AAT - level 3

patrick.grindley
Mind Map by patrick.grindley, updated more than 1 year ago
patrick.grindley
Created by patrick.grindley over 5 years ago
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Mind Map on AAT - level 3, created by patrick.grindley on 10/25/2014.

Resource summary

AAT - level 3
1 Study Plan/Schedule

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1.1 Week mornings: 3-5 days per week
1.2 Resume with extra hour on 26.10.14 (extra hour from DST)
1.3 weekends: 2-3 hours session?
2 Accounts Preparation
2.1 ASSETS - debit ---------------- CAPITAL - credit LIABILITIES - credit
2.2 VAT
2.2.1 VAT Rates
2.2.1.1 Std rate = 20%
2.2.1.1.1 Default rate; most goods and services
2.2.1.2 Reduced Rate = 5%
2.2.1.2.1 Domestic fuel & power; children's car seats
2.2.1.3 Zero rate = 0%
2.2.1.3.1 Books & newspapers; children's clothing & footwear; public transport
2.2.1.4 Items not covered by VAT scheme
2.2.1.4.1 Exempt items - Royal Mail stamps & postage; insurance; providing credit; education & training; some services provided by doctors & dentists
2.2.1.4.2 Outside Scope of VAT: Rates; wages & salaries; donations to charity
2.2.1.5 Fundamental difference between Zero Rated goods and services and Exempt goods and services:
2.2.1.5.1 If a business supplies only zero rated goods and services, it would collect no VAT on supplies but would claim back any VAT on its purchases
2.2.1.5.2 If a business supplies only exempt goods and services, it cannot register for VAT and does not collect VAT on its supplies nor claim back any VAT on its purchases
2.2.2 If turnover > VAT threshold then business must register for VAT
2.2.3 INPUT TAX / debit / VAT reclaimable (Asset)
2.2.3.1 VAT on - purchases; purchases on non-current assets; refunds received from sales returns; expenses/services; petty cash expenditure
2.2.4 OUTPUT TAX / credit / VAT payable (liability)
2.2.4.1 VAT on - sales of goods/services; sale of non-current assets; refunds given on purchase returns
2.3 Use a Sub-divided Accounting System
2.3.1 Main books
2.3.1.1 General Ledger
2.3.1.1.1 Control Accounts
2.3.1.1.1.1 Sales Control Account (SLC)
2.3.1.1.1.2 Purchases Control Account (PLC)
2.3.1.2 Cash book
2.3.1.2.1 Also book of prime entry
2.3.1.2.1.1 Usually kept in columnar format
2.3.1.2.2 Petty cash
2.3.1.2.3 Cash and Bank account
2.3.1.2.4 Settlement Discounts
2.3.1.2.4.1 Discount Received = income from credit supplier
2.3.1.2.4.2 Discount Allowed = expense from credit customer
2.3.1.2.4.3 VAT is calculated on discounted value
2.3.2 Subsidiary books
2.3.2.1 Sales Ledger / memorandum accounts of each credit based customer (trade receivables)
2.3.2.2 Purchase Ledger / memorandum accounts of each credit based supplier (trade payables)
2.3.3 Books of Prime Entry
2.3.3.1 Journal
2.3.3.2 Sales Day Book
2.3.3.3 Purchases Day Book
2.3.3.4 Sales Returns Day Book
2.3.3.5 Purchases Returns Day Book
2.3.4 Advantages
2.3.4.1 Individuals work within a specific section and can become specialised
2.3.4.2 Lends itself more easily to sharing of workload which improves speed and accuracy
2.3.4.3 Reduces risk from fraud
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