Double-Entry Revision Recap & Summary

System
System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
edited 10:24AM in AAT student discussion
Get a handle on this stuff, guys! You'll need it for Unit 5 (Intermediate) and Unit 11 (Technician), as well...

Mnemonics

PLUS 'RECAL' - see post by Glyn Sweet. Also any further contributions will be there...

DRive on Left, CRash on Right!
(can't remember, sorry! - could be Gem or Bluewednesday)

IN (debit) OUT (credit)
(Yazi, Kloe, myself, & Frank Wood)

DEAD CLIC
DEBIT Expenses, Assets, Drawings, CREDIT Liabilities, Income, Capital.
(Gem7321)

PEAD SILC
Purchases, Expenses, Assets, Debtors
Sales, Income, Liabilities, Creditors
(biglill from teacher, Gill Laythom)

DIALL CILLA
Debits Increase Assets Lessen Liabilities
Credits Increase Liabilities Lessen Assets.
(speegs)

PEARLS
Purchases, Expenses, Assets || Revenue, Liabilities, Sales.
(tutor at my college, & numerous on this site)

CLAD
Credit Liability || Asset Debit.
(Jaime)

ALICE
Assets (DR) Liabilities (CR)
Income (CR)
Capital (CR)
Expenses (DR)
(chelledunleavy)

[T accounts -
Assets----|| Liabilities
|| Income
|| Capital
Expenses ||
(chelledunleavy)]

Settlement Discounts -
The seller allows a discount,
The buyer receives a discount.
(Hills)

AlLowed (Dr) || Received (Cr)
(Chris Harte)

Control Accounts:-
Debit the Debtors, Credit the Creditors.
(Robert - blobbyh)

Words of Wisdom

- from AAT - Recommendation to SHOW WORKINGS
http://forums.aat.org.uk/home/newsitem/store32/item14151/

- from blobbyh
:idea: YOU CAN ALL DO IT - NEVER GIVE UP! :idea:
:idea: Use your lunchbreaks! :idea:
:idea: Discussions/Explanations for Double-Entry :idea:
http://forums.aat.org.uk/forums/posts/list/13166.page
Further Discussion (D/E)
http://forums.aat.org.uk/forums/posts/list/13224.page

- from CJC, claudialove & lincs, (et al)
Discussion of D/E
http://forums.aat.org.uk/forums/posts/list/13113.page

- from phunkyphantom22 & Gem7321
Discussion of D/E
http://forums.aat.org.uk/forums/posts/list/13084.page
Flash Cards (phunkyphantom22)
http://forums.aat.org.uk/forums/posts/list/13584.page#66812

- from Gem7321
Discussion of Mnemonics in D/E
http://forums.aat.org.uk/forums/posts/list/13817.page

-from Robert (blobbyh), BaggyBooks, et al
Discussion of Credit Cards & CashBook
http://forums.aat.org.uk/forums/posts/list/13874.page

- from Chris Carne (CJC)
CashBook Discussion
http://forums.aat.org.uk/forums/posts/list/13405.page
Journal entries
http://forums.aat.org.uk/forums/posts/list/13548.page
General stuff (in development, give him time...)
:idea: http://www.cjcnet.net/wiki/tiki-index.php :idea:

- Discounts from Colina-Caminho
http://forums.aat.org.uk/forums/posts/list/13699.page

Study Resources
Revision Techniques
http://www.aat.org.uk/students/display/store4/item1088/
Exam Tips
http://www.aat.org.uk/students/display/store4/item1087/
Support booklets:
http://www.aat.org.uk/centres/display/store3/item24758
Past Papers:
http://www.aat.org.uk/students/display/store4/item298
:idea: :idea: Revision Quizzes (courtesy of Jim Riley):
http://www.tutor2u.net/business/aat/foundation/revision-quizzes.html :idea: :idea: VICKY!!!
Revision Notes (Jim Riley)
http://www.tutor2u.net/sub_accounting.asp
Diploma Skills Test Practice (Unit 31)
https://www.aat.org.uk/forums/posts/list/13705.page
Maths Help for Business students
http://www.mathcentre.ac.uk/students.php/business/

Main books in Accounting:
Purchases Day Book & Purchases Returns Day Book

Sales Day Book & Sales Returns Day Book

Cash Book (both Cash & Bank)

Journal (for unusual transactions: invest capital, purchase/sale of fixed assets, correct errors...)

Main Ledger:
Purchase Control (credit)
Sales Control (debit)
Debt accounts - capital, loans, etc. (credit)
Expense accounts - insurance, wages, telephone, etc (mostly Debits).
Income accounts - Rent receivable (ie from tenants), Commission Receivable, etc (credit but with debit entry in Cash Book...)
Asset accounts - fixed assets, vehicles, fixtures, stock (special case, see below) mostly debits
Sales Account & Purchase Account (& Returns for both)
- combined to form 'stock', ie stock in and stock out.
Discount Allowed account - debit.
Discount Received account - credit.
NB Could have several Purchase/Sales - for each item traded in!!!

Cash Book (IN on Left, OUT on Right...)
Discount Allowed (debit) & Discount Received (credit)
payments in and payments out (NB don't balance these columns!!!)
Vat is included in the two- and three-columns, so remember to split when posting 'Net' to other accounts...(NB don't balance these columns)
Credit on bank is overdraft... but never credit on Cash!!!
NB Sometimes treated as part of Main Ledger - eg question may ask for two accounts from 'Main Ledger', when the answer is bank and Sales Control...

Purchase Side
Suppliers = Creditors (you owe them money)

Purchase acc (net total from Purchases Day Book) debit
(or net value from Credit of Cashbook) debit

Purchase Returns acc (net total from Purchase Returns Day Book) credit

VAT acc (total for Vat column from Purchase Day Book) debit
(total for Vat column from Purchase Returns Day Book) credit

Purchase Ledger CONTROL (total of Gross column from Purchase Day Book) credit
(and total of Gross column from Purchase Returns Day Book) debit
(Payments to Suppliers from credit of CashBook) Debit
(Discount Received from credit of CashBook) Debit

Discount Received acc (total from Cash Book) credit
NB (total posted to debit of Purchase Control)
(single values posted to debit of Supplier accounts)

Subsidiary (Memo) Purchases Ledger
Suppliers' accounts: gross value for each invoice (credit)
gross value for each credit note (debit)
payment value (debit)
discount received value for payment (debit)

In general:
You pay them: credit OUT of CashBook
debit IN to Supplier's account.

Sales Side
Customers = Debtors (they owe you money)

Sales acc (net total column from Sales Day Book) credit
(or net value from debit of Cash Book) credit

Sales Returns acc (net total column from Sales Returns Day Book) debit

VAT acc (total for Vat column from Sales Day Book) credit
(total for Vat column from Sales Returns Day Book) debit

Sales Ledger CONTROL (total Gross column from Sales Day Book) debit
(total Gross column from Sales Returns Day Book) credit
(Payments from Customers from debit of CashBook) Credit
(Discount Allowed from debit of CashBook) Credit
(Bad Debts) Credit

Discount Allowed acc (total from Cash Book) debit
NB (total posted to credit of Sales Control)
(single values for each transaction posted to credit of Customer accounts)

Subsidiary (Memo) Sales Ledger
Customer accounts: gross value for each invoice (debit)
gross value for each credit note (credit)
payment received value (credit)
discount allowed value for payment (credit)

In general:
They pay you: debit IN to Cash Book
credit OUT of Customer's account.

General Advice:
(i) tick items in pencil to indicate that you have posted to accounts - then you won't forget.
(ii) do both entries together, even if you have to shuffle paper, (same reason as above)
(iii) find a system where you post the items in a particular order, then it becomes automatic, and less likely to miss anything out.
(iv) pick something that you recognise, eg money out of bank, then follow everything else as it flows in and out of other accounts, in relation to this 'known' item.
(v) if you can't get your Trial Balance to 'balance', put the difference into a 'suspense' account on the same sheet, then come back and have another go if you have time at the end of exam. (Thanks Gem.)
(vi) use the blank sheets to show your workings (calculations). You get marks for method, even if you use the wrong numbers in the calculation! See 'Words of Wisdom' comments from AAT...
(vii) use the resources available! (part of the course involves finding the info that you need, ie unit 23...) - there's a 1000 threads going back to November 2004!!!
(viii) you may find the answer to a particular question in one of the above links. (Collected together in one location...I will add others when find them.)
(ix) do as much background reading as possible - recommend Frank Wood, Margaret Nicholson, and any others you can get your hands on!
(xi) pace yourself. Take breaks and pamper yourself. But, get your priorities straight!

To expand Gem's advice,
Divide by 2 rule
eg +500 on debit, -500 on credit (difference of 1000)
so divide by 2, find entry (likely on wrong side)

Divide by 9 rule
9 times table (eg 45 and 54, 63 and 36) They are divisible by 9 so the difference between them is also divisible by 9. So digits could have been switched over.

(Obscure rule, that might come in useful for invoices, say:
11 times table
take the digits, split them/space them.
add the digits, if 10 or more carry the 'one' to the left.
eg1: 99 * 11 = 9 space 9 = 9 [18] 9 = 9+1, [8], 9
so 10, 8, 9 = 1089
eg2: 37 * 11 = 3 [10] 7 = 407
etc)

Good luck with the exam, guys!

I apologise for missing anything out... or not crediting the right person...

Check-out Glyn's & Gem's advice (at bottom)

Then

Advice for Final Week before Exams
http://forums.aat.org.uk/forums/posts/list/13816.page

ยซ1

Comments

  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    THANKYOU SO MUCH!!!! that helped me sooo much!!! :)

    *Hayley-May*

    PS Now can anyone help me with understanding capital/liabilities/assets!! :shock:
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    Wow, Toadie - you've been busy!!

    Thanks for that - very useful :D
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    [Edited from original...]

    Self-Control

    Event
    Observation
    Reaction

    (also known as 'A.B.C' model, under Rational Emotive Therapy, and similar in other systems.)

    Also covers traumatic and stressful events...
    (to be expanded, later...)

    Criticism

    (Separate Ego from Self-Esteem)

    Are comments relevant to discussion, or is someone trying to isolate, intimidate or belittle you?

    If comments relate to Accounts, from Accounts Tutor, then no matter how harsh may seem, they are likely to be fair and accurate regarding your understanding of the principles.

    They know their stuff. You are a beginner.

    Absorb like a sponge and do your background reading.

    Commitment and Perseverance...

    Decision-Making

    Fast decisions then 'Stick to your Guns!'.
    If wishy-washy when deciding - then usually wishy-washy with commitment...
    (However, take responsibility for your decisions!)

    "Personal"
    "Important"
    "Trivial"

    (to be expanded later...)

    Further reading - NLP, RET, etc
    http://forums.aat.org.uk/forums/posts/list/13641.page
    (NB Gem is referring to the 'Double-Entry Summary in the previous posts above...)
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    Don't call me Gemma, call me Gem! :twisted:

    I think it's really great that you've taken the time to do this for all the foundationers out there.

    Good luck to everyone in the exam!

    Gem

    p.s Hayley May -

    Capital is the funds which the owner invests in the business. Therefore this is a liability as the business owes it back to the owner. You would credit the capital account and debit the business bank account.

    Liabilties are things like loans, capital, overdrawn bank accounts, creditors, basically something that you owe money to. Liabilities are credits.

    Assets are things which are valuable to the company, eg. vehicles, computers, machinery, bank accounts, debtors etc. These are debits. (debit debtors, and say you bought a fixed asset you would have credited the bank account so you have to debit the fixed asset account!)

    All the best

    Gem
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    There is also a rather long-winded version at

    http://forums.aat.org.uk/forums/posts/list/13644.page#66927

    Check-out Glyn's & Gem's advice (at bottom)

    There are further dicussions of DE BK (Phunky, et al) - on the following pages.
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    have you tried the "ALICE" thingy?

    Assets (DR) Liabilities (CR)
    Income (CR)
    Capital (CR)
    Expenses (DR)

    It works for some :lol:
    Write ALICE in your "T" account, I cannot get it to show correctly here, sorry, and it should make a bit more sense!
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    Thanks greatly for this thread. I can now say I know the rules for Discounts ALlowed and Discounts Received. If I fail everything else, at least I know that! :D
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    Hi Nigel,

    Good revision. I think that I will get back to revising for FRA. Thanks for the mention on P14 of study buddy. it was a shame it got deleted. Still the other thread, "Advice" is still up there for everyone's amusement!LOL!!! :lol:

    Good luck with the exam. I am sure that you will pass. No wonder you have taken most of today (24/11) off to do shopping.

    Have fun buying all those Christmas prezzies!!!

    Yours,

    Jayne Hogan
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    Yes.. I'm still thankful to Robert for his support.
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    Check-out Glyn's & Gem's advice (at bottom)

    There are further dicussions of DE BK (Phunky, et al) - on the following pages.

  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Double-Entry Revision Recap & Summary
    ToadFace wrote:
    Regarding 'Netiquette' and the essentials of keeping a sense of humour!

    https://www.aat.org.uk/forums/posts/list/12315.page

    Mnemonics

    DRive on Left, CRash on Right!
    (can't remember, sorry! - could be Gem or Bluewednesday)

    IN (debit) OUT (credit)
    (Yazi, Kloe, myself, & Frank Wood)

    DEAD CLIC
    DEBIT Expenses, Assets, Drawings, CREDIT Liabilities, Income, Capital.
    (Gem - Gem7321)

    PEAD SILC
    Purchases, Expenses, Assets, Debtors
    Sales, Income, Liabilities, Creditors
    (biglill from teacher, Gill Laythom)

    DIALL CILLA
    Debits Increase Assets Lessen Liabilities
    Credits Increase Liabilities Lessen Assets.
    (speegs)

    PEARLS
    Purchases, Expenses, Assets || Revenue, Liabilities, Sales.
    (tutor at my college, & numerous on this site)

    CLAD
    Credit Liability || Asset Debit.
    (Jaime)

    ALICE
    Assets (DR) Liabilities (CR)
    Income (CR)
    Capital (CR)
    Expenses (DR)
    (chelledunleavy)

    [T accounts -
    Assets----|| Liabilities
    || Income
    || Capital
    Expenses ||
    (chelledunleavy)]

    Cheers. I study the foundation at Bourmemouth College and we have been taught RECAL. basically an increase in Revenue goes on the credit side of the T account, a decrease is the opposite.

    Revenue (Cr)
    Expenditure (Dr)
    Capital (Cr)
    Assets (Dr)
    Liabilities (Cr)

    My friend at work is doing the certificate in accountancy and she learnt

    A & E are Debits and R,C,L are Credits. If you can remember the A & E then you should remember the rest.
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    Just to expand on recal a bit (although everyones probably realised) the top part of recal goes into the p&l (the r & the e) whereas the bottom is balance sheet (the c, a &l)

    Happy studying

    Gem
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    Can I just ask...

    Does these little phrases work for the Subsiduary accounts also or is it really just for the main ledger??

    I just struggle with the subsiduary account knowing which side to put things on?

    I tend to use the phrase ''pearls'' but I cant see how to work that into the subsiduary accounts so therefore i am guessing these rules only apply to the main ledger? Am I right or completely heading downwards?? :shock:
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    You are right - it depends on where you place yuor first entry though which will decide your way of using pearls.

    I tend to start in the cashbook - if i buy a PC for my company I would use PEARLS as follows

    Cr Bank Account
    Dr Office Equipment (or whatever you call the account)

    CREDIT PURCHASE______________

    You are buying something INTO your business, so your Office Equipment account would be debited because you have just acquired an asset, on the other hand, it is a CREDIT purchase therefore you have also acquired a Liability (credit side of Purchase Ledger)

    My explaining is crap today, I can't seem to get the words from my mushy brain to the fingertips.. hope that was clear enough for you to understand.
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    Bambilicious - I can't remember exactly, but by subsidiary accounts I am assuming you mean accounts which are not part of the main ledger, also known as memorandum accounts? Example - individual customer/debtor and supplier/creditor accounts?

    These accounts are NOT part of the double entry system. You won't be able to apply PEARLS because these accounts sit in the main ledger.

    To record a credit purchase of a fixed asset in the main ledger and in the memorandum accounts:

    Buy the PC on credit:

    DR Fixed assets - PC's/Office Equipment (main ledger)
    CR Purchase ledger control a/c (main ledger)

    Record purchase in the supplier a/c (purchase ledger - memorandum a/c).

    Pay the supplier:

    DR Purchase ledger control a/c (main ledger)
    CR Bank (main ledger)

    Record the payment in the supplier a/c (purchase - ledger - memorandum a/c).

    The total of all the individual accounts in the sales/purchase ledger (memorandum a/c's) should equal the total of the sales/purchase ledger control account in the main ledger.

    Hope that helps a bit.
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    In addition to advice from J and phunky, the debtors from Sales Ledger would be 'Assets' while the creditors from Purchase Ledger would be 'Liabilities'. Hence, the PEARLS works, with 'A' and 'L'.
    In the Sales/Purchase accounts (in Main Ledger), you would use the 'P' and 'S' from PEARLS.

    The Control Account would follow the rule for corresponding Ledger - ie Asset or Liability.
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary


    Thanks to all you guys for your help - I sort of understand it now. I know I am being a bit previous and I think I am exhausting my brain trying to learn it becasue of my exam in June.

    I think I may be thing about it too much which is why I am not understanding it properly...

    Purchase = Dr Purchases & VAT Cr PLCA??

    I dont think i am getting this one bit you know!! :evil:
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    The sales ledger and the purchase ledger are memorandum accounts and NOT part of the double entry system, hence PEARLS does not work with these.

    The A and L in PEARLS refers to assets/debtors which is the SLCA (sales ledger control account) and liabilities/creditors which is the PLCA (purchase ledger control account) in the main ledger, NOT the sales and purchases ledgers in the memorandum accounts.

    However, as mentioned before the totals of sales/purchase ledgers should equal SLCA/PLCA, but for double entry using PEARLS you should be using SLCA/PLCA.
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    Oh My God,

    Just when I thought I had my way around the ledgers worked out, there is a spanner in the works! :x

    I really thought I had a reasonable understanding but now I fear the worst :roll:

    So basically individual debtors & purchase/sales are part of subsiduary and absolutely NOTHING to do with the double entry?

    Then you have the main ledger which has the individual ledgers for a company i.e Office equipment & rent etc?? :oops:
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    That's right - you're getting it!

    A cash purchase is simply:

    DR Purchases (net)
    DR VAT (vat)
    CR Bank (gross)

    A credit purchase is:

    DR Purchases
    DR VAT
    CR PLCA

    then when you pay:

    DR PLCA
    CR Bank

    Yes - individual customer and supplier accounts are NOT in the main ledger and have nothing to do with double entry. The sale/purchase is recorded in the control account in the main ledger with double entry, then the sale/purchase is simply recorded in the individual account so each account can be looked at seperatly to see how much a customer owes or what is owed to a supplier.
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    but what happens to recording what the purchase was for? Where does that come into it?

    I really am thick!! :lol:
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    In your exam you will be dealing with either the sales-side or the purchase-side.
    In the instructions it will tell you whether the Control Account OR the Sales/Purchase Ledger is being used.
    If it states that Control Account is being used then you will be required to make entries into the control account and the Sales/Purchase Ledger, BUT only one of the options will be used for your Trial Balance. (As they duplicate information, and your trial balance will show a 'doubling effect' on one side or the other.)

    It would be a Liability (hence Credit) to your PLCA, and a debit to your Purchase/VAT accounts.
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    for example how does the using of the office equipment ledger come into it if the only entries to be made are the ones you mentioned? :roll:
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    There will be many different types of purchase accounts - it just means DR the appropriate purchase account.

    It's quite common sense though i.e. you purchased some stationary as a cash sale:

    DR Stationary
    CR Bank

    Office equipment is simply the name of the purchase account.

    All the letters in PEARLS will split off into different types of those accounts, but it just helps you to remember what type of account to post to. For example, Expenses will split into things like electric, water etc. If your exam says you receive an electric bill, you know to debit the electric expense account.

    Does that help?

    Don't forget that if you purchase a fixed asset it is recorded as an acquisition of a fixed asset and you DR the fixed asset a/c, but you won't come across that until intermediate so I shall stop confusing you!! :-)
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    it is starting to make sense - I think I have a lot more understanding of it to be had though! First off I need to make sure I can diferentiate between the 2 ledgers, which after you explain it I think i can.

    Then i need to understand which accounts to post things to. It is so complicated...I dont know what possesed me to start this course... :lol:
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    :-) Don't worry or feel bad - double entry can be very hard to get your head around to start with.

    When I started out, someone told me that it will just click one day and make sense - I didn't believe them as I was pulling my hair out and getting so frustrated - but, trust me, it does happen and now it all seems pretty simple to me.

    Just keep trying and practicing and you will get there!
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    Thanks sooooo much for all you help trying to explain to me...

    I think I need extra tuition but hey I can come here and get the same thing!! :lol:

    I will d lots of practice over the weekend...

    Thanks again! xxx
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    No worries!

    Of course, any questions you have - just ask!

    It is good practice for me and others to answer questions to refresh the subjects in our minds so you are helping us too!

    It will click eventually, trust me!
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    Bambilicious -
    Take a look at one of the exam papers, then you will see what you will be expected to do.
    You have three ledgers - Purchase Ledger (for suppliers), Sales Ledger (for customers) and the Main ledger (for all the misc accounts including the Control Accounts).
    In the PLB exam you will deal with Sales-side plus Main Ledger or Purchase-side plus Main Ledger. (I assume similar for IAC.)
    The exam will present you with Day Book and Returns Day book (either Sales, or Purchase, for both) plus a Cashbook.
    You will usually have 4 accounts in the Day Book and 2 in the Returns Book. You may have a payment (to you or from you in the Cashbook) corresponding to one of these accounts. (Possibly, a discount value as well...)
    The Double-entry rules apply to both the Purchase Ledger (separate accounts) and the Purchase Ledger Control, (or the Sales Ledger separate accounts and Sales Control).
    When people say 'Not part of Double-entry system' - take note:
    1. AAT doesn't print this on the exam papers!!!
    2. The double-entry rules still apply - you will be making entries into the same side for both the Purchase Ledger and Purchase Control, (or Sales Control and Sales Ledger). So, you will have 7 double-entries to transfer, one for each invoice/account, plus the total into Control Account, plus VAT & Purchase/Sales Acc. (And 5 for the Returns...)
    3. Your Trial Balance will either have one entry for the Control Account, or 'four' separate entries say, one for each of the separate accounts. The total should be the same in either case...
    So far, AAT have stuck to using the Control Account in the Trial Balance. The 'Memorandum/Subsidiary' in this case means that only the Control Account is used in the Trial Balance. But it doesn't mean that the double-entry rules no longer apply, or that different rules are used...
    Any Mnemonic that you prefer (eg PEARLS) will thus work for both the Ledger and the corresponding Control Account (as the entries are on the same side).

    I advise that you take a look at the exam papers, then things might make more sense... :D
    NB Purchase/Sales is dealing with stock, (or materials for processing, etc, at lvl 3-4). Capital Expenditure for Asset (on credit) will probably have a 'Liability Account' (Edit - for J's example, say Dell Plc) in the Main Ledger (for whoever you will eventually pay - Credit-side.) But I havem't seen this turn up in an exam yet... 'Expense' items, eg insurance, do turn up though.

    Edit - IAC requires postings for both Sales-side and Purchase-side, but it looks like you are given a separate list of data for Trial Balance.
  • System
    System Posts: 100,534 ๐Ÿค– Admin ๐Ÿค–
    Re:Double-Entry Revision Recap & Summary

    Hi All, :lol:

    Bet you wish you had never read this now....only me again!!

    Im a bit stuck on my thinking again.

    Our college tutor told us that only purchase invoices go into the sales day book?? or did he say the analised cash book?? Oh now I aint sure :shock:

    Well anyway - what happens to the invoices rec'd that are NOT for purchases?? where do they go as a book of prime entry?

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