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Summary AAT Introduction to Bookkeeping Section 1 notes
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9/26/23, 4:49 PM Introduction to bookkeepingIntroduction to bookkeeping
Introduction to bookkeeping
Provides an thorough understanding of all the stages involved in processing
transactions using manual methods and understanding digital bookkeeping
systems which automate some of the stages in the manual process.
Also looks at the different documents involved and ther accounting books and
ledgers required when recording transactions.
Why do businesses use bookkeeping?
Businesses need to keep track of its costs as well as its sales.
Bookkeeping system is based on five stages:
Financial transactions: - This is about the actual transaction that creates a
document. e.g. a sale would result in a sales invoice.
Financial documents: - This is the document that is the result of the transaction. e.g.
a purchase would result in a purchase invoice.
Books of prime entry: - This is where the document is first recorded. e.g. a sales
invoice would be recorded in the sales day book.
Ledger accounts: - This is where the Books of prime entry are transferred to and is
where we start the double entry process.
Trial balance: - This is a basic financial report that is a list of ledger balances and can
be used as a checking device as well as providing accounting information to
owners and accountants.
Once trial balance is completed, ready to move onto the next stage of creating
financial statements:
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, 9/26/23, 4:49 PM Introduction to bookkeeping
Statement of profit or loss:
This statement details the sales and costs of the business for a period and would
show the resulting profit or loss.
Statement of financial position:
This statement details the assets, liabilities, and capital of a business at a given
point in time.
Business documents:
Invoice - this documents details the goods/services bought and how much the
buyer owes the seller.
Credit notes - issued by the seller when goods are either faulty or not as ordered
and have been returned.
Remittance Advice - Document is sent from the customer to the seller detailing what
they are paying. Thenbe used to allocate the payment on the account to clear
relevant transactions
Statement of account - Document normally sent to the customer at the end of the
month, should detail the transactions that have happened on that account during
the month and what the customer owes the business.
Bank statement - document issued by the bank to its customer detailing the activity
on their account.
Petty Cash voucher - many businesses operate petty cash system. This is where a
small amount of cash is kept in a locked tin so that money can be used to purchase
items like stamps, coffee, or tea etc. If someone needed to go out and spend a
small amount of money a petty cash voucher would be created.
Books and ledgers:
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