Summary
Summary AAT level 2 bookkeeping exam
covers everything neened for bookkeeping transactions, bookkeeping controls and elemts of costing
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PPD-Prompt Payment Discount, SLCA-Sales Ledger Control Account, PLCA – Purchase Ledger ControlAccount
Transactions
Income
- Money coming into a business.
- Money generated by the business.
- Needs to be high to make a profit.
- Most often sources of income – sales, rent, and donations.
Expenditure
Things a business must pay for
- Inventory
- Rent
- Rates
- Utilities
- Insurance
- Marketing
- Bank charges
- Interest
- Depreciation
- Tax
Insurance – big cost of a business for protection, often a legal obligation
Assets
- Current – lasts for a year.
- Non-current – lasts longer than a year.
- Cash
- Inventory
Intangible assets
- Not a physical product – cannot touch it.
- Value attributed to name or reputation of a business.
- Protection of assets
- Trademarks
- Brand name
Liabilities
- Money owed.
If liabilities are not paid, assets can be taken away.
Examples of liabilities – overdraft, tax, trade payables, accruals
Businesses borrow to invest.
,PPD-Prompt Payment Discount, SLCA-Sales Ledger Control Account, PLCA – Purchase Ledger Control
Account
Debt is bad only if you are unable to pay it off.
Capital
- Money put into the business by the owner.
Drawings
- Assets being taken out of the business for personal use by owner.
Cash sales
Cash sales Credit sales
Action The sale and payment The seller provides goods,
happened at the same time. but payment is not made
straight away.
Payment Cash, debit, or credit card Usually, 30-90 days after
sale
Cash, cheque, or automated
payment
Usage Minority of business sales The majority of business
(except for in retail)
Business document Till receipt Invoices
Credit sales
Stage Process Document
1 Business tells customer Quotation
about the product.
2 Order is place. Customer order
3 Goods are dispatched. Delivery note
4 Payment requested. Invoice
5 Goods (maybe) returned. Credit note
6 Payment is made. Remittance advice note.
Step 1 – quotation should clearly state:
- Good/service being provided.
- All features
- Price
- Terms and conditions
- Discounts available
Step 2 – customer order should state:
- A unique code for the customer
- Addresses
, PPD-Prompt Payment Discount, SLCA-Sales Ledger Control Account, PLCA – Purchase Ledger Control
Account
- The product codes.
- Price
- Signature
Step 3 – delivery note should have:
- Addresses
- All codes used in previous documents for this customer.
- A new unique code for delivery
- Description of what is being delivered.
- Signature
Step 4 -invoice should state:
- VAT registration code
- Addresses
- All previous unique codes used.
- New unique code for invoice
- Date
- Price
- Discounts
Step 5 – credit note should have:
- All unique codes previously used.
- New unique code for the credit note
- What is being returned?
- Reason for credit note
Step 6 – remittance advice note should have:
- All previously used unique codes.
- A new unique code for the remittance advice notes.
- Purpose of the check
- Prices
- Discounts taken.
The process of preparing an invoice.
Step 1 – check goods were sent, find delivery note.
Step 2 – note it if anything was not delivered or delivered faulty.
Step 3 – check list prices
Step 4 – find customer file.
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