Cash receipts book question

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
can anybody explain this - I know that its probably very obvious but after a few hours of studying, my mind cant seem to make sense of anything!! :roll:

After writing up my cash receipts book i had to then show how the totals would appear in their main ledger accounts

Total - 1,639.87
vat - 98.11
Cash Sales - 560.64
Sales Ledger - 981.12

I thought that the total would be a debit, and the other anounts a credit (so that both sides would equal)

However, after checking the answers, it showed that all of the amounts above were put in to the credit side of their accounts. Im just a little confused as there was no debit entry??
:?

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Cash receipts book question

    I'm not so sure it is completely obvious if you're not familiar with using a cash book.

    The cash book itself is part of the double entry system, think of it as a special kind of T-account. The total for cash sales in the cash book is the balancing debit here.

    Chris

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Cash receipts book question

    Your VAT figure of £98.11 is incorrect - it is actually £244.23 (£98.11 VAT on cash sales of £658.75 + £146.12 on credit sales of £981.12).

    On the credit side, we have £1,395.64 credited to the Sales account and £244.23 credited to the VAT account, totalling £1,639.87.

    On the debit side, we have £981.12 debited to Sales ledger control account and £658.75 debited to the bank account (we presume that as it was cash it was banked), toalling £1,639.87.

    Therefore, the debits and credits both equal.

    Does this help!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Cash receipts book question

    I was quite critical of this mythical "cash book" that was taught in Foundation. To me, this kind of implies that you receive cash and cheques, shove them in a big physical book and hide it somewhere!!!

    I'd much rather have had them refer to it as the bank account and show it in a proper T account format, with debit side payments in and credit side payments out. They teach you the CRB and CPB and then only go and replace it with the bank account later on anyway! Why not just teach it like it really is in the first place?!

    That would have been so much easier for me to understand for the first two simulations, when making and receiving payments!

    Robert
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Cash receipts book question

    Thanks guys, that does help

    I think sometimes its easier to understand when you ask people who are or were in the same boat as you, rather than our own tutors!!

    And I know what you mean about the bank account part Robert!! :?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Cash receipts book question

    No problem, don't forget to use these forums if you get stuck.

    Yeah, the way they teach the bank account is very flawed to to me. You learn the CBP and CBR separately, then later they merge them together in "proper" T account format and rename it (more correctly) as the bank account. The CBP becomes the credit side while the CBR becomes the debit side. :evil:

    Regards,

    Robert

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