The Happy Accountant

The company’s cash book may require the following adjustments:

direct debit payments and standing orders directly to or from the bank account may not have been entered into the cash book
bank interest and charges may not have been entered into the cash book.

Items which may have been included in the cash book but which may not [...]

The point of carrying out a bank reconciliation is to check that nothing has been missed from the business’s records and also to ensure that there have been no bank errors.
A business’s cash book will rarely agree to the bank statement and it can be easy to miss transactions, such as direct debit payments if a [...]

A bank reconciliation is simply a checking exercise to ensure that the business can “agree” their records to the balance on their bank statement.
It is normally done each time a bank statement is received.  (It is possible, but highly inadvisable to leave it until the year end)

Occaisonally, a bad debt that has been written off may be paid.  If the payment occurs in a later period than the write-off, the amount paid should be recorded (in the period that payment is received) as additional income in the profit and loss account.

If a bad debt has been written off by a VAT registered business, the VAT on the original sale can be reclaimed.  The debt must be older than six months and less than three years and six months.
You include the VAT on the bad debt in input VAT (box 4) of your VAT return.

Advantages
Encourages customers to pay early, thus helping cashflow.
Can be used as a marketing device.
Disadvantages
Some customers take the discount without actually paying within the timescale required.

For the purposes of VAT, settlement discounts are treated as a finance charge.  Therefore, VAT is calculated on the net amount (after the settlement discount - regardless of whether the discount is actually taken).

When offering a settlement discount, the accounting entries are:
Credit Sales (with the full amount)
Debit Discounts allowed (P&L account) (with the discount amount)

Sometimes, goods might be unsaleable for one of the following reasons:

the goods might be lost or stolen
the goods might be damaged, and therefore worthless
the goods might become obsolete

When goods are lost, stolen or disposed of, the business will make a loss on them, because they will have zero sales value.
Similarly, if goods become obsolete and [...]

Carriage is the cost of transporting goods from the supplier to the business which has purchased them.  Sometimes the supplier pays and sometimes the buyer pays.
If the supplier pays, the cost to the supplier is called “carriage outwards” and if the buyer pays, the cost to the buyer is called “carriage inwards”.
Carriage inwards is usually [...]