Acca f3 Financial Accounting (int) Study Text

Part G  Miscellaneous topics

  24:  Information technology

411

Answer

The payables ledger will consist of individual records for each supplier account. Just as for customer 

accounts, some of the data held on record will be standing data, and some will be variable data.

Standing data will include: 

Variable data will include: 

(a) Account 

number 

(a) Transaction 

date 

(b) Name 

(b) Transaction 

description 

(c) Address 

(c) Transaction 

code 

(d) Credit 

details 

(d) Debits 

(e) 

Bank details (eg method of payment) 

(e) 

Credits 

(f) 

Cash discount details, if appropriate 

(f) Balance 

2.2.1 Inputs to a payables ledger system 

Bearing in mind what we expect to see held on a payables ledger, typical data input into a payables ledger 

system is: 

(a) 

Details of purchases recorded on invoices 

(b) 

Details of returns to suppliers for which credit notes are received 

(c) 

Details of payments to suppliers 

(d) Adjustments 

2.2.2 Processing in a payables ledger system 

The primary action involved in updating the payables ledger is adjusting the amounts outstanding on the 

supplier accounts. These amounts will represent money owed to the suppliers. This processing is identical 

to updating the accounts in the receivables ledger, except that the receivables ledger balances are debits 

(receivables) and the payables ledger balances are credits (payables). Again, the open item approach is the 

best.

2.2.3 Outputs from a payables ledger system 

Typical outputs in a computerised payables ledger are as follows. 

(a)

Lists of transactions posted – produced every time the system is run. 

(b) An 

analysis of expenditure for nominal ledger purposes. This may be produced every time the 

system is run or at the end of each month. 

(c)

List of payable balances together with a reconciliation between the total balance brought forward, 

the transactions for the month and the total balance carried forward. 

(d)

Copies of suppliers' accounts. This may show merely the balance b/f, current transactions and the 

balance c/f. If complete details of all unsettled items are given, the ledger is known as an 

open-ended ledger. (This is similar to the open item or balance forward methods with a 

receivables ledger system.) 

(e) 

Any payables ledger system can be used to produce details of payments to be made.  

(i) 

Remittance advices (usually a copy of the ledger account) 

(ii) Cheques 

(iii) Credit 

transfer 

listings 

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24: Information technology   Part G  Miscellaneous topics 

(f) 

Other special reports may be produced for: 

(i) Costing 

purposes 

(ii) 

Updating records about non-current assets 

(iii) 

Comparisons with budget 

(iv) 

Aged accounts payable list 

2.3 Nominal ledger 

The nominal ledger (or general ledger) is an accounting record which summarises the financial affairs of a 

business. It is the nucleus of an accounting system. It contains details of assets, liabilities and capital, 

income and expenditure and so profit or loss. It consists of a large number of different accounts, each 

account having its own purpose or 'name' and an identity or code. 

A nominal ledger will consist of a large number of coded accounts. For example, part of a nominal ledger 

might be as follows. 

Account code 

Account name 

100200

Plant and machinery (cost) 

100300

Motor vehicles (cost) 

100201

Plant and machinery depreciation 

100301 Vehicles 

depreciation

300000 Total 

receivables

400000 Total 

payables

500130 Wages 

and salaries

500140

Rent and local taxes 

500150 Advertising 

expenses

500160 Bank 

charges

500170 Motor 

expenses

500180 Telephone 

expenses

600000 Sales 

700000 Cash 

A business will, of course, choose its own codes for its nominal ledger accounts. The codes given in this 

table are just for illustration. 

It is important to remember that a 

computerised nominal ledger works in exactly the same way as a 

manual nominal ledger, although there are some differences in terminology. For instance, in a manual 

system, the sales and receivables accounts were posted from the sales day book (not the sales ledger). 

But in a computerised system, the sales day book is automatically produced as part of the 'receivables 

ledger module'. So it may 

sound as if you are posting directly from the receivables ledger, but in fact the 

day book is part of a computerised receivables ledger. 

2.3.1 Inputs to the nominal ledger 

Inputs depend on whether the accounting system is integrated or not. 

(a) 

If the system is integrated, then as soon as data is put into the sales ledger module (or anywhere 

else for that matter), the relevant nominal ledger accounts are updated. There is nothing more for 

the system user to do. 

(b) 

If the system is not integrated then the output from the sales ledger module (and anywhere else) 

has to be input into the nominal ledger. This is done by using journal entries. For instance. 

DEBIT A/c 

300000 

$3,000 

 

CREDIT A/c 

600000 

 $3,000 

Where 600000 is the nominal ledger code for sales, and 300000 is the code for receivables. 

Regardless of whether the system is integrated or not, the actual data needed by the nominal ledger 

package to be able to update the ledger accounts includes: 

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