Summary Theory relating to Reconciliations (debtor's and creditor's)
20 views 0 purchase
Course
Accounting
Institution
12th Grade
The following notes include theory concepts relating to debtors and creditors reconciliations. Unfortunately I learnt bank reconciliations with cheques, which are no longer valid, so i am currently unable to provide notes relating to those.
These notes include:
Debtors: internal control, errors w...
Reconciliations
Debtors
Asset Owes the business money.
Internal control
• Adequate separation of duties with regards to debtor’s transactions.
• There should be policies in place which monitor the approval of credit for
potential debtors.
• When a customer applies for credit, their past credit track record should be
checked.
• Discount should be given for early payment (this will encourage debtors to
settle their accounts early).
• The debtors clerk must send out regular statements to debtors in order to
remind them of what they owe.
• Interest should be charged on overdue accounts (this will discourage debtors
from taking too long to pay off their debts).
Errors which may occur
Error How to fix it
An amount was not posted from the Correct the amount in the control
journal to the ledgers at all. account and the list.
An amount was incorrectly entered into Enter the amount into the control
the journal e.g. 3740 instead of 7340 account and the list. Too much – cr(-) or
too little – dr(+).
Amount correctly entered into the Enter the difference into the list only.
journal but incorrectly posted to the
debtors ledger.
Amount correctly entered into the Enter 2x the amount into the list only.
journal but posted to the wrong side of
the debtor’s ledger.
The journal was cast (added or totalled) If undercast – add, if overcast –
incorrectly, too much or too little. subtract. Enter in the control account
only.
The total of the journal was posted to Correct by entering 2x the amount in the
the wrong side of the control account. control account.
Journal was correctly totalled, but the Correct by entering the difference into
total was incorrectly posted to the the control account only.
control account.
Debtors age analysis
• Shows a breakdown of outstanding debtor’s amounts after the schedules
aging period, usually 3 months.
• Analysed to find out:
o Which debtor owes what amount and for how long.
o Which debtor needs to be given discount for early payment, charged
interest for late payment or handed over to the attorneys for collection.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ciaralee. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $4.22. You're not tied to anything after your purchase.
