Vardhan Shah
IGCSE ACCOUTNING
(0452)
QUICK RECAP
Author: Vardhan Shah
CHAPTER 1:
• Book-keeping is the detailed recording of all the financial transactions of a business.
Accounting uses these book-keeping records to prepare financial statements.
• It is necessary to prepare financial statements to show the profit or loss of the
business and the financial position of the business and to help in decision making.
• The accounting equation shows that the assets are always equal to the capital plus
the liabilities of the business.
• A statement of financial position shows the assets and liabilities of a business on a
certain date.
CHAPTER 2:
• Every transaction must be entered twice -on the debit side and on the credit side of
another account
• The debit entry is made in the account which is receiving the value and the credit
entry is made in the account which is giving the value
• Each type of asset, liability, expense and income has its own ledger account.
• Any value taken from the business by the owner of the business is known as
drawings.
• At the end of the period, the accounts of assets and liabilities which contain more
than one entry should be balanced
• The entries for purchases and sales, and purchases returns and sales returns, are
recorded in separate accounts
• Carriage is the cost of transporting goods.
1
, Vardhan Shah
CHAPTER 3:
• A trial balance is a list of the balances on the accounts in the ledger at a certain date.
• A trial balance is prepared to check the arithmetical accuracy of the double entry
book-keeping
• There are six types of errors which are not revealed by the trial balance.
CHAPTER 4:
• The ledger is usually divided into three specialist areas- sales ledger, purchases
ledger and nominal (general) ledger.
• The cash account and the bank account are usually kept side-by-side in a cash book.
• A contra entry appears on both sides of a cash book.
• Payments can be made by cheque, credit transfer, direct debit, standing order and
credit and debit cards.
• A credit balance brought down in the bank column of a cash book indicates a bank
overdraft.
• Cash discount is given to encourage customers to pay their accounts within a set
time limit.
• The totals of the discount columns in the cash book are transferred to the discount
accounts in the ledger.
CHAPTER 5:
• A petty cash book is used to record small cash payments (and occasionally small cash
receipts).
• The imprest system of petty cash means that the petty cashier starts each period
with the same amount.
• A petty cash book is a book of prime entry and also a ledger account.
• The totals of the analysis columns are posted to the appropriate nominal ledger
accounts at the end of each period.
• Any payments to credit suppliers are posted individually to the purchases ledger
account of the supplier to whom the payment was made.
CHAPTER 6:
• A supplier of goods on credit issues an invoice to the customer.
• A supplier may allow a customer trade discount if the businesses are in the same
trade and also for buying in bulk.
• If goods are returned or there is an overcharge, a customer may issue a debit note to
the supplier asking for a reduction in the invoice.
• A supplier issues a credit note to notify the customer of any reduction in the total of
an invoice.
• A supplier issues a statement of account at the end of each moth to notify the
customer of the amount owing and provide a summary of the account.
• Many accounts are paid by cheque, in which case it is not necessary to issue a receipt
as proof of payment.
CHAPTER 7:
2
IGCSE ACCOUTNING
(0452)
QUICK RECAP
Author: Vardhan Shah
CHAPTER 1:
• Book-keeping is the detailed recording of all the financial transactions of a business.
Accounting uses these book-keeping records to prepare financial statements.
• It is necessary to prepare financial statements to show the profit or loss of the
business and the financial position of the business and to help in decision making.
• The accounting equation shows that the assets are always equal to the capital plus
the liabilities of the business.
• A statement of financial position shows the assets and liabilities of a business on a
certain date.
CHAPTER 2:
• Every transaction must be entered twice -on the debit side and on the credit side of
another account
• The debit entry is made in the account which is receiving the value and the credit
entry is made in the account which is giving the value
• Each type of asset, liability, expense and income has its own ledger account.
• Any value taken from the business by the owner of the business is known as
drawings.
• At the end of the period, the accounts of assets and liabilities which contain more
than one entry should be balanced
• The entries for purchases and sales, and purchases returns and sales returns, are
recorded in separate accounts
• Carriage is the cost of transporting goods.
1
, Vardhan Shah
CHAPTER 3:
• A trial balance is a list of the balances on the accounts in the ledger at a certain date.
• A trial balance is prepared to check the arithmetical accuracy of the double entry
book-keeping
• There are six types of errors which are not revealed by the trial balance.
CHAPTER 4:
• The ledger is usually divided into three specialist areas- sales ledger, purchases
ledger and nominal (general) ledger.
• The cash account and the bank account are usually kept side-by-side in a cash book.
• A contra entry appears on both sides of a cash book.
• Payments can be made by cheque, credit transfer, direct debit, standing order and
credit and debit cards.
• A credit balance brought down in the bank column of a cash book indicates a bank
overdraft.
• Cash discount is given to encourage customers to pay their accounts within a set
time limit.
• The totals of the discount columns in the cash book are transferred to the discount
accounts in the ledger.
CHAPTER 5:
• A petty cash book is used to record small cash payments (and occasionally small cash
receipts).
• The imprest system of petty cash means that the petty cashier starts each period
with the same amount.
• A petty cash book is a book of prime entry and also a ledger account.
• The totals of the analysis columns are posted to the appropriate nominal ledger
accounts at the end of each period.
• Any payments to credit suppliers are posted individually to the purchases ledger
account of the supplier to whom the payment was made.
CHAPTER 6:
• A supplier of goods on credit issues an invoice to the customer.
• A supplier may allow a customer trade discount if the businesses are in the same
trade and also for buying in bulk.
• If goods are returned or there is an overcharge, a customer may issue a debit note to
the supplier asking for a reduction in the invoice.
• A supplier issues a credit note to notify the customer of any reduction in the total of
an invoice.
• A supplier issues a statement of account at the end of each moth to notify the
customer of the amount owing and provide a summary of the account.
• Many accounts are paid by cheque, in which case it is not necessary to issue a receipt
as proof of payment.
CHAPTER 7:
2
