1. When sending payment to a supplier by chq (for example), do you have to calculate the VAT element of the total payment and post this VAT figure in the VAT account? If so, doesn't that mean the VAT has been entered twice?

I'm assuming that this is on a credit basis, you will have already entered and analysed the invoice to your expense account (net) and VAT account (vat element), at that point you are assuming payment has been made or will be made and therefore you wont have to re-enter anything in either of these account when you make payment.

2. When there is money coming in from a debtor, does it need to be entered in the DR side of the cash/bank book AND the CR side of the debtors account? Does anything need to be entered in the VAT account.

Just need to as you say Debit bank Credit debtors control and subsiduary, again nothing needs to be entered in the VAT account. The only time you will enter anything in the VAT control is when you enter an invoice or when you pay the VAT people.

3. When generating a sales invoice, does the total figure go in the DR side of the debtors account AND the CR side of the sales ledger account. I presume you also need to calculate the VAT element of this total amount and enter it in the VAT account? If so, doesn't that mean that the VAT has been entered twice?

Gross amount in debtors control and subsiduary on the Debit side and credit the sales account (net) and vat account (vat element)
A quick point there is a Sales account and a Sales ledger (subsiduary sales ledger) the two are seperate from each other, Sales account is in the main ledger Sales ledger as the name suggests is a seperate ledger purely for the purpose of keeping track of individual accounts, it's only connection to the main ledger is through the control account which is a summary of the sales ledger.

1. At what point in time do I need to make an entry in the vat account?

When you input the invoice sales or purchase, take a purchase invoice for example, you recieve it, match it, then enter it into the system, so you would credit the gross amount to credoitors control account and the other side of the double entry would be a debit to expense account (whatever the expense relates to ) and also debit the VAT account which in a simple syatem would be a control account. This would be your double entry in simple terms. So in answer to the question you would make an entry into the vat account when inputting the invoice, unless you are using a cash accounting system then you wouldn't enter anything till you pay the invoice in which case you would enter it all at the same time, just to confuse matters.

2. When making/receiving payments from supplier/customer, do any entries need to be made in the vat a/c?

No the VAT will of already been accounted for and entered into the system, unless of course as above you are using cash accoutning rather than accrual.

3. When a payment is made, for example, phone bill, does the vat need to be calculated and entered in the vat a/c? What figure goes in the bank and mobile phone a/c - the gross or the net figure?

If you have an account setup for phone service provider and they have invoiced you then you will have most likely already entered the invoice into the system including the vat.
EG phone bill £10.00 invoice already in system you would credit bank £10.00 and debit creditors control account to reduce the balance, the vat will of already been accounted for when the invoice was inputted earlier. In answer to your question it will be the gross figure in the creditors control and the bank.

4. If a customer pays for goods by cash, apart from the cash book, where would the other entry be made?

Assuming you are running the business properly you would enter it into the bank account, so debit bank credit sales credit vat unless you are using (as some do) the cash book as part of the main ledger then the debit side will of been taken care of and the analysis (sales and vat)
will need entering in the main ledger or if a sole trader it could go in the owners pocket which means you would credit sales as above and debit drawings.

5. With regards to debit/credit notes, does the vat element need to be calculated and entered in the vat a/c?  If so, I presume the net figure would be entered in the goods received/returned a/c and the double entry to it in the debtors/credits a/c?

Yes a credit note either way from yourselves or to yourselves would need entering thusly.
If you recieve a credit note from a supplier then it would be Debit purchase(creditors) control account (Gross) (treat as a payment would be an easy way to remember) and a credit to purchase returns account (net) and a credit to the vat control account (vat element).

I don't know where your up to in your studies but good luck and don't hesitate to ask more questions we are all here to help (a bit quiet tonight though).
Don't worry it all becomes crystal clear after a while, and once it does things start to become a lot easier to get your head round. The understanding of how the double entry system works is in my opinion the biggest hurdle, stick with it and you could be bankrupting the country in years to come (if your good enough that is).


-- Edited by Rhianrach on Wednesday 2nd of June 2010 08:16:55 PM

-- Edited by Rhianrach on Wednesday 2nd of June 2010 08:20:11 PM

Hi

I'm terribly sorry, but I just have 2 more questions -

1. When entering a sales/purchase invoice, does the net value go in the sales/purchase ledger and gross value in the debtors/credits account? If so, then obviously the vat element goes in the vat a/c?

2. I have an assignment question where a sole trader gives 30 days credit to his business customers and only excepts cash payments from other (smaller) customers. When he receives a cash payment, does the total payment go in the DR side of the cash book? What about the other part of the double entry. Where should I put that? From the sense of the question, there are no sales invoices generated for cash payments! Do I have to extract the vat element and put it in the vat a/c?

Again, many thanks for your response.

1. When entering a sales/purchase invoice, does the net value go in the sales/purchase ledger and gross value in the debtors/credits account? If so, then obviously the vat element goes in the vat a/c?

Firstly it would be a good idea to differentiate between sales/purchase ledger and sales/purchase account.
Typically an invoice would be entered into the sales/purchase ledger which is a completely seperate entity to the main ledger, its sole purpose is to keep track of individual accounts.
In manual accounting this would be a seperate book or ledger. It is very important that you don't confuse the 2 albeit they are very similar sounding.
The balances of all the accounts within the sales/purchase ledger would be totalled and entered in the sales/purchase control account which resides in the main ledger and its purpose is to give an overview of what money you are owed and need to pay out.
So when entering an invoice lets say a purchase invoice, typically you would have the gross on the credit side (as they are creditors) of the purchase ledger control account and the other side of the double entry would be the net value to the debit side of the purchases account (not ledger be wary of the difference) and the vat element to the debit side of the vat control account.
That in effect completes the double entry but it is also good practice to keep track of individual accounts which is where your sales/purchase ledger comes in, a seperate book or ledger entirely and you would enter the gross amount (net plus vat) to the credit side of the individual account.

As said above its important to differentiate between terms such as ledgers and accounts, accounts reside in ledgers, the double entry for an invoice involving vat is gross to one side net and vat to the other, job done, sales/purchase ledgers are a seperate thing.

The reason I repeat this is because there are still people on my course who are still at this late stage getting confused due to the inability to tell these apart.

Hi Steve, Majinder

just read this thread.

Well Steve, you should be awarded the ICB level 1 for this.

Majinder,

If your having difficulties at this level you may be better going back and working fro the start again but using different books.

Try the AAT units 1-4 revision companion and work through that for the Unit's 1-3 only.

I fear that Steve may be helping a little too much on this which in the long run will not help you understand bookkeeping fundamentals (although it's really good revision for Steve).

Not trying to put you off asking questions but it does seem from the number in this thread that you are having quite fundamental bookkeeping problems at the lowest level of of the ICB qualification so it may be better for you to slow down and go back tot he start of your studies and work through again.

Often at second or third viewing everything starts to drop into place and it's only really by struggling through some of the questions that you really get to understand things.

Wishing you all the best in your studies,

Shaun.

It's a good point by Shaun mainly because if you don't have a very good understanding at this level of how everything works then you will trully struggle later on when they make the assumption that you are comfortable with the double entry system and all its ins and outs.
As I said there are people still struggling with the whole concept of accounts, ledgers, books of prime entry and double entry at the end of AAT foundation and the tutor is not recomending they go on to the next level, as it assumes a level of understanding.

Thanks Shaun I just wish interviews were like this I'd have a job in no time

Shamus wrote:

---

Hi Steve,

I think that when you do interviews maybe you should refer them back to your assistance on this site. Perhaps with a few specific examples such as this thread.

Regardless of where you are with AAT your assistance with queries such as this one is second to non.

Certainly if I were hiring I would have no qualms at all about taking you on.

What's happened about the Access interview? Has that one happened yet?

---

The access interview changed roles from a supervisor needing all that to an assistant needing just this, so I got a phone call telling me I'm over qualified blah blah which I followed up with an e-mither stating that I look for jobs that are more locality and relative security based blah blah so upshot being I'm waiting to hear back.
As it turns out I got a gooooood job offer today which I have accepted and have another interview tomorrow that I will attend and do some playing off.
All of this is because I categorically stated "You do know who I am don't you, have a look on http://www.book-keepers.org.uk at Shamus that is me".

 

Hmmm I'll be honest she asked me to do a dance and I declined,........... I think that was a good decision.

I wont abandon this forum, the job involves short hours (for parents with kids at school) and high wages (which is why I'm surprised I got it but hey you never know what to expect in an interview, they seemed more focused on the person fitting into their team than capabilities and I was already capable) so I still have time to post..... yay.

Deformation of character is a difficult and costly lawsuit to follow, I really wouldn't be concerned seeing as you haven't actually deformed anyones character.

Hi Folks

Many thanks for your help so far.

My situatuon is as follows -

As you may be aware, I have started doing the ICB book keeping course. I am on level 1 and have gone through the allocated work book. I have done all the exercises in the book and checked against the answer book - I got them all correct!

I then contacted the learning provider - 'Training Link', to tell them this, and they said I now need to take a mock exam, on the computer, (in preparation for the real exam) for this level (level 1). However, they have said that I am at a stage where they cannot offer me any help wirth any of the questions. I have gone through this whole mock exam paper and cannot get the trial balance to balance. I have been told that they are not willing to check my answers until I get to balance the trial balance. I have been racking my brains over this for the last few days. I have also amended a few entries in accordance with the help given above by a few people, and I have gone through the work book several times to make sure I have posted my entries correctly. However, I still cannot get the figures to balance!

What do you suggest I do? Do you think I should get a professional book keeper to give me one to one tuition and explain to me where I am going wrong in posting my entries?

Thanks in advance for any advice

Hi Folks

Regarding the above, where I am getting stuck on a particular question, one or two of you have suggested that I should post my trial balance here so that you guys can point me in the right direction of where I am going wrong.

According to me, getting the trial balance is the easy bit (I think), once all the postings are made to the correct ledgers (the hard bit). It is the posting of the entries that I am getting stuck on - I am not sure that I have posted some of the entries to the correct ledgers!!
As a result of this, the error is filtering down to the trial balance stage.

What do you think I should do? Do you think I should post the entire question on this forum, so that you folks can point me in the right direction without giving me the answer?

Thanks

Hi,

have a look at this topic:

http://www.book-keepers.org.uk/index.spark?aBID=106474&p=3&topicID=32058565&page=1

I posted step by step clues on the topic above with info on what transaction you have to post where and what your balance should be and how many items you should have on your trial balance. If you cannot spot the error after those, you have to do it again from the beginning I suppose.
If you still cannot get it right you will have to send it off to your training provider with the mistake, if you haven't got a training provider you should have the answers for the mock so you can check what went wrong...
Apart from step by step instructions posted on the other thread I don't really know how else I could help, especially without seeing your trial balance and ledgers.