Bookkeeping Transactions - Sales Account and Sale Control Account
Laura82
Registered Posts: 4
Hi have picked the books back up in the last while and the one thing I cannot get my head around is when there is a credit sale and we are recording that sale into sales ledger control account, I understand that is a Debit in there as it is money owed to us and therefore increasing an asset. We then do the opposite of that, entering it as a credit in the Sales Account and Vat account, but I don't understand WHY in real life terms? Surely its still increasing an asset by sales going up?
I learn better when I can understand why something is the way it rather, rather than "this is just the rule". Can anyone help. I understand DEAD CLIC, so is it just that income has gone up, therefore its a credit. But what differentiates it between an asset and income?
I learn better when I can understand why something is the way it rather, rather than "this is just the rule". Can anyone help. I understand DEAD CLIC, so is it just that income has gone up, therefore its a credit. But what differentiates it between an asset and income?
0
Comments
-
The sale still has to be recorded as a sale as if it was a cash sale, but we cannot debit the bank acct cos the money hasn't arrived yet. So instead of debiting the bank acct we debit the SLCA. When the money comes in we debit the bank acct and credit the SLCA and it now looks like it was a cash sale!0
-
To expand on what Gaz has put the system we use is a double entry system, so there will always be a debit and a credit entry.
You are comfortable with DEAD CLIC so I'd think of things like this.
Where has the money come from (Credit)
Where has the money gone to (Debit)
In what you've stated you have received money from a sale (credit) and it has gone into your SLCA (debit)
when the money is paid it comes from the SLCA (credit) and goes into the bank account (debit).
Credits aren't always owed income being a good example. It's more to do with where something comes from, if you take out a loan money has come from (credit) the loan account as a liability. When you pay it off you put money in (debit) to the account.
You're essentially a middle man taking money from one person and passing it to another whoever you take the money from gets credits whoever you give it to gets debits,AAT Level 4, MAAT
ACCA in progress
F4- Passed Aug 2020
F5- Passed Dec 2020
F6- Passed Sep 2020
F7- Passed June 2021
F8 - Passed Sep 2021
F9 - Passed June 2021
SBL -
SBR - Passed Mar 22
ATX - Passed Dec 21
APM - Passed June 220
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 18.9K For AAT students
- 259 NEW! Qualifications 2022
- 146 General Qualifications 2022 discussion
- 9 AAT Level 2 Certificate in Accounting
- 37 AAT Level 3 Diploma in Accounting
- 64 AAT Level 4 Diploma in Professional Accounting
- 8.9K For accounting professionals
- 23 coronavirus (Covid-19)
- 274 VAT
- 92 Software
- 274 Tax
- 137 Bookkeeping
- 7.3K General accounting discussion
- 193 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 352 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 590 Job postings
- 17 Who can benefit from AAT?
- 36 Where can AAT take me?
- 44 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 65 AAT membership