Summary Good notes for ACCF111 tests

Chapter 3:
Periodic inventory system- summary:
 When you have to post the general journals to the general
ledger, open all of the general ledgers first (T-accounts)
 The T-accounts that you are going to open in the general
ledger when you are using the periodic inventory system
are:
o Bank(A)
o Trading inventory(A)
o Creditors(L)
o Purchases(E)
o Purchases returns and allowances(I)
o Freight on purchases(E)
o Sales(I)
o Sales returns and allowances(E)
o Carriage on sales(E)
o Cost on sales(E)
 Opening inventory (Assets) is always on the DR side of the
trading inventory accounts and thus you have to take it
out and post it to the cost of sales account:
o DR trading inventory with the opening balance
o CR trading inventory with cost of sales
o DR cost of sales with trading inventory
 Purchases (Epenses) goes to the purchases account and
then it goes to bank (if the purchases was on credit)
o DR purchases with bank or creditors control
o CR bank with purchases or
o CR creditors control with purchases
 Freight on purchases (Expenses) goes to the purchases
account and then it goes to bank (if purchases was done in
cash) or it goes to Creditors control (if the purchases was
done in credit)
o DR freight on purchases with bank or creditors
controls
o CR bank with freight on purchases or
o CR creditors with freight on purchases

,  When you have damaged inventory that you purchased
from suppliers and you send it back, you have to post it to
the purchases returns and allowances account (Income)
and then it has to go to bank (when you purchases it for
cash) or to creditors control (if you purchases it on credit)
o DR bank with purchases returns and allowances
o CR creditors control with purchases returns on
allowances
o CR purchases returns and allowance with bank or
creditors control
 Sales (Income) goes to your sales account than it has to
go to bank (if it is cash sales) or debtors’ control (if it was
credit sales)
o DR bank with sales or
o DR debtors’ controls with sales
o CR sales with bank or debtor’s control
 When damaged inventory that clients bought from you
gets send back then you have to post it to the sales return
and allowances account (Expenses) and then it goes to
bank (when it sends back on cash) or creditors control (if it
was send back on credit)
o DR sales returns and allowances account with bank
or credit control
o CR bank with sales returns and allowances or
o CR credit controls with sales returns and allowances
 Closing balance goes to the cost of sales account and to
the trading inventory account
o DR trading inventory with cost of sales
o CR cost of sales with trading inventory
 After all the transactions are recorded you have to post
the purchases, purchase returns and allowances and
freight on purchases account to the cost of sales account
o CR purchases with cost of sales
o DR cost of sales with purchases
o Purchases returns and allowances are greater on the
CR side than on the DR side
o DR purchases returns and allowances with cost of
sales