Category: Level 2
Principles of coding
Nominal codes are general ledger codes used to record a business’s daily financial transactions. These transactions are processed through bookkeeping, posted to the general ledger, and included in the Trial Balance. Businesses also assign account codes to customers and suppliers to make identification easier. Each business follows a set system for allocating these codes, which … Read More
Trial Balance
What a Trial Balance Does A Trial Balance lists the closing balances of all accounts in the general ledger. You place each balance in either the debit or credit column. After you add the columns, the totals should match.When these totals match, the ledger entries are arithmetically correct. After you finish the Trial Balance, you … Read More
Petty Cash System In Businesses
Many businesses use a petty cash system to manage small business payments. These payments are too small for writing a cheque. For example: A staff member usually manages the petty cash float. This person is responsible for: Funding and Receipts Businesses top up petty cash from the cash book or bank. Sometimes, petty cash also … Read More
The Cash Book
The Cash book is a book of prime entry which is initially used to record all money transactions and then transferred into the general ledger. All monies received or paid out will have an entry in the cash book and this will include monies paid in and out in cash or through the bank.In the … Read More
CLASSIFICATION AND RECORDING OF COSTS
Every organisation in operation will usually incur costs of different kinds. Costs can be logically grouped in different ways. The particular grouping selected will depend on the purpose for which the resulting analysed data is intended to be used. Different forms of accounts will require accounting records and costs to be classified in different ways … Read More
Sales Ledger & Exercises
The company’s services or products are sold to its customers. These customershave to be set up on Sage in order to be able to allocate invoices, credit notes andtransactions against the customer.In order to set up customers, click on the ‘New’ button at the top of the Sales Ledger(Customer tab), and follow the wizard. Important! … Read More
Irrecoverable Debt
Many businesses sell their goods and services on credit and this gives rise to the riskof one or more customers not paying after they have received the goods or services.This may not be a regular occurrence in businesses, but where the goods or servicesof a business are offered to its clients on credit, the risk … Read More
Labour Costs – Bonus Schemes
A bonus payment is an extra payment made to an employee as a reward. The basicprinciple of a bonus payment is that the employee is rewarded for any additionalincome generated or savings in cost to the organisation. Bonuses may be paid to employees for a variety of reasons. An individual employee, adepartment, a division or … Read More
Labour Costs – Piece Rate with Guarantee
This gives the employee some security if the employer does not provide enough workin a particular period. The way that system works is that if an employee’s earnings forthe amount of units produced in the period are lower than the guaranteed amount thenthe guaranteed amount will be paid to the employee. Illustration: Fernando is paid … Read More