ACCA FA CH4 - SOURCES, RECORDS AND BOOKS OF PRIME ENTRY

Documents are the source of all information recorded by the business in the books of prime entry

• - Transaction (i.e. invoices)
• - Categorised (Books of Prime Entry)
• - Summarised (nominal ledger, trial balance)
• - FINANCIAL STATEMENTS

• Stage -- Document
• 1. Quotation -- Quotation
• 2. Order is Placed -- Sales Order
• 3. Goods are despatched and signed for on receipt -- Goods Despatched Note
• 4. Payment Requested -- Sales Invoice
• 5. Goods may be returned -- Credit note (negative invoice)
• 6. Payment -- Receipt (confirmation that receipt received)

• Stage -- Document
• 1. Quotation -- Quotation
• 2. Order placed -- Purchase Order
• 3. Goods are despatched and signed for on receipt -- Goods Received Note
• 4. Payment Requested -- Purchase Invoice
• 5. Goods may be returned -- Debit note (request to supplier for a credit note)
• 6. Payment -- Remittance advice note (details what invoices are being paid and which credit notes offset)

Document sent to a customer stating fixed price to be charged for goods/services.

• - Details goods/services which the company wishes to purchase from another company. 
• - One copy sent to vendor, one saved internally for tracking orders.

• - Document that details an order placed by a customer for goods/services.
• - May be the result of a customer sending a purchased order.

• - Document that lists the goods that the business has received from a. supplier. 
• - Typically prepared by the business's own warehouse or goods receiving area

• - Lists the goods that the company has sent out to a customer. 
• - Customer compares despatched note with what they've received to tick and tie.

• - Document sent by supplier to customer listing transactions on customer's account including invoices and credit notes issued and all payments received.
• - Allows customer to know what they owe supplier and tick and tie with what they believe they have already paid.

• - Document sent by a supplier to a customer in respect of goods returned,  
• a correction to an invoice previously sent out, or overpayments made by customer.
• - NEGATIVE INVOICE

• - Document sent by customer to supplier for goods returned or an overpayment made. 
• - Formal request for supplier to issue a credit note.

• - Document sent to a supplier with payment.
• - Details which invoices are being paid and which credit notes offset.
• - Allows supplier to update customer's account and see which invoices are still outstanding.

- Document confirming confirmation that payment has been received (usually provided for cash payments i.e. at the store)

• - Relates to sales order or purchase order on credit
• - Request for customer to pay what they owe.
• - Details on invoice should match details on sales order.

• - Should be numbered so it can be tracked
• - Includes name/address of seller & purchaser
• - Date of sale
• - Description of what was sold
• - Quantity purchased/Unit price
• - Trade discounts, settlement discounts (if any)
• - Sometimes payment terms, due date.

• 1. Copy to customer to request payment
• 2. Copy to accounts department to match eventual payment
• 3. Copy to warehouse to despatch goods
• 4. Copy matched to sales order to record sales

• - Record receipt of goods (i.e. in a warehouse)
• - Can also record a service that has been carried out
• - Key to estimating accruals (purchases) prior to invoices being received often posted to a GRNI (Goods received not invoiced) account which rolls up to overall accruals

• Books where we first record transactions:
• 1. Cash Book - cash transactions
• 2. Sales Day Book - credit sales
• 3. Purchase Day Book - credit purchases
• 4. Petty Cash Book - small cash
• 5. Journal Book - adjustments/errors

• Also sometimes
• 6. Sales returns day book - returns of goods from credit customers
• 7. Purchase returns day book - returns of goods to credit suppliers.

• - Book of prime entry for CREDIT SALES
• - Keeps list of invoices sent out to customers each day.
• - Includes invoice details / sale categories

• - Book of prime entry for CREDIT PURCHASES
• - List of all invoices received from suppliers. 
• - Suppliers invoice numbers might be all different so there should be an internal sequential number to track

Book of prime entry for credit notes raised (when customers return goods to the business)

Book of prime entry for credit notes received from suppliers (when business returns goods to supplier)

• - Book of prime entry for cash receipts and payments to and from the bank (also a day book)
• - Money received / paid out by business
• - Includes direct payments i.e. cash, coins, checks and subsequently paid into bank
• - Includes receipts and payments made by bank transfer, direct debit
• - Includes bank interest and charges paid directly by/to bank

Business should reconcile cash book with bank statement to ensure no cash 'goes missing'

• - Cash book for small payments
• - Often called a cash float
• - Typically more payments than receipts with main receipt being balance getting refilled via cash book

• - Amount of money in petty cash is kept at an agreed sum (float) called the Imprest amount
• - Expense items are record on vouchers as they occur
• - Cash still held in petty cash tin + vouchers for payments = the imprest amount.

• Book of prime entry for:
• - Period end adjustments
• - Correction of errors

- Memo ledgers are used to record how much is owed by a particular customer or to a particular supplier at a point in time.