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Basic Accounting II (BAII)

Basic Accounting II (BAII). Level 2 Certificate in Accounting AAT. Basic accounting I recap. Terminology. A summary of the equivalent international version to the UK terms which are used within this assessment. UK International Fixed Assets Non-current Assets Stock Inventory

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Basic Accounting II (BAII)

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  1. Basic Accounting II (BAII) Level 2 Certificate in Accounting AAT

  2. Basic accounting I recap

  3. Terminology A summary of the equivalent international version to the UK terms which are used within this assessment. UK International Fixed Assets Non-current Assets Stock Inventory Debtor Receivable Creditor Payable It is also important for you to be able to use the terms “main ledger” and “general ledger” interchangeably.

  4. Ledger accounts

  5. Ledger accounts

  6. Ledger accounts

  7. Debits and credits Every DEBIT must have an equal CREDIT

  8. Balancing a ledger account

  9. Balancing a ledger account

  10. The trial balance • List of all the ledger balances in the main (general) ledger • Debit balances and credit balances listed in difference columns • Total debit balance must equal total credit balance

  11. The trial balance

  12. The trial balance Debit balances Credit balances Assets Liabilities Expenses Income Drawings Capital

  13. Journal adjustments

  14. Journal adjustments • A written instruction by a bookkeeper to write a double entry into the general ledger accounts • Generally for adjustments therefore a narrative usually accompanies the double entry as explanation for the purpose

  15. Journal adjustments • E.g. £170 has been debited to insurance instead of motor tax • Journal: • Dr Motor tax • Cr Insurance • Being motor tax posted to insurance in error

  16. Journal adjustments • Other adjustments: • Bad debts • Contra entries

  17. Journal adjustments • Bad debts • Arise when a debtor fails to pay and the debt is written off • DR Bad debt expense • CR Sales Ledger Control Account • Being the write off of a bad debt

  18. Journal adjustments • Contra entries • A business is both a debtor and creditor of another business if it buys and sells with it. • Both parties have to agree to “net” balances off i.e. Reduce both the creditor and debtor balances • DR Purchases Ledger Control Account • CR Sales Ledger Control Account • Being the adjustment for a contra entry with ABC Ltd

  19. Contra entry - example

  20. Contra entry - solution

  21. Suspense account

  22. Suspense accounts • Used as a temporary holding account when • Destination of a posting is uncertain • The Trial Balance does not balance and an error has to be investigated

  23. The trial balance

  24. Errors identified by trial balance

  25. Errors not identified by trial balance

  26. Journals • Used to record unusual items such as error corrections or to clear a suspense account Dr Cr Account to be debited £XXX Account to be credited £XXX

  27. Journal entry

  28. control accounts

  29. Sales ledger control account

  30. Purchases ledger control account

  31. Control Account Balances • Reasons for differences • Casting errors • Posting errors • Bad debts • Contra entries

  32. Petty cash

  33. Imprest system

  34. Petty cash voucher

  35. Petty cash book

  36. vat

  37. VAT VAT is charged on the taxable supply of goods and services in the United Kingdom by a taxable person in the course of a business carried on by them.

  38. VAT Control Account OUTPUT VAT > INPUT VAT = LIABILITY OWED TO HMRC INPUT VAT > OUTPUT VAT = REFUND DUE BACK FROM HMRC

  39. Calculating VAT Net 100% VAT 17.5% Gross 117.5%

  40. Calculating VAT

  41. payroll

  42. Gross pay and deductions

  43. Employee payslip

  44. Entering payroll in the ledger - 1

  45. Entering payroll in the ledger - 2

  46. Entering payroll in the ledger - 3

  47. Banking procedures

  48. Bank accounts

  49. Cheques

  50. Cheque crossings

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