AAT - level 3

AAT - level 3

1. Study Plan/Schedule

   • comment
   • Week mornings: 3-5 days per week
   • Resume with extra hour on 26.10.14 (extra hour from DST)
   • weekends: 2-3 hours session?

2. Accounts Preparation

   • ASSETS - debit ---------------- CAPITAL - credit LIABILITIES - credit
   • VAT
     • VAT Rates
       • Std rate = 20%
         • Default rate; most goods and services
       • Reduced Rate = 5%
         • Domestic fuel & power; children's car seats
       • Zero rate = 0%
         • Books & newspapers; children's clothing & footwear; public transport
       • Items not covered by VAT scheme
         • Exempt items - Royal Mail stamps & postage; insurance; providing credit; education & training; some services provided by doctors & dentists
         • Outside Scope of VAT: Rates; wages & salaries; donations to charity
       • Fundamental difference between Zero Rated goods and services and Exempt goods and services:
         • 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
         • 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
     • If turnover > VAT threshold then business must register for VAT
     • INPUT TAX / debit / VAT reclaimable (Asset)
       • VAT on - purchases; purchases on non-current assets; refunds received from sales returns; expenses/services; petty cash expenditure
     • OUTPUT TAX / credit / VAT payable (liability)
       • VAT on - sales of goods/services; sale of non-current assets; refunds given on purchase returns
   • Use a Sub-divided Accounting System
     • Main books
       • General Ledger
         • Control Accounts
           • Sales Control Account (SLC)
           • Purchases Control Account (PLC)
       • Cash book
         • Also book of prime entry
           • Usually kept in columnar format
         • Petty cash
         • Cash and Bank account
         • Settlement Discounts
           • Discount Received = income from credit supplier
           • Discount Allowed = expense from credit customer
           • VAT is calculated on discounted value
     • Subsidiary books
       • Sales Ledger / memorandum accounts of each credit based customer (trade receivables)
       • Purchase Ledger / memorandum accounts of each credit based supplier (trade payables)
     • Books of Prime Entry
       • Journal
       • Sales Day Book
       • Purchases Day Book
       • Sales Returns Day Book
       • Purchases Returns Day Book
     • Advantages
       • Individuals work within a specific section and can become specialised
       • Lends itself more easily to sharing of workload which improves speed and accuracy
       • Reduces risk from fraud