Untitled Presentation

Debts that can be recovered

Debts that cannot be recovered

Debts that are partially recovered

Debts that are written off

To record regular transactions

To provide a summary of financial statements

To document non-regular transactions

To replace the ledger

A debt that is expected to be paid

A debt that the company believes will not be paid

A debt that is disputed

A debt that is easily recoverable

As an asset on the balance sheet

As an expense on the income statement

As a liability on the balance sheet

As revenue on the income statement

DR – Irrecoverable Debt a/c

Dr – VAT a/c

Cr – RLCA

You can only record the VAT once the debt is more than 6 months old

It is ignored

It is recorded and then entered into accounts

It is only noted in the ledger

It is not recorded at all

To record sales only

To record purchases only

When a customer is also a supplier

To manage inventory

(a) all purchases of goods

(b) all credit purchases of assets

(c) all credit purchases of goods

(d) all purchases of assets

£375

£650

£275

£325

To track expenses

To manage cash flow

To ensure accuracy in financial records

To prepare tax returns