August 3, 2010
All businesses are obliged to keep ‘proper books of account’ which must accurately record the day-to-day transactions of the business.
The following records must be maintained and kept up-to-date.
- Sales Book – This records all the sales of the business. The sales may be for cash or on credit but a full record must be maintained. Sales must also be analysed under the various VAT categories.
- Purchases Book – This records all the purchase invoices of the business. The invoices should be analysed under the various expense headings and also record the relevant VAT categories.
- Cash Book – This records all the cash received by the business. In some businesses the Cash Book and the Sales Book can be the same. This will usually only occur where sales are on a cash basis only.
- Payments Book – This records all the bank payments of the business. Payments should be recorded regardless of how they are made from the bank account, e.g. by cheque, direct debit or standing order. The payments should also be analysed under the relevant expense headings e.g maintentance, repairs etc.
- Creditors Ledger – If purchases are made on a credit basis the business should maintain a creditors ledger which keeps an account of amounts due to each of it’s suppliers.
- Debtors Ledger – If sales are made on a credit basis to customers it is important to keep an accurate and up-to-date account of the amounts owing by each individual debtor.