SALES LEDGER
~ Dean Bloom ~
~ BloomTech Solutions ~
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| Sales Ledger | Purchase Ledger | Cash Book | Nominal Ledger | VAT | Fixed Assets | Profit / Loss |
SALES LEDGER
Invoices
Credits
Allocations
Credit Control
When a sale is made, an invoice in usually raised. This invoice is raised within the sales ledger.
Once the sales invoice has been raised, this will effect the following:- DEBTORS CONTROL & SALES
| ON THE LEFT HAND SIDE (DEBIT) | ON THE RIGHT HAND SIDE (CREDIT) |
| The DEBTORS CONTROL account is increased to show that more money is owed to the company. | The SALES account is increased to reflect an increase in sales. |
Both these Debit and Credit entries balance back to ZERO. This is the term known as "Double Entry".
Having increased the Debtors Control Account by raising the invoice, when the customer then pays the invoice, the Debtors Control Account will then be decreased again. This time, the sales on the right (CREDIT) will not be effected as you still want to show the total sales in that period, but instead, the Bank Account on the left (DEBIT) will be increased.
HERE IS AN EXAMPLE OF THE ABOVE:-
Starting balances before the sale takes place.
| DEBIT | CREDIT | ||
| Debtors Control | 300.00 | Sales | 420.00 |
| Bank Account | 120.00 | ||
| 420.00 | 420.00 |
LETS SAY WE THEN RAISE AN INVOICE FOR £80.00. THE BALANCES WILL THEN BE:-
| DEBIT | CREDIT | ||
| Debtors Control | 380.00 | Sales | 500.00 |
| Bank Account | 120.00 | ||
| 500.00 | 500.00 |
THEN, WHEN THE DEBTOR PAYS THEIR INVOICE, THE BALANCES WILL BE:-
| DEBIT | CREDIT | ||
| Debtors Control | 300.00 | Sales | 500.00 |
| Bank Account | 200.00 | ||
| 500.00 | 500.00 |
As you can see, each time, the accounts still balance. This is because we must always use "Double Entry".
When a Credit Note is raised, usually due to returned goods or compensation etc., the opposite effect takes place.
PURCHASE LEDGER
Invoices
Credits
Issue Of Payments
Allocations
Account Queries
CASH BOOK
Entry of information
Accounting for VAT
Bank Statement Reconciliation
NOMINAL LEDGER
Double Entry
Trial Balance
FIXED ASSETS
Depreciation
Net Book Value