AccforMgrsUnit3….pptVIP

Exercise 3.4 Solutions Exercise 3.5 Solutions Exercises Complete Exercises 3.11 * Exercise 3.11 Solution * The Purchase Returns and Allowances Journal Used to record the returns of, or allowances received, for the purchase of faulty or unordered stock where the original purchase was on credit. Therefore, every transaction recorded in the purchase returns and allowances journal affects only two ledger accounts – Purchase Returns Allowances and Trade Creditors (Creditor’s Control). If there is a purchase return where the original purchase was for cash, then this would involve the receipt of a cash refund and therefore the purchase return would be recorded in the cash receipts journal. * The Purchase Returns and Allowances Journal * Exercises Complete Exercises 3.12 * Accounting for Managers Unit 3 Introduction to Accounting Systems and Transactions: Documents to Journals The Accounting Cycle A series of procedures to record business transactions and to report the financial effect of those transactions for each accounting period: Transactions: exchanges of money either immediately or in the future. The actual running of the business, eg. Selling goods/ providing service. 2. Source Documents: Each transaction should have evidence, known as source documents eg. invoices, cheques, receipts, adjustment notes, cash register rolls (tapes), internal memorandums and bank statements. 3. Record Transactions in Journals: basically a “book of first entry” prepared from source documents. Records day-to-day transactions by date * The Accounting Cycle 4. Post Journals to Ledger Accounts: Usually at the end of the month, post the journal info to the individual ledger accounts as DEBITS or CREDITS and “balancing” the accounts - either adding increases to or subtracting decreases from the previous balance in the account 5. Prepare a Trial Balance: A trial balance is a list of all ledger accounts and their balances. If a ledger account has a “debit” balance the amount is