FETAC LEVEL 5 MANUAL BOOKKEEPING 5 N 1354

FETAC LEVEL 5 MANUAL BOOKKEEPING 5 N 1354 An Introduction 1

Aim of the course � The aims of the course is to provide you the learner with both an introduction to manual bookkeeping terms and principles, and the knowledge and skills necessary to keep an record of accounts up to and including the trial balance. � Also the skills necessary to operate a computerised accounts system using an integrated accounts package. 2

Bookkeeping � Bookkeeping involves recording and presentation of the day-to-day transactions of a business. � What is a Business? ◦ A business is an organisation that conducts commercial, industrial, or professional conduct. The most familiar we are with is a business whom we buy goods or services from. 3

BOOKKEEPING � What is the difference between bookkeeping and accounts? � Bookkeeping steps are mechanical in nature. It is a regimented process which usually occurs in monthly cycles. It consists of transactions being entered, making adjustments and getting out reports at the end of each month. � Accounting is whereby someone interprets the reports and results. It is less mechanical and more subjective. 4

Business � What are the main transactions in a business? � Purchasing products and services � What is the difference between a product and a service? � Selling products and services 5

Stages of a business transaction 1. 2. 3. Enquiry which leads to a Quotation A Quotation can lead to an Order A business puts the goods on order for the customer and delivers them with a delivery note 4. Customer receives the goods 5. An invoice is then sent to the customer 6. The customer then pays for the goods. 6

Customer and Supplier �A customer is someone who buys goods or services from you. �A supplier is someone who supplies goods or services to you 7

Source documents � Source documents are the starting point of recording transactions into the company’s accounts. � Important for a bookkeeper to identify each source document � Each source document has to be entered into a particular Daybook. 8

Source documents � There are different types of source documents � Sales Invoices/credit notes � Purchase Invoices/credit notes � Customer receipts � Remittance advices � Petty cash vouchers 9

Source documents � Sales invoice records the sales we have made to a customer � Purchase invoice records the purchases we have made from a supplier � Sales credit note is where a customer returns goods that were faulty or is not satisfied � Purchase credit note is where we would find a fault with goods we received from a supplier 10

Source documents � Customer receipts are records of monies received from our customers. Monies are subsequently lodged into the business bank account. Monies can be in the form of cash or cheques. The receipt can take the form of a bank lodgement stub. 11

Source documents � Remittance advice � When we make a payment to a supplier we attach details of the payment. This is usually has the invoice number and amount shown on it. A copy of the remittance is also kept for our records. 12

Source documents � Petty cash refers to a set amount of cash (eg € 100) that is kept in a petty cash box. It is used for small expenses such as cleaning materials, tea, coffee sugar, postage, extra stationery. � All monies used for petty cash are recorded on a petty cash voucher. 13

Source documents � Other payments � A business also keeps records of other payments such as salaries tax etc. These payments are not supplier payments. 14

Daybooks � What are Daybooks? � Daybook is a book that has many columns and is used to record the source documents. � Daybook for each type of transaction � There are 5 main daybooks � Daybooks record: � Date, details, total amount, vat, net amount, and has many analysis columns also. 15

Daybooks � Daybooks are totalled each month � Accuracy is of utmost importance when entering source documents into the daybooks. � Information from the daybooks is carried on through to the ledgers. � If there is a mistake in the daybooks it will carry through to the ledgers 16

Daybooks � Sales invoices/credit � Sales/sales return notes � Purchase invoices/credits � Bank lodgement stubs � Remittance advice � Petty cash vouchers � No source documents daybook � Purchase/return daybook � Cash receipts � Cash/cheque payments � Petty cash � General journal Source document Daybook 17

LEDGERS 18

What are Ledgers �There are 3 ledgers we will be dealing with 1. 2. 3. Sales Ledger Purchase Ledger Nominal Ledger/General Ledger 19

LEDGERS Invoices and credit notes from SDB CHEQUES AND CASH FROM CRD �SALES � LEDGER THE SALES LEDGER IS WHERE ALL OUR CUSTOMER INFORMATION IS HELD. EACH CUSTOMER HAS THEIR OWN ACCOUNT WITHIN THE SALES LEDGER TELLS US HOW MUCH MONEY OUR CUSTOMERS OWE US ! 20

LEDGERS Invoices and credit notes from Sales Daybook • SALES • LEDGER Cheques and cash from cash receipts daybook • SALES • LEDGER 21

LEDGERS Invoices and credit notes from PDB Cheques paid from CPD � PURCHASE LEDGER � The purchase ledger is where all our supplier information is kept. Each supplier has an account. The purchase ledger will tell us how much money we owe ! 22

LEDGERS Invoices and credit notes from Purchase Daybook • PURCHASE • LEDGER Cheques From cheque payments daybook • PURCHASE • LEDGER 23

Double Entry � The method of bookkeeping we will be using is called: DOUBLE ENTRY � Double entry is where each entry is entered twice. 1 Debit and 1 Credit. You need not know anymore at this stage. 24

DEBITS AND CREDITS � DR stands for Debit � CR stands for Credit � In the Sales Ledger: Debits (Dr) are Positive � Credits (Cr) are Negative � Balance on the account is Dr-Cr = Balance � � Debit Sales in the Sales Ledger � Credit Cash Received and Credit Notes in the Sales Ledger 25

DEBITS AND CREDITS � DR stands for Debit � CR stands for Credit � In the Purchase Ledger: Debits (Dr) are Negative � Credits (Cr) are Positive � Balance on the account is Dr-Cr = Balance � � Credit Purchases in the Purchase Ledger � Debit Cash Payments and Credit Notes in the Purchase. Ledger 26