Acca F3 Notes
There are often day by day inventory records kept, but because of the importance of the accuracy of the igure a physical count would still be made as a check. The Cash Book This will list all receipts and payments in and out of the bank. The members of this body are. However, more detailed information is also required. Gross proit margin The gross proit margin is the gross proit expressed as a percentage of the selling price.
This information means that if we know the cost of sales we are able to calculate the sales and vice versa. What is the gross or tax inclusive selling price? However, a great many of the transactions of a company involve purchases and sales on credit.
In this chapter we will explain how journal entries are written in the examination. The critical thing is to be as time efficient as possible.
The balances remaining on the accounts all represent Statement of Financial Position items. Description A Statement of Cash Flows is simply a summary of the cash receipts and payments. In practice, it would not be repaid because we would stay in business and use the rest of the insurance in the following period.
Methods of calculating depreciation There are several methods of calculating depreciation. This is an allowance for particular or speciic debts, where we know that there is a problem for example, the debt has been owing for a long time. If the payment is possible i. However, if again we had paid for a year but only used half a year so far, then it would be wrong to show the full payment as an expense in the Statement of Proit or Loss. These entries may be necessary in any type of examination question, but are particularly common in control account questions.
You could stick your headphones in and watch a video on your lunch-break, for example, then do the corresponding questions that evening when you get home. For this reason we do not show the amount of the over-payment as an account receivable, but show it separately in the Statement of Financial Position as a prepayment. In all cases, the cost of removing irrecoverable debts and of allowing for doubtful debts is charged as an expense in the Statement of Proit or Loss. There is therefore a potential liability, but it is not certain.
If you are not told, then charge a fraction or time- apportion as above. Very often a company acquires another company some years after incorporation in which case the company will have earned proits by the time that they are acquired. For example, the customer may have died leaving no assets, or may have disappeared without trace. Note that this preparation of the Statement of Financial Position and Statement of Proit or Loss does not result in any additional entries in the t-accounts.
The assets are presented in exactly the same way, with the exception that only the carrying value net book value is shown on the face of the Statement. In the examination, read the question carefully. The purpose is to provide users of the inancial statements with more information than is provided just by the Statement of Proit or Loss and Statement of Financial Position. The tax charged on their sales is known as output tax. For these events, the inancial statements will not be changed.
Control is the power to govern the inancial and operating policies of the entity so as to obtain beneits from its activities. Prepayments A prepayment is a payment in advance.
One reason is that the non-current assets may have been worth more than the carrying value this is particularly likely to apply to any land and buildings. Then Section B has the two mark questions, which are split into requirements. Or you could have four requirements worth four marks each. We will explain the other two approaches by means of an example.
The valuation of inventory The igure for the closing inventory in the above examples would have come from physically counting the inventory. Date purchased Might be needed for depreciation calculations or the identiication of old assets. For a limited company this must be the case.
If all the inter entity sales had subsequently been sold outside the group then no other adjustment would be necessary because all the proit would have been realised. Reserves A reserve is anything owing to shareholders in addition to the Share Capital. Limitations of ratio analysis You must learn the various ratios.
Introduction In this chapter we will look briely at the regulatory system that exists for inancial accounting, and the role of International Financial Reporting Standards. The balance on both should be the same. Net realisable value is the selling price less any extra costs that there will be in order to get the goods in a state to be sold. The sum of the costs of the assets should agree to the amount in the cost account in the nominal ledger.
Financial Accounting (FA)
Again, they must be given to existing shareholders in the same ratio. He had however not received a bill from the telephone company. Revenue can be recognised according to the stage of completion of the transaction at the date of the Statement of Financial Position.
Consolidated accounts These are the accounts for the whole group, where we treat the group as though it is one big company. It can be any combination. The accounting entries You will recall that whenever we buy goods for resale we debit a purchases account, and that whenever we sell goods we credit a sales account.
The question is clearly labelled and split into requirements, with the mark scheme laid out next to it. Introduction We mentioned in the last chapter that one of the books of prime entry is known as the journal, and is used to list unusual transactions. An ordinary shareholder may be puzzled by this, but maybe the explanation is that the company had very large expenditure on non-current assets. Note that all the above only applies to intangible assets.
You are most welcome if you want to write short notes for us. You know, astm c330 reading notes over and again. The statement reconciling the balances is called a bank reconciliation statement. Similarly it is necessary for us to prepare a Consolidated Statement of Proit or Loss and we will look at how this is prepared in this chapter.
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