AAT Level 2 Unit 2 Principles of Costing

general ledger

A general ledger is a comprehensive record of all financial transactions made by a business. It serves as the main accounting record, summarizing all accounts and providing a complete audit trail.

receivables ledger

A receivables ledger is a detailed account of all amounts owed to a business by its customers. It tracks individual customer transactions and outstanding balances, aiding in credit management and cash flow analysis.

payables ledger

A payables ledger is a detailed record of all amounts a business owes to its suppliers and creditors. It tracks individual supplier transactions and outstanding balances, helping manage cash outflows and maintain good supplier relationships.

control account

a general ledger account that summarises a larger number of transactions. Provides one consolidated total without all the indepth information.

trial balance

A trial balance is a summary of all the general ledger accounts of a business, showing the total balances of debits and credits to ensure they are equal. It is used to verify the accuracy of financial records before preparing financial statements.

liability

An obligation a business owes to creditors, typically involving future payments or services.

input VAT

The VAT the business paid on purchases which can be reclaimed. Purchases Daybook

Output VAT

VAT collected from sales that the business needs pay the HMRC. Sales Daybook

the aged receivables report

an analysis of outstanding balances owed by credit customers, and classifies the debt into 30 day periods/increments

how is the aged receivables report used?

it is used to help identify money owed so collections can chase it down. it also tells management the effectiveness of the credit policies

VAT control account

VAT throughout bookkeeping records to calculate total, if owed or reclaimable.