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Unit 1 Income and Receipts Revision

Unit 1 Income and Receipts Revision. Aims and objectives. Revision of unit 1 prior learning Preparation for skills test Focus on key areas of difficulty Reinforce and extend knowledge. Unit 1. Element 1.1 Process documents relating to goods and services Element 1.2 Process receipts.

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Unit 1 Income and Receipts Revision

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  1. Unit 1 Income and ReceiptsRevision

  2. Aims and objectives • Revision of unit 1 prior learning • Preparation for skills test • Focus on key areas of difficulty • Reinforce and extend knowledge

  3. Unit 1 • Element 1.1 Process documents relating to goods and services • Element 1.2 Process receipts

  4. Double entry revision • What is double entry? • Why use of double entry? • Who uses double entry?

  5. Types of accounts • Revenue • Expense • Capital • Asset • Liability

  6. Dominoes/Matching activity • Using your card sets match the financial transactions to the account categories • Feedback on activity? • What are the benefits of RECAL?

  7. Quadrant • Working in pairs complete the activity on double entry • Feedback?

  8. Sales Cycle

  9. VAT • What is VAT? • Who pays VAT? • Who administers VAT?

  10. VAT • VAT on sales: • OUTPUT VAT • VAT on purchases: • INPUT VAT • SOPI: • Sales output; Purchases input • Rates • 17.5% • 5% • 0% • Exempt • Outside the scope

  11. How it works • Net amount x 17.5% standard rate • Net amount £100 • VAT 17.5% £17.50 • Total including VAT £117.50

  12. Michael has received a new washing machine from Pointhot, which costs £200.00, excluding VAT. He wants to know how much the machine will cost, in total, inclusive of VAT. • £242.00 • £236.00 • £217.50 • £235.00

  13. Task 1handout from Revision Companion

  14. Discounts • Bulk discounts • Trade discounts • Cash discounts

  15. Trade example • Sam buys goods for £500 + VAT with a trade discount 10% • INVOICE £ • Sales 500.00 • Discount 50.00 • 450.00 • VAT @ 17.5% 78.75 • TOTAL PAYABLE 528.75

  16. Cool Socks Ltd offers a 10% trade discount to Trends Ltd. Trends have purchased 100 blue Toebar socks @ £2.36 a pair. What is the total price including VAT. • £277.30 • £224.61 • £249.57 • £236.00

  17. Task 2 handout from Revision Companion

  18. Cash example • Sid buys goods for £200+VAT settlement discount 5%, 10 days • INVOICE £ Sales after trade discount 200.00 Cash discount 200 x 5% (10.00) VAT @ 17.5%(on £190) 33.25 TOTAL PAYABLE 233.25 If you pay within 10 days you should only pay £223.25 • A trade or bulk discount is ALWAYScalculated before a settlement discount

  19. Cool Socks Ltd offers a 10% trade discount and a cash discount of 2.5% to Trends Ltd. Trends have purchased 100 blue Toebar socks @ £2.36 a pair. What is the total price including VAT? • £270.37 • £248.64 • £249.57 • £255.81

  20. Task 3 handout from Revision Companion

  21. Day books • Sales Day Book • Sales Return Day Book

  22. Sales Day Book Date Invoice Total VAT Net a/c number £ £ £ 1/12 1061 293.75 43.75 250 14 2/12 1062 58.75 8.75 50 21 2/12 1063 940.00 140.00 800 5 3/12 1064 699.12 104.12 595 19 TOTAL 1991.62 296.62 1695 SLCA VAT a/c Sales a/c • To post to the Main ledger:

  23. Posting the Sales and Sales Returns Day Books • Sales Day Book • DR Sales Ledger Control Account (SLCA) • CR Sales • CR VAT • Sales Returns Day Book • DR Sales Returns • DR VAT • CR Sales Ledger Control Account (SLCA)

  24. SLCA VAT SDB 1991.62 SDB 296. 92 a/c 14 Sales SDB 293.75 SDB 1695.00

  25. Cool Socks Ltd have sent invoices over the last month to Trends Ltd to a value of £1675.90 inclusive of VAT. What figure would be in each of the main ledger accounts? • SLCA £1426.30, VAT a/c £249.60 , Sale a/c £1675.90 • SLCA £1675.90, VAT a/c £249.60 , Sale a/c £1426.30 • SLCA £1969.18 , VAT a/c £293.28, Sale a/c £1675.90 • SLCA £1675.90 , VAT a/c £293.28, Sale a/c £1969.18

  26. Task 4 handout from Revision Companion

  27. Consolidation of session against learning objectives

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