Petty Cash System Overview

What is the purpose of a ledger account?

How many capital accounts are typically found in a business operated by a sole proprietor?

What is the purpose of using double-entry bookkeeping in recording transactions?

What do the left-hand side and right-hand side of a ledger account represent?

How are an entity's financial statements generated from the general ledger?

What is the primary function of a general ledger?

What is the purpose of a petty cash float in accounting?

Which method is used to account for petty cash based on the text?

What is the main reason for offering trade discounts to customers?

How are trade discounts different from settlement discounts?

What does a settlement discount offer to credit customers?

'4/14, net 30' means:

'Variable consideration' refers to:

'Top up' in terms of petty cash means:

What happens if a customer decides not to accept a settlement discount?

How are trade discounts accounted for by both sellers and customers?

If an income account needs to be increased, how should it be recorded in the ledger?

In a cash transaction, how is a payment typically made?

What would be the correct entry when cash is received in the cash at bank ledger account?

Which ledger account would record cash that an entity owes to suppliers?

How would adjustments to the cash at bank general ledger account be handled for unrecorded bank transactions?

What is the purpose of petty cash within an entity?

When a customer owes cash to an entity, how is it recorded in the ledger?

What is the primary function of a cash register or cash till mentioned in the text?

Why are receipts from credit customers coded with individual references in the general ledger system?

Which ledger account would typically record small, occasional out-of-pocket expenses incurred by staff on behalf of an entity?

What happens if a customer does not pay early and is no longer entitled to the discount?

What does a sales tax registered entity do in terms of sales tax?

What is Input tax in the context of sales tax?

How are trade receivables presented in the statement of financial position?

In what case would there be a receivable in the statement of financial position according to the text?

What does it mean when a product or service is 'zero-rated' with regards to sales tax?

How do many developed economies handle taxation according to the text?

What does a tax-registered entity do for the government, as mentioned in the text?

'Output tax' in terms of sales tax refers to:

Each ledger account in the general ledger corresponds to a specific type of transaction or event.

A sole proprietor typically has multiple capital accounts to track financial transactions.

The left-hand side of a ledger account is referred to as the credit side according to established convention.

An individual general ledger account is often presented as an enlarged 'L' instead of an 'T'.

The duality concept in accounting states that each transaction affects only one ledger account.

An entity's financial statements are directly produced from the individual transactions recorded in the general ledger.

An entity must always pay tax on the goods and services it buys, even if the supplier is not registered for sales tax.

Sales tax must be charged on all goods sold, regardless of whether the entity is registered to account for sales tax or not.

A tax-registered entity can reclaim the sales tax suffered on its purchases but cannot reclaim the sales tax paid on its own sales.

An entity must register for sales tax only if its purchases reach a specific threshold, regardless of its sales revenue.

A 'reduced rate' of sales tax can sometimes be applied to specified products or services like domestic fuel charges.

If more input tax has been suffered by an entity, it will result in a payable amount in the statement of financial position.

Output tax is the sales tax paid to suppliers on purchases made by an entity.

Trade payables are presented net in the statement of financial position, after accounting for sales tax.

'Zero-rated' products or services are those that have the highest rate of sales tax applied to them.

Entities carrying on tax-exempt activities can both charge and reclaim sales tax on their transactions.

Trade discounts and settlement discounts are the same concept and are accounted for in a similar way.

A petty cash float is used to pay for large transactions and is topped up regularly by the bank.

Settlement discounts require customers to pay less if they pay after the due date.

Variable consideration refers to the uncertainty around whether customers will take advantage of settlement discount terms offered.

Imprest method is used for accounting petty cash and involves withdrawing an amount from the bank to restore the petty cash float.

A settlement discount must always be accepted by customers if offered by the seller.

A trade discount is typically offered to credit customers who pay early.

Trade discounts are included in the accounting records of both the seller and the customer.

An entity can prepare a sales invoice at a higher amount when offering a settlement discount, then issue a credit note if the customer accepts the discount.

The purpose of offering trade discounts is to ensure customers place smaller individual orders more frequently.

Sales and purchases made by cheque or immediate bank transfer are not considered cash transactions.

Cash that an entity is owed by customers is accounted for in the payables’ ledger.

Petty cash is used for large business expenses like paying salaries and rent.

In double-entry bookkeeping, cash received is recorded with a credit entry in the cash at bank ledger account.

Errors made by the bank in transactions should be recorded in the cash at bank general ledger account.

Credit sales and purchases are transactions where goods or services change hands immediately, and payment is received immediately.

Cash transactions are those where payment is made or received immediately at the point of sale/purchase, without any delay.

Adjustments to the cash at bank general ledger account are not needed for unrecorded bank transactions.

When cash is paid out, the entry in the cash at bank ledger account is a credit.

An entity's financial statements do not need to include transactions that have passed through the bank account.

Match the following terms with their descriptions:

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Match the given actions with the appropriate ledger accounts:

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Match the type of ledger account with its corresponding entry when cash is received:

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Match the correct entry in the cash at bank ledger account with the corresponding transaction:

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Match the ledger accounts with their corresponding treatment for errors made by the bank:

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