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The process

The process. Revision. All information must be recorded. Money from Customers is recorded on a Receipt. Money paid to suppliers and employees on a Cheque. All Receipts are recorded in a. Cash Receipt Journal. All Payments are recorded in a. Cash Payments Journal.

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The process

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  1. The process Revision

  2. All information must be recorded • Money from Customers is recorded on a Receipt • Money paid to suppliers and employees on a Cheque

  3. All Receipts are recorded in a Cash Receipt Journal

  4. All Payments are recorded in a Cash Payments Journal

  5. All the Receipts & Payments in the Journals are reported in a Statement of Receipts and Payments • Name of the business, name of the report, date of the report • Bank at beginning • Receipts – all the headings and totals from the Cash Receipts Journal except Sundries which are listed individually • Less Payments – all the headings and totals from the Cash Payments Journal except Sundries • Bank at end

  6. Williams WineryStatement of Receipts & Paymentsfor the month ending 31st October Zero because this business is just starting Bank at beginning 0 Add Receipts Sales 900 Loan 20,000 Capital 10,000 Government Grant 15,000 Debtors 660 GST Collected 90 46,600 Less Payments 46,600 Wages 1,000 Stock 20,000 Rent 900 GST Paid 4,370 Equipment 20,000 Telephone Installation 2,800 49,070 Bank at end (2,470) William’s Winery owes the Bank = Overdraft

  7. Classify all the items in the Statement of Receipts & Payments • Revenue – earnings from running the business • Expenses – cost from running the business • Assets – How much the business owns • Liabilities – How much the business owes • Owner’s Equity – anything to do with the owner • Capital – money put in by the owner • Profit (Loss) – belongs to the owner • Drawings – money taken out by the owner

  8. Williams WineryStatement of Receipts & Paymentsfor the month ending 31st October Bank at beginning 0 Add Receipts Sales 900 Loan 20,000 Capital 10,000 Government Grant 15,000 Debtors paid 660 GST Collected 90 46,600 Less Payments 46,600 Wages 1,000 Stock 20,000 Rent 900 GST Paid 4,370 Equipment 20,000 Telephone Installation 2,800 49,070 Bank at end (2,470) Revenue – money from customers Liability – money owed to Finance company Owner’s Equity – money from owner Revenue – money from Government Asset – money owed by customers Liability – money owed to ATO Expense – money paid to employees Asset – owned by business Expense – money paid for hire of building Liability – money owed / paid to ATO Asset – owned by the business Expense – money paid for hire of services Liability– money owed the Bank

  9. All the Revenues & Expenses go into the Income Statement Williams WineryIncome Statementfor the month ending 31st October Revenue Sales 900 Government Grant 15,000 15,900 Less Expenses Wages 1,000 Rent 900 Telephone Installation 2,8003,700 Net Profit12,200

  10. Go through the Statement of Receipts & Payments • Work out which are the items that belong to the Balance Sheet Balance Sheet AssetsLiabilities Items owned Items owed Owner’s Equity Owner’s items

  11. Williams WineryStatement of Receipts & Paymentsfor the month ending 31st October Bank at beginning 0 Add Receipts Sales 900 Loan 20,000 Capital 10,000 Government Grant 15,000 Debtors paid 660 GST Collected 90 46,600 Less Payments 46,600 Wages 1,000 Stock 20,000 Rent 900 GST Paid 4,370 Equipment 20,000 Telephone Installation 2,800 49,070 Bank at end (2,470) Liability – money owed to Finance company Owner’s Equity – money from owner Asset – money owed by customers Liability – money owed to ATO Asset – owned by business Liability – money owed / paid to ATO Asset – owned by the business Liability– money owed the Bank

  12. Williams WineryBalance Sheet as at 31st October Assets Stock 20,000 Equipment 20,000 GST Refund 4,280 (GST Collected $90 less GST Paid $4,370) 44,280 Liabilities Overdraft 2,470 Loan 20,000 22,470 Owner’s Equity Capital 10,000 Add Profit 11,810 21,810 44,280

  13. Last month’s Balance Sheet • When working with a business that has existed for some time • Check the previous month’s Balance Sheets > this will give you • An idea what Assets & Liabilities the business already has • A starting figure • Look at the Statement of Receipts & Payments to see if the figures have changed during the month

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