator333

Hello,

It sucks that your training provider is so pants.

My thoughts:

First off it depends if he is VAT registered. That may be why no VAT is mentioned anywhere - they have phrased the Q as a sole trader exempt from VAT. Assuming he is VAT registered:

1) I wouldn't make a payment without an invoice. Tell the phone company unless you get an invoice, no payment. But I doubt that is the thrust of the answer.

Technically you are not allwed to reclaim VAT if you don't have a VAT invoice. So if he doesn't have an invoice he shouldn't be reclaiming the VAT either. Yet another reason to demand an invoice before payment.

If you were booking the VAT, then it would be Dr Expense, Dr VAT, Cr Bank.

I think really this person should refuse to pay and make an accrual, Dr Expense (net amount) and Cr Liability for accrual.

2) Yeah, Dr Bank, Cr Income, Cr VAT.

3) VAT should be on the receipt. If the question doesn't specify if VAT is included or not, make a note of the fact you have assumed VAT. Then Dr Expense, Cr Cash, Cr VAT.

4) You need a Dr to the P&L as you are reducing the income. It could go Dr Sales, or Dr Sales refunds, the cr side is probably then to the debtor account and would show as a negative debtor.

E.g When the customer bought in the first place they purchased £100. So Cr Income £100, Dr Debtor £100.

Then when you issue the credit note, you are in effect reversing this, so Dr Income £100 and Cr Debtor £100. Add them up and it leaves 0 in both accounts - Which is what you want if you have done a refund in full.

Regarding what is a debit and credit, the memory aid I used to use was DEAD and CLIC. Rember those 2 words and the rest falls out of them:

Debit Expense Asset Depreciation

Credit Liability Income Capital

Everything fits one of those categories, so if you are ever unsure just think about where it fits, sometimes that is best done through elimination, e.g. you know it can't be x, y or z, so it must be this one.

I would also just say keep at it, for myself and the people I studied with, we all agreed that is something of a lightbulb moment with accounting. For a while we all put Dr's and Cr's in the wrong place and fail to balance the ledgers, then at some point it just clicks. It does take a while, but good luck!

I will look around occasionaly, but feel free to PM if you have a question up on the board you want me to have a look at.

Any

Procrastinator is right, it very much depends whether the business/sole trader is VAT registered to know what you are doing with VAT.

Ignore the fact that he doesn't have an invoice. He still needs to pay it otherwise they will cut his phone off and he may as well wave by by to the business as clients won't be able to contact him. However in normal life you would still make sure the invoice turns up at some point.
However you would need an invoice to be able to claim VAT - if you don't have an invoice you cannot claim VAT at this point.

Now, when he sent out the credit note did he also refund the money? Because that makes a difference - is this the whole question? Is there no note whether he sells anything on credit, or whether everything is immediate payment? That will make a difference in which credits you dr and cr.

Any

geek84 wrote: »

Hi Stalwart


Many thanks indeed for your notes and links. I will try and work through them and hopefully get my trial balance to balance. A lot of my friends have indeed suggested that instead of doing this book keeping course, I should have gone straight ahead and do the AAT (like yourself). I may still do that.

For the time being, I would be gratefiul if you could help with the following points raised on the assignment (about a sole trader running a car valeting business) which I am doing-

1. The owner needs to pay his phone bill - however he does not have an invoice for the bill. In that case, for double entry purposes, would it be DR phone a/c & CR bank a/c? Do I have to work out the vat & put it in the vat a/c?

You don't have an invoice, you cannot claim VAT.

2. He has some customer cash takings for the month. In this case., should I DR cash book & CR sales a/c? Do I have to work out the vat on these takings and put it in the vat a/c?

Yes (if he is VAT registered then work out VAT yes)

3. He pays for petrol by cash. So would it be DR motor van expenses a/c & CR cash book? What about vat?

Yes, and again if he is VAT registered yes.

4. He has sent a credit note to a customer. Do I DR sales return a/c & CR debtors a/c? Do I need to do anything with the vat?

Did he just send the note, or refunded the money immediately as well? If he just send the note, then you are doing it correctly. Though I never worked with sales return a/c, I would just dr the normal sales account - but I don't know how many T accounts they want you to have, they might teach you to do new T account to make it easire for marking.

Again - if he is VAT registered, then yes, VAT needs to be worked out again.


Thanks in advance for any help offered.

Notes in red. xx

Any

Katebl - bank is DR=increase, Cr=decrease

So if money is going out, you need to CR bank. But I think it was just overtyping error as before for expense you accounted correctly?
ie dr expense, cr bank

katebl

Any wrote: »

Katebl - bank is DR=increase, Cr=decrease

So if money is going out, you need to CR bank. But I think it was just overtyping error as before for expense you accounted correctly?
ie dr expense, cr bank

Thanks any, that's exactly why I invited comments, I got my DR and CR mixed up in q4 - will attempt to edit it, and not attempt any future questions! :beer:

Any

katebl wrote: »

Thanks any, that's exactly why I invited comments, I got my DR and CR mixed up in q4 - will attempt to edit it, and not attempt any future questions! :beer:

If you knew how many times I've done that!! all the way through correctly and then just suddenly turned it round at one point. Later looked at it and though - what the hell I was thinking... :rotfl:The worst thing is, that at the time I was doing it it made sense to do it that way!!:rotfl:

Practice makes masters...

Procrastinator333

This is one of those stupid exam q's that never actually happens.how is someone going to know they owedor a phonebill if they don't have the invoice? And if they call up, you just ask for one and pay as soon as it arrives.

Any

Procrastinator333 wrote: »

This is one of those stupid exam q's that never actually happens.how is someone going to know they owedor a phonebill if they don't have the invoice? And if they call up, you just ask for one and pay as soon as it arrives.

Yep. Sometimes some of the questions are just unrealistic. Pain in the bum.