Fsa Subject

Topics: Accounts receivable, Balance sheet, Generally Accepted Accounting Principles Pages: 5 (1600 words) Published: December 23, 2012
1a. Explain the purpose and use of the different accounting records: *Invoice:+Relates to sales and purchase order+When business sells goods or services on credit to a customer+This is a demand for payment+Produced in multi-part stationary, photocopied or carbonized copy * Credit note: a document issued by the seller to show a reduction in the amount owed by the buyer, maybe due to*Incorrect goods specification+Damaged goods+Faulty goods -Sometimes printed in red to distinguish from invoice*Sales day book: To keep a list of all invoices sent out to customer each day. Sales ledger folio is a reference to the sales ledger. To analyze sales which helps how best to run the business*Sales return day book: When the customers return goods for some reasons. Also called inwards journal. The source document is the credit note*Journal: Is the book that records business transactions then enters in to the accounting system*Cash book: Used to keep a cumulative record of money received and money paid out by the business. Usually referred to as petty cash and is accounted separately*Nominal ledger: is a bookkeeper's collection and summary of a company's accounts. It usually have 2 column: debit and credit*Sales ledger: the sales ledger deals invoice sent out and consists of personal accounts for credit customers*Account receivable ledgers: An accounts receivable ledger is a book or document that contains a list of all of the outstanding money a person or company is owed. This means it is a book where the company keeps a list of all the people it has sold products to on credit. After a company makes a sale and sends a bill or invoice, that account is considered an account receivable 1b the importance and meaning of the fundamental accounting concepts applicable in the scenario: *Going concern assumption that an enterprise will continue in operational existence for the foreseeable future. Management must review the going concern status to confirm it is appropriate for the financial statements. They should consider all available information for the foreseeable future covering, but not limited to, twelve months from the reporting date*Prudence:  It suggests that assets or revenue should not be overstated, liabilities and expenses should not be understated reflect the least favorable position of a business*Accruals: assets, liabilities, income and expenses are recognized when they occur and not when cash or its equivalent is received or paid. Cost should be set off against the revenues they have contributed to.*Accounting Conventions: principles or accepted practice which apply generally to transactions. They have an influence in determining:+which assets and liabilities are recorded on a balances sheet+how assets and liabilities are valued+what income and expenditure is recorded in the income statements+at what amount income and expenditure is recorded.*Fair presentation: Financial statements should be ‘fair presented. In areas where no IAS exists, the financial statements should be presented in accordance with the stated accounting policies of the enterprise, in a manner which provides relevant, reliable, comparable and understandable information.*Consistency: presentation and classification of items in the financial statements should be retained from one period to the next unless a significant change in the nature of the operations of the enterprise or a review of its financial statement presentation demonstrates that more relevant information is provided by presenting items in a different way, or a change is required by a new IAS*Materiality and aggregation: Similar items should be aggregated together ,but information that is material should not be aggregated with other items. Information is material if its non-disclosure could influence the economic decisions of users.*Business entity: Treat the company as a separate entity from its owners. Accounts are kept for entities and not the people who own or run the company. Apply: Company is an...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Subject and Verbs Prepositional Verbs Essay
  • Causative: Subject and Action Verb Essay
  • Subject and Verb Patterns Essay
  • Essay about Adjective Clauses, Subject and Object Pronouns
  • The “Institutional Gaze” and Disciplining Subjects Essay
  • Subject and Verbs Essay
  • The English Subject Essay
  • Essay on whats a subject in a sentence spanish

Become a StudyMode Member

Sign Up - It's Free