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ACCA F3 Control Accounts (a)
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Dear mr. Moffat, Is chapter 16 (correction of errors) from the BPP book covered in control accounts or in another chapter. and regarding trade discounts as well as promt discounts.?
Correction of errors isn’t really a separate topic – errors could be anywhere in the bookkeeping and this need understanding of all the topics. Most are covered in the lectures on adjustments to profit and suspense accounts, some are covered in the lectures on control accounts.
With regard to discounts, they are covered in the chapter on control accounts (with the exception of prompt payment discounts to customers – because the rules on these have changes, they are covered in the lecture on IFRS 15).
My lectures are a complete course and cover everything needed to be able to pass the exam well. If you are watching the lectures, then it is not really the Study Text that you need, but the Revision Kit (because it contains lots of exam standard questions for practice, and practice is vital to passing the exam).
Sir, thanks for your great lecture but I have a question. In the example of Mr Y, when he received the cash discount, you only Cr Receivables and Dr Cash and Discount allowed but you left the sales ledger there and did nothing about it. I think when Mr Y paid less amount of money, the sales afterward should have been reduced and no longer remain as 1000 Cr, am I correct? Why does it still remain 1000? Shouldn’t we Dr Sales 50 to bring the balance to 950???
We could either leave the same at 1,000 and have as an expense ‘discount allowed’ of 50, or we could reduce sales to 950 instead. The final profit would of course be exactly the same.
yes got it
Or perhaps as part of the next two chapters adj. to profits and suspense a/c ?
Dear mr. Moffat, exams are around the corner. Is chapter 16 (correction of errors) from the BPP book covered in control accounts or in another chapter? many thanks. Loukas
Excellent lecture once again.
Thank you for the comment 馃檪
who are you talking to
what treatment will be done to indivisual subsidiary ledger recievables accounts for overall allowance for bad debtsfor example 5% ?
An allowance for receivables is not entered in either the receivables ledge control account, or in the individual accounts in the receivables ledge. Only irrecoverable debts written off are entered.
Question 6 in your lectures includes returns payable why not in question 4
I assume that you are referring to the test questions at the end of the chapter.
There is no such thing as ‘returns payable’. They are purchase returns, i.e returns to suppliers.
In question 4, we need to correct the total of the balances in the payables ledger. The fact that the total of the returns journal was wrong does not affect that payables ledge (each item is entered there individually). It only affects the control account (which is where the total is posted).
In question 6 it is the control account that we are correcting, and the total has been posted on the wrong side.
If you have not watched the lecture on Books of Prime Entry then you really should – then you will know what is entered where. The lectures form a complete course for Paper F3, but are meant to be watched in order.
Thanks for the correction, purchases returns. Your explanation makes it clearer. Thank you
Thanks for good and clear explanation.
Lectures can not be downloaded. It is the only way that we can keep this website free of charge
when reconciling control accounts with normal payable s/receivables ledger in exam they give us different errors. which of the errors will effect control accounts ONLY ?
how to identify them i always get stuck with this part .
The main ones to look for are those where the totals of any of the books of primed entry are wrong (purchase day book, sales day book etc.).
The totals of these books are only used in the control accounts.
why does settlement refunds to custmer be loacted on the debit side of receivables control account?
A refund is a repayment of cash to the customer.
Maybe they have paid us too much by mistake and so we repay them – CR cash DR receivables
(and they are not called settlement refunds).
but if place the refund on the debit side of receivables, then more receivebles would be created, actually it is the money owed by the company to custmer?
No.
Suppose you sell goods for 1000. You DR receivables 1000.
Suppose the customer pays 1500 by mistake (500 too much). Then you DR Cash and CR Receivables with 1500.
There is now a credit balance on receivables – you owe them 500.
If we refund (or repay) that 500, the CR Cash DR Receivables and the balance is now zero.
Thanks a lot~~~
You are welcome 馃檪
great great great tutoring!!!my textbook looked like greek until i found a decoder…….OT!!!
I share the same sentiment
This is the best lecturer i have ever listened to. Very straight forward explanation. Thumbs up!
Thank you 馃檪
do we put cash sales in control accounts? reply asap
@Vanna Motilal, ohhhhh dont bother got my ans from the next lecture…..
I have the same question with onyxera.
In solving Test Question 4 of Chapter 16, page 111 on the free lecture notes (ACCA-Paper-F3-notes-December-2011-OpenTuition.pdf), I do not understand why error (2) 鈥淭he total of the purchase return journal was undercast by $1,000? was not corrected in the payables ledger. Shouldn鈥檛 this be debited to the payables ledger to reduce liability?
Could you please kindly help?
@jenniferwoo, The payable ledger is where there is an account for each individual payable. The individual figures will have been entered correctly in these accounts, and the total of the returns journal is irrelevant for this.
Where we use the total from the journal is when we do the double entry – debit payables and credit returns – and so it is the payables account in the nominal ledger that needs correcting.
Excellent
In solving Test Question 4 of Chapter 16, page 111 on the free lecture notes (ACCA-Paper-F3-notes-December-2011-OpenTuition.pdf), I do not understand why error (2) “The total of the purchase return journal was undercast by $1,000” was not corrected in the payables ledger. Shouldn’t this be debited to the payables ledger to reduce liability?