Hi can someone please help me with the below problem.
Mr A buys equipement for £215.00 and pays in cash. I put the receipt in as a purchase invoice and pay for this using NC 1230 (I know this is petty cash, but just changed to a cash account). I then did a journal entry from 1230 to 2301 (directors loan) but now I have £430.00 cr in my cash account as it's accounted for it twice (perhaps this was obvious to others but not to me as I normally work from bank statement, nothing is ever paid in cash!) I can sort this by deleting my PI but then when do I put the receipt if it is not part of my purchase invoices. I am not claiming the VAT back as this is not a VAT receipt.Can someone tell me the correct way to pay in cash and move it to credit the directors loan account?
Thank you Matt, I did just have my journals around the wrong way...I thought it was way more complicated than that! I still don't like cr and dr and cant understand why they are not the other way around!
I still don't like cr and dr and cant understand why they are not the other way around!
I'm curious. In this age of computerised accounting, is double entry book-keeping still taught? This was one of the things that was clearly explained very early on when I learned it.
I don't know how old you are John but I learnt double entry just before computers were being widely used for accounts purposes. Surely it is the fundamental concept underlying bookkeeping and accounts?
Moving on a few years, when I worked in practice I frequently came across people who knew Sage inside out but didn't understand double entry so produced rubbish. Conversely I came across people who knew double entry inside out but didn't understand Sage so produced rubbish......
If I get confused about entries, I still use T accounts to work it out, the only difference being now is that I will probably do it on Excel and not a scrap of paper!
It's like the times table which probably doesn't get taught anymore either. Once learnt, never forgotten.
none of the professional bodies have moved away from teaching manual bookkeeping but I do know that Sage had an advertising campaign a few years back that pushed being able to make a living by only learning their software.
If we can take this discussion away from the actual post into the more general as I fear that there's a risk of slipping nto assumptions that may upset the poster without properly knowing her background (#1) then I would say that the likes of ICB, IAB and AAT expect people to be able to do manual bookkeeping before being able to do computerised.
The accountancy qualifications (ACCA, ACA, etc.) expect people to be able to do the manual side of things but don't care about the computerised as the software is really only there to make one's life simpler and should have no significance at all to one's knowledge base.
On the times tables front children do two exams for their maths GCSE, one where they are allowed to use a calcualtor and one where they are not so times tables remain as important as they always were and even if they were not in the eye's of the country they would have been in my sons education.
I have always taught my son that when using a calculator you should know the ballpark figure that you are expecting before believing what the calculator tells you as its so easy to make a mistake on entering the question.
Accounts software is also like that. When I enter data I know where I expect to see both sides of the transaction reflected in the financial statements as we appreciate that the software is simply a tool that serves us, we are not just data entry clerks that serve it.
I feel thats the reason that I like VT so much in that its software that you would not be able to use if you didn't understand the principles of double entry bookkeeping. Definitely software created for financial professionals by financial professional as there's non of the silly idiot proofing thats so evident in software such as Sage thats aimed at end users as much, if not more than financial professionals.
Like yourself I always have Excel open on one of my screens as a scratch pad to manipulate data.
kind regards,
Shaun.
#1 and nobody has asked whether the poster comes from a background in banking in which case you do think to the debits and credits the other way around and it takes a while to be able to switch hit between the two worlds.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
with ICB they changed their syllabus I think in 2010.
You have always had to pass their level I manual but then at level II it used to be that you could practice with either level II manual or level II computerised. That got changed to people having to get both to achieve a practice certificate.
IAB have a bit of a strange one in that they have a computerised paper where the computerised part of it accounts for very few of the actual marks.
You know AAT.
CAT and FIA are the same as AAT.
ACCA paper F3 is the foundation level of the financial accounting side of the qualification and it incorporate a lot of bookkeeping with the intent of student being able to think in double entry terms going forwards.
Hang on a sec, just off to have a look at the entry level CIMA study texts... Yep, paper C2 has plenty of double entry.
What about ACA.... Yep, certificate level, accounting module covers manual double entry.
Basically, its the accross the board foundations of every professional body.
The big difference between the bodies of course is where they stop.
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Hi Shaun
It's that Sage advertising campaign that has stuck in my mind and I think a lot of people who signed up to learn Sage at that time went on to call themselves bookkeepers. I hope the poster doesn't think this is aimed at her because it is just intended to be a general observation. I also thought that there could be confusion with bank statements as this was something that I struggled with in the early days. Client accounts are equally confusing with the client account balance being a credit, as opposed to a ddebit when in funds. I am glad times tables are still taught as we place too much reliance on technology nowadays. I am just as bad as the next person but get annoyed if I am out for a meal with friends and they expect me to check the bill! I just say I can't do it without my calculator......
I wasn't intending to criticise the OP, which I why I just said that I'm curious. It's 40 years since I started my accountancy training with the ICMA (now CIMA), although I never finished it!
My understanding has always been that a bank statement is the bank's statement of account with the customer, not the customer's statement of account with the bank. So a credit balance on the account (that the customer sees as a nice thing), is actually stating the bank's liability to the customer. Very confusing for anyone before they learn these things, especially as the word credit seems like a good thing, and debit is a very similar word to debt.
It always amuses me when I see statements on Facebook that the world is so many trillion pounds in debt, which is impossible in a closed system using double entry book-keeping, because every balance sheet balance in one set of accounts has an opposite entry in another set!!!!
