Time Tracer Ltd - Publishing

ACCOUNTING INSIGHT

2nd Edition by Edwin Olima FCCA

ISBN 0-9543820-1-3

 

 

 

 

 

 

 

 

 

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Any business will be selling goods  or services and raising invoices  to their customers for the goods and services sold . In this chapter you will create a summary of the sales invoices  from your Work Pack as follows:

 

Step 1.      Arrange all your sales invoices  in date order (Work Pack, page 24 ). This has been done for you in the work pack. When using accounting software in practice this step would not be necessary as the software can sort the invoices by date order.

 

Step 2.      List and analyze the sales invoices as shown in the example below. Use the analysis paper  provided for sales (Work Pack, page 45 to 49 ).

 

Mark each invoice with an E after you have entered it on your analysis paper. This avoids double counting .

 

Sales Invoice Analysis Example

 

DETAILS OF SALES INVOICES

SALES ANALYSIS

AMOUNT PAID & OUTSTANDING

Date

Invoice No.

Customer Name

Gross

VAT

Net

Sales of Goods

Asset   Sale

Paid

Outstan-ding

13/01/01

00001

Mr. Smith

1175

175

1000

1000

 

 

 

15/02/01

00002

T Shop Ltd

2350

350

2000

2000

 

 

 

22/07/01

00003

Ms Kelly

470

70

400

 

400

 

 

 

Step 3.      For the credit note , list it out as you would a sales invoice but use a red pen to highlight the fact that it is to be deducted. Put brackets round the amounts to indicate that it is a negative number.

 

Step 4.      Once you have listed all your sales invoices  and the credit note , total up the Gross , VAT , Net, Sales & other columns at the bottom of the list.

 

You have now created a list of sales for the period.

 

Note that net sales  represent the value of goods  or services that flow out of the business. The VAT  is the tax on net sales  and will flow out of the business to the government (Chapter 7 ).

 

The summary also shows you who owes the business money and what they owe the money for. Thus, it is also known as a debtors list.

 

Note that debtors represent cash that will flow into the business.

 

Compare your list to the one in the answer section at the back of the book.


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