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Kim Smith.
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Noah098
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scenario: “The daily sales readings from the tills along with the cash data and credit card payment data are transferred daily to head office through an interface with the sales and cash receipts records. A clerk oversees that this transfer has occurred for all stores.”
TOC: “During the interim audit at head office, compare the daily sales readings from individual stores, including some visited by the audit team, to the sales and cash receipt records within the general ledger. ”
maam is tere any connection between general ledger and head office? I mean is it the head office that maintains the general ledge?
Kim Smith
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For any individual company, management must prepare a single set of financial statements. The “make up” of those financial statements is founded on transactions:
“Physical” transaction -> Recorded in a book of prime entry -> Posted to the general ledger -> Extracted in a trial balance -> Period end adjustments (depreciation, inventory, bad debts, etc) -> financial statements.
Although individual transactions may take place in many different locations – retail outlets, warehouse, etc – they must ultimately be recorded in one general ledger maintained by the accounts/finance department.
A “head office” is where all the “administrative” functions including accounts/finance will take place.
Jiya024
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professor books of prime entry is the location where ledger accounts of suppliers and customers exist on an individual basis, right? Like Ledger account of B customer or C supplier, so all transactions with that entity basically.
and at the end of each day total sales or purchases are posted to respective control accounts, which are included as a part of general ledger, true maam? General ledger includes only control accounts? or they include something else too?
Am sorry maam for asking such a silly doubt, but there has been a long gap since i last finished my F3 paper!
Kim Smith
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The individual a/cs of suppliers and customers are kept in separate ledgers. Postings from books of prime entry are in TOTAL to control a/cs – and INDIVIDUALLY to the separate ledgers.
Only one of these – control a/c posting OR separate ledger postings can be part of the double entry – e.g. double entry is to the control a/c (in the general ledger) and the separate ledgers are kept as “memoranda”.
If you need further clarification I suggest first taking a quick look at our FA notes – you should be able to navigate to control a/cs from the contents.
Noah098
Kim Smith
Jiya024
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