Cash Books

System

hi all

i wonder if you can help me.

we have been doing simulation question in class and im 90% ok with the unit 1+2
but the only thing i cant do is cash books (cash sale).

ive notice when you put info in sometimes you put the vat in and not the discounts visa versa

how do i know if to include the VAT in or discount or both?
please help

System

Re:Cash Books

I've only done Unit 1 so far, so I can only comment on the receipts side of the cash book, for sales, but I suspect the situation is similar (but in reverse), for the payments side.

The main distinction is between credit sales, and cash sales. In credit sales, you will already have entered the invoice into the sales day book, and so will have already dealt with any VAT element.

All that is left to enter into the cash book, when you receive payment, is the actual amount, and any cash discount. The discount will be the cash/settlement discount for prompt payment, and must be figured out when payments are made, as only then will you know whether the customer has met the conditions.

In cash sales you are dealing with the whole sale in one go, so must include VAT. There shouldn't be a discount allowed figure, as there is no cash discount, and any other discounts would be figured into the amount charged.

Overall, everything is pretty much the same, but on credit sales there are two parts, the sale itself (and the invoice), and the payment. On cash sales the sale and payment are dealt with in one go.