Year 10 Accounting- Term 2

What is GST collected

the amount of gst the business has collected through the sale of goods and services.

What is the nature of GST collected

gst collected has a credit nature, as the business collects gst but only temporarily held and owed to the government, meaning it is a liability

What is GST credits received

the amount of gst the business has paid on its initial acquisition of goods they purchased which can be claimed by the business from the ATO

What is the nature of GST credits received

gst credits received has a debit nature as it is an asset, representing the gst the business receives from the ATO

What is the purpose of preparing a Bank rec

to compare the cash at bank balance in the business accounting records with the balance of the bank statement, to identify any differences and ensure cash records are accurate

What does a credit balance in the bank statement indicate

the account holder has invested money into the bank, meaning the bank now owes money to the account holder, which is a liability in their perspective

What does a debit balance in the bank statement indicate

the account holder has overdrawn meaning they have drawn out more money than in the account, from the banks perspective this is considered an asset, as they expect to receive this money back

Why might transactions appear in the bank statement but not in the business's records

because the bank has failed to notify the business of these transactions, causing problems such as interest charging and bank receipts

Why might transactions appear in the business records but not in the bank statement

because the bank has to process transactions before they are recorded

What is the net profit ratio

focuses on earning the capacity profitability of the entity while showing how much each dollar of service revenue generates net profit

If the net profit is low, what can the business do to improve their results

increase sales revenue, reduce expenses, improving the efficiency to reduce waste and unnecessary costs, negotiating lower costs, promoting high profit products or service