0. Basic Accounting II (BAII)
Level 2 Certificate in Accounting
AAT

1. Basic accounting I
recap

2. Terminology UK International Fixed Assets Non-current Assets
A summary of the equivalent international version to the UK terms which are used within this assessment.
UK International
Fixed Assets Non-current Assets
Stock Inventory
Debtor Receivable
Creditor Payable
It is also important for you to be able to use the terms “main ledger” and “general ledger” interchangeably.
Progressing through the AAT qualification and other accounting qualifications requires a knowledge of both UK GAAP terms and International Accounting Terms

3. Ledger accounts
Run through terms eg Assets, Liabilities, Expenses, Income
Stress difference between Purchases and Expenses

4. Ledger accounts

5. Ledger accounts

6. Every DEBIT must have an equal CREDIT
Debits and credits
Every DEBIT must have an equal CREDIT

7. Balancing a ledger account

8. Balancing a ledger account

9. The trial balance
List of all the ledger balances in the main (general) ledger
Debit balances and credit balances listed in difference columns
Total debit balance must equal total credit balance

10. The trial balance

11. Debit balances Credit balances
The trial balance
Debit balances
Credit balances
Assets Liabilities
Expenses Income
Drawings Capital

12. Journal adjustments

13. Journal adjustments
A written instruction by a bookkeeper to write a double entry into the general ledger accounts
Generally for adjustments therefore a narrative usually accompanies the double entry as explanation for the purpose

14. Journal adjustments
E.g. £170 has been debited to insurance instead of motor tax
Journal:
Dr Motor tax
Cr Insurance
Being motor tax posted to insurance in error

15. Journal adjustments
Other adjustments:
Bad debts
Contra entries

16. Journal adjustments Bad debts
Arise when a debtor fails to pay and the debt is written off
DR Bad debt expense
CR Sales Ledger Control Account
Being the write off of a bad debt

17. Journal adjustments Contra entries
A business is both a debtor and creditor of another business if it buys and sells with it.
Both parties have to agree to “net” balances off i.e. Reduce both the creditor and debtor balances
DR Purchases Ledger Control Account
CR Sales Ledger Control Account
Being the adjustment for a contra entry with ABC Ltd

18. Contra entry - example

19. Contra entry - solution

20. Suspense account

21. Suspense accounts Used as a temporary holding account when
Destination of a posting is uncertain
The Trial Balance does not balance and an error has to be investigated
Review producing a trial balance

22. The trial balance

23. Errors identified by trial balance

24. Errors not identified by trial balance

25. Journals
Used to record unusual items such as error corrections or to clear a suspense account Dr Cr
Account to be debited
£XXX
Account to be credited
£XXX

26. Journal entry

27. control accounts

28. Sales ledger control account

29. Purchases ledger control account

30. Control Account Balances
Reasons for differences
Casting errors
Posting errors
Bad debts
Contra entries
Talk around casting/posting errors
Next slides cover bad debts and contra entries

31. Petty cash

32. Imprest system

33. Petty cash voucher

34. Petty cash book

35. vat

36. VAT
VAT is charged on the taxable supply of goods and services in the United Kingdom by a taxable person in the course of a business carried
on by them.

37. VAT Control Account VAT INPUT VAT (on purchases) OUTPUT VAT (on sales)
OUTPUT VAT > INPUT VAT = LIABILITY OWED TO HMRC
INPUT VAT > OUTPUT VAT = REFUND DUE BACK FROM HMRC

38. Calculating VAT Net 100% VAT 17.5% Gross 117.5%
Explain and work examples on calculating VAT

39. Calculating VAT

40. payroll

41. Gross pay and deductions

42. Employee payslip

43. Entering payroll in the ledger - 1

44. Entering payroll in the ledger - 2

45. Entering payroll in the ledger - 3

46. Banking procedures

47. Bank accounts

48. Cheques

49. Cheque crossings

50. Standing orders and direct debits

51. BACS and CHAPS

52. Credit and debit cards

53. BANK Reconciliations

54. Bank reconciliation - 1

55. Bank reconciliation - 2

56. Bank reconciliation - method