Lecturer: Tran Viet

Thang
ACCA
Certified Accounting Technician
(CAT)
Paper 1 - Recording Financial
Syllabus overview
Part A Introduction to transaction
accounting
1 Business transactions and documentation
2 Assets liabilities and the accounting
e!uation
" Statement o# #inancial $osition and income
statement
% &ecording summarising and $osting
transactions
' (om$leting ledger accounts
Syllabus overview
Part B &ecording and accounting
#or cash transactions
) &eceiving and chec*ing money
+ Ban*ing monies received
, &ecording monies received
- Authorising and ma*ing $ayments
1. &ecording $ayments
11 /aintaining $etty cash records
12 Ban* reconciliations
Syllabus overview
Part ( &ecording and accounting
#or credit transactions
1" Sales and sales returns day boo*s
1% The receivables ledger
1' Purchase and $urchase returns day
boo*s
1) The $ayables ledger
1+ (ontrol accounts
Part 0 Payroll
1, &ecording $ayroll transactions
(1APT2& 1
Business transactions and
documentation
(ontents overview

Ty$es o# business transaction

0ocumenting business transactions

Invoices and credit notes

0iscounts rebates and allowances

Sales ta3

(ontract law

Storage o# in#ormation

0ata $rotection
Ty$es o# business
transaction

4hat is a business5

6ses economic resources to create goods or

services which customers will buy

Provides 7obs #or $eo$le to wor* in

Invests money in resources in order to ma*e

even more money #or its owners

Business transactions5

Pro$erty changes hands

Two main ty$es: sales and $urchases

By cash or on credit

Sales

By cash: goods or services given in

e3change #or immediate $ayment 8in notes
coins che!ues9

:n credit: cash received later

Purchases:

;or cash: $ayment made immediately

:n credit: cash $aid later

:ther business transactions

Payment o# wages

Borrowing money

Lending money

:##ering a discount

&eceiving a discount
0ocumenting business
transactions

Binding $oint b<w seller and buyer5

0iscussion

0ocumentation to e3$ect
1 =ou buy a (0 #rom a sho$ $aying cash
819 A recei$t
" =ou have air>conditioning system installed
819 A letter o# en!uiry
829 A !uotation
8"9 An order
8%9 An order ac*nowledgement
8'9 A delivery note
8)9 An invoice
(7) A credit note
/ore documents

Inventory lists: chec* availability o# all the

$arts

Su$$lier lists: where to buy $arts

Sta## schedules: $lan #or human resource

Timesheet: record the actual hours sta##

s$ent

?oods received notes

23$ense claims: 2m$loyees may incur

e3$enses which need to be reimbursed
Accounting system: records summari@es
and $resents the in#ormation contained in
Purchase order vsA sales
order
Pu
rc
h
as
e
or
S
al
es
or
d
er
Invoice vsA credit note vsA
debit note

Invoice

A demand #or
$ayment

Settled immediately
in cash: recei$t

Paid on recei$t o#
goods: cash on
delivery 8(:09
invoice

Paid later: credit

invoice

Invoice illustration

1ow many co$ies

needed5

(redit note

Begative invoice:
cancel $art or all o#
$reviously issued
invoice

Amount $ayable:
un$aid invoiceCs
value minus the
credit noteCs

0ebit note

(ustomer to su$$lier
re!uesting a credit
note

Su$$lier to customer
to ad7ust u$wards
Illustration

o
!
m
u
c
h
is
th
e
p
a
y
a
"l
0iscounts rebates and
allowances

D1 $er unit but -'$

#or 1.. units or more

?iven on invoice

Permanent

1.E . days 'E +

days net ". days

;inancing matter
Trade discount Cash discount

A reduction in the
bills #or the #ollowing
year

A che!ue #or the

calculated rebate

Buy 1 get 1 #ree

Re"ate Allo!ance
23am$le
Trent /arcus has three ma7or su$$liersA
8a9 Par*er is in the same business as Trent and o##ers 'E
trade discount
8b9 Scott o##ers a trade discount o# )E on amounts in
e3cess o# D2.. 8ie the trade discount does not a$$ly to
the #irst D2..9
8c9 Alan o##ers a 1.E cash discount #or immediate
$ayment or a 'E cash discount #or all items $aid #or
within ". days o# $urchase
Purchase transactions in Fan 2.G, worth the #ollowing
amounts be#ore discounts have been deductedA

;rom Par*er: D)..

;rom Scott: D,'.

;rom Alan: D2,. cash and D-2. to be $aid on 1%A1AG,

#or goods $urchased on "A1AG,
(alculate how much Trent has received as discounts in
Answer
23am$le

Product A is !uoted at D1. $er eachA A lower

$rice o# -'E $er unit #or buying 1.. units or
more at a timeA :ne com$any $urchased
1'. unitsA

4hat is accounting treatment5

Trade discount

The value o# those goods recorded in

accounting boo* should be the net amount
a#ter discount iAe D1%2'

8D1%2' H 1'.ID1.I-'E9
Juestion
(ham$er $urchases goods with a list $rice o#
D"....A The su$$lier o##ers a 1.E trade
discount and a 2KE cash discount #or
$ayment within 1. daysA
&e!uired
BoteA Ignore sales ta3A
8a9 (alculate the amount (ham$er will
have to $ay i# it delays longer than 1. days
be#ore $ayingA
8b9 (alculate the amount the com$any will
$ay i# it $ays within 1. daysA
Answer
List $rice "....
Less 1.E trade discount "...
2+...
Less 2K cash discount
2+... 3 2KE )+'
2)"2'

Bote: Trade discount #irst cash discount

second
23am$le
(redit $eriod allow: ). days
Invoice $rice o# the goods: D1....
"E discount #or immediate $ayment
Juestions:
1A Should the customer ta*e this o$tion when
he has no money and has to as* money
#rom ban* with interest rate 2E $er month5
2A Should the su$$lier o##er this o$tion i# he
can de$osit the early $ayment in ban* with
interest rate 1A,E $er month5
Answer
The discount worth H D1....I"E
H D"..
The interest $aid to ban*
H 2EI2ID1....I-+E
H D",,

(ustomer should re#use this option

The interest income received #rom ban*
H 1A,EI2ID1....I-+E
H D"%-A2

Su$$lier should re#use this option

Sales ta3
Bet $rice H D12.
Sales ta3 rate H 1+KE
Sales ta3 H 1+KE I D12. H D21
?ross $rice H D1%1

Bote:

Purchaser $ays gross $rice 1%1

?overnment ta*es the sales ta3 8219

Seller *ee$s net $rice 12.

In$ut ta3 vsA out$ut ta35

Sales ta3 return5

Illustration
The gross $rice o# $roduct A is D+.' and
the net $rice o# $roduct B is D%,.A 4hat is
the sales ta3 charged on each $roduct i#
the sales ta3 rate is 1+KE5
Solution
8a9 Sales ta3 #or $roduct A H 1+A'<11+A' L
D+.' H D1.'A 8So net $rice was D+.' M
D1.' H D)..A9
8b9 Sales ta3 #or $roduct B H .A1+' L D%,.
Juestion
A com$any sells goods #or D12+"'.
including sales ta3 at 1+ KE in a !uarterA
It buys goods #or D1.12-. including sales
ta3A 4hat amount will it $ay to or receive
#rom the ta3 authorities #or the !uarter
8round to the nearest D95
Solution
23am$le: 0iscounts and
sales ta3
A com$any buys goods #or sale costing
D)...A A cash discount o# 'E is o##ered
#or $ayment within 1. daysA I# the sales
ta3 rate is 1+KE what is the sales ta3
due5 Is your answer di##erent i# the
com$any $ays a#ter 1. days5
Answer

Sales ta3 is calculated on the discounted

$rice regardless o# whether the discount
is actually ta*enA
1ome &eading
(ontract law > 0iscussion (ontract law > 0iscussion
(ontract law > 0iscussion
Situation 1

=ou $ic* u$ something in a de$artment store

which is $riced at D2%A 4hen the assistant
scans it the $rice a$$ears as D2)A

=ou tell her that as it was mar*ed at D2%

the store is legally obliged to sell it to you at
that $riceA Are you correct5

Bo you are not correctA The $rice label in the

store is an Ninvitation to treatN 8invitation to
ma*e an o##er9A =our $ro$osal to $ay D2% is
the o##erA There is no acce$tance #rom the
store so no contract has been madeA
Situation 2

& bought a car #rom 0 which 0 had

un*nowingly bought #rom a thie#A 4hen
this was discovered the car was returned
to the true ownerA & sued 0 #or the return
o# the #ull $urchase $rice 8as damages9A

The court decided that although & had

used the car #or several months he had
not had ownershi$ o# it which is what he
had $aid #orA 0 there#ore had to re$ay the
#ull amountA
Situation "

A sells goods to B who sells them on to (A B

then #ails to $ay A #or the goods and disa$$ears
without traceA Then how A and ( should go on5

I# A can demonstrate that he was genuinely

mista*en as to the identity o# B and would not
have dealt with him had he *nown who B really
was then A can recover the goods which were
sub7ect to the original contract #rom (A

This is because the law ta*es the view in such a

situation that the original contract between A
and B was no contract at allA There#ore ( who
was an innocent third $arty acting in good #aith
has to return the goods to A and either bear the
Situation %

A seller advertised a second>hand rea$ing

machine describing it as new the
$revious yearA The buyer bought it
without seeing itA 4hen it arrived he
#ound that it was much more than a year
old and re7ected itA The seller sued #or the
$riceA

It was held that this was a sale by

descri$tion the goods had not
corres$onded to the descri$tion and the
buyer was there#ore entitled to re7ect the
Situation '

Peter buys an electronic *eyboard #rom his local

catalogue storeA 1e $ays D1-- #or itA 1e returns to the
store the ne3t day com$laining that although the main
*eys wor* none o# the $re>set rhythm buttons seem to
#unctionA 1e demands an immediate re#undA The sales
assistant re#uses to given him a re#und or ta*e bac* the
goods and instead gives him a card with the name and
address o# the manu#acturer suggesting that Peter
contacts them to obtain a re#und or a re$lacementA
Juestions:

8a9 4as the sales assistant legally 7usti#ied in re#using

to give a re#und5
B:

8b9 ?ive brie#ly a reason #or your answerA

(ontracts o# sale are between the buyer and the
seller
1ome &eading
In#ormation and data In#ormation and data
In#ormation and data
&etention $olicy

Sets down how long di##erent *inds o#

in#ormation are retained

/aster #iles and re#erence #iles: charter

agreement legal documents

Tem$orary or transitory #iles

Active #iles: invoices ?&Bs #iles

Bon>active #ile: $urchase invoices o#

$revious years
Bo long needed in#o and
data

4ill you throw it away555

4ays to deal:

/icro#ilmed or micro#iched

Stored elsewhere 8archiving9

Securely destroyed
JB 1
Ans!er: A
JB 2
Ans!er: #