T7 - Accounting Systems, Control accounts, VAT & Payroll

Define an invoice & the different types

• doc issues by seller, sent to customer

• Details goods/services sold (quantity, value etc) & VAT (if seller registered)

• Seller calls this a sales invoice, customer calls it purchase invoice

Define a Credit Note

• document to cancel or part-cancel an invoice

• because goods were returned, they were damaged or faulty or the customer had been overcharged for some reason

What is the account for total receivables called?

• receivables control

What is the account for total payables called?

• payables control

What is meant by a dishonoured cheque?

• cheque is just a signed piece of paper instructing the payer’s bank to transfer £x to the payee’s bank

• Occasionally, the payer’s bank will refuse to make the transfer

• If so, the cheque is said to have ‘bounced’ or to have been ‘dishonoured’

What do DC do to total receivables?

• Increase them

What is input and output VAT?

• VAT on goods & services the business has bought is known as ‘Input VAT’

• VAT on sales is known as ‘Output VAT’

The various methods of accounting for VAT include?

• standard scheme

• Cash accounting scheme

The value of G/S excluding VAT, is what?

• the ‘net’ amount

• The net amount plus VAT (£240) is described as the ‘gross’ amount

What does the payroll provide (in terms of information)?

Define Gross Pay

• tax and national insurance etc in relation to each employee’s pay

• Amount earned by employee

UK deductions from gross wages/salaries include, what?

• ‘Pay as you earn’ Income Tax (PAYE)

• Employees’ National Insurance (EE NI)

• Pension contributions

• Voluntary & other contributions