2.3 - Statements Flashcards
(42 cards)
1
Q
‘Owing’
Expenses that have been received and have not been paid
A
Accrued expenses
- Increase the expense
- Create a current liability called “accrued expenses”
2
Q
‘Owing’
Income that has been earned but has not been received
A
Accrued income
- Increase the income
- Create a current asset called “accrued income”
3
Q
‘In advance’
Expenses that have not been received and have been paid
A
Prepayments
- Decrease the expense
- Create a current asset called “prepayments”
4
Q
‘In advance’
Income that has not been earned but that has been received
A
Income in advance
- Decrease the income
- Create a current liability called “income in advance”
5
Q
‘Invoice on hand’
Income
A
- Increase accounts receivable by full amount
- Increase income by GST exclusive amount (divide full amount by 1.15)
- Increase GST by the difference between the two amounts
6
Q
‘Invoice on hand’
Expense
A
- Increase accounts payable by full amount
- Increase expense by GST exclusive amount (divide full amount by 1.15)
- Decrease GST by the difference between the two amounts
7
Q
Depreciation on PPE
A
- Create depreciation expense
* Increase accumulated depreciation
8
Q
(Classify)
Term deposit
A
Investment Asset
9
Q
(Classify)
Rates
A
Administrative expense
10
Q
(Classify)
Hire purchase
A
Non-current liability
11
Q
(Classify)
Interest on term deposit
A
Other income
12
Q
(Classify)
Depreciation on building
A
Administrative expense (If it doesn't specify 'shop')
13
Q
(Classify)
Freight outwards
A
Distribution cost
14
Q
(Classify)
Courier expenses
A
Distribution cost
15
Q
Straight line depreciation
A
Asset cost - residual value / useful life of asset
OR
Asset cost x __% of depreciation
16
Q
Diminishing value depreciation
A
(Asset cost - accumulated depreciation) x __% of depreciation
17
Q
Units of use depreciation
A
(Asset cost - residual value) / Estimated useful life production x Actual units produced
18
Q
Reporting inventory at net realisable value
A
- Decrease inventory by the difference between the GST exclusive cost of inventory and the GST exclusive net realisable value of inventory
- Increase Cost of Goods Sold by the same figure
- Only done if net realisable value < Cost price
19
Q
Write off bad debts
A
- Decrease accounts receivable by full amount
- Increase bad debts by GST exclusive amount (divide full amount by 1.15)
- Decrease GST by the difference between the two amounts
20
Q
Doubtful debts
A
- Multiply new accounts receivable figure x percentage of allowance, and make allowance for doubtful debts = the answer
- Increase/decrease doubtful debts expense (or create) with the difference between the old and new allowance for doubtful debts figure
21
Q
Headings for PPE table
A
‘For the year ended...’ Opening carrying amount Additions (Cost of new PPE purchased) Disposals (Carrying amount of old PPE sold) Depreciation Closing carrying amount
‘As at…’
Cost
Less accumulated depreciation
Closing carrying amount
22
Q
General ledger for drawings
A
+ -
Balance
Capital (Cr -)
23
Q
General ledger for capital
A
- +
Balance
Income summary (Cr +)
Drawings (Dr -)
24
Q
To close accounts…
A
- Use ‘income summary’
- Put balances on the opposite sides (if it is a Dr balance, make it Cr to remove it) (if it is a Cr balance, make it Dr to remove it).
DON’T ‘CLOSE’ CAPITAL AND DRAWINGS
- Close income, expenses and COGS
25
General journal - Transfer net profit to capital
• Income summary (Dr) =
to amount of net profit
• Capital (Cr) =
to same amount as above
26
General journal - Transfer drawings to capital
• Capital (Dr) =
to amount of drawings
• Drawings (Cr) =
to same amount as above
27
Prepayments adjustment
- ‘The (expense name) was paid for a 12 month period, commencing on (date)’
OR
- ‘An annual (expense name) contract of (amount) was paid in full on (date)’
• Find start date
• Find end date by using the length of the time period (12 months)
• Find trial balance date
• Calculate how many months difference between the end date and trial balance date (__)
(Indicates how many months in advance the prepayment amount is for)
• Calculate the amount by doing __ / 12 x (total amount paid)
28
Income in advance adjustment
- ‘(business name) rents out part of the building office space to (business name) for (amount) including GST per month’
* Find GST exclusive amount owed per month
* Multiply this amount by 12 to find the GST exclusive amount owed per year
* Make rent received = to this amount
* Add/subtract the difference between the old and new rent received amount to find the income in advance amount
29
Statement of Cash flows - Accounts receivable
(Remember to show working in numbers and in words)
```
Opening accounts receivable balance
+ credit sales/invoices issued
- bad debts
- discount allowed
- sales returns/credit notes issued
- closing accounts receivable balance
= Accounts receivable (cash received from customers)
```
30
Statement of Cash flows - Accounts payable
(Remember to show working in numbers and in words)
Opening accounts payable balance
+ credit purchases/invoices received
- discount received
- purchase returns/credit notes received
- closing accounts payable balance
= Accounts payable (cash paid to suppliers)
31
Headings for statement of financial position (‘as at’)
```
Current assets
Non current assets
(Property plant and equipment)
Total carrying amount (note 1)
(Investment assets)
(Intangible assets)
Total assets
Less liabilities
Current liabilities
Non current liabilities
Total liabilities
Net assets
```
```
Equity
Opening capital
Plus profit for the year
Less drawings
Closing capital
```
32
Headings for income statement (‘for the year ended’)
```
Revenue
Sales
Less sales returns/discount allowed
Net sales
Less cost of goods sold
Gross profit
Add other income
________
Less expenses
(Distribution costs)
(Administrative expenses)
(Finance costs)
Total expenses
Profit for the year
```
33
Headings for statement of cash flows (‘for the year ended’)
```
Cash receipts
Total cash receipts
Less cash payments
Total cash payments
Net cash (increase/decrease)
Add bank balance at beginning
Equals bank balance at end
```
34
PPE tables
Cost price
(If the trial balance is at the start of the year)
| - Remember to add the cost of new PPE and subtract the cost of old PPE to find the cost price 'as at'.
35
Calculating opening carrying amount for PPE
(Assuming trial balance is from the end of the year and the additions and disposals from throughout the year HAVE been included in it)
If there are no additions or disposals...
Opening cost
- Opening accumulated depreciation
= Opening carrying amount
```
If there are additions or disposals...
Opening cost
- Opening accumulated depreciation
- GST exclusive cost of new PPE purchased
+ Carrying amount of old PPE sold
= Opening carrying amount
```
36
Calculating cost for PPE
(Assuming trial balance is from the start of the year and the additions and disposals from throughout the year HAVE NOT been included in it)
If there are no additions or disposals...
Cost of PPE from trial balance
```
If there are additions or disposals...
Opening cost
+ GST exclusive cost of new PPE purchased
- GST exclusive cost of old PPE sold
= Cost
```
37
Calculating accumulated depreciation
(Assuming trial balance is from the start of the year and the additions and disposals from throughout the year HAVE NOT been included in it)
If there are no additions or disposals...
Opening accumulated depreciation
+ depreciation for the year
= Accumulated depreciation
```
If there are additions or disposals...
Opening accumulated depreciation
- (GST exclusive cost of old PPE sold - carrying amount of old PPE sold)
+ depreciation for the year
= Accumulated depreciation
```
38
Investments note
Investments comprise of Shares in (business name). The current fair value of the shares is $(amount from additional information), which is their market value on (trial balance date).
39
(Classify)
Gain on sale
Other income
40
Statement of cash flows
- Record any direct debts (payments) and direct credits (receipts)
- Record any cash received, or cash paid
- If trading PPE in for its carrying amount on a new PPE purchased on credit, use (new cost - carrying amount)
- If purchased PPE on credit, use GST inclusive cost
- Only use cash drawings (ignore any drawings of goods/inventory)
- Ignore any loss/gain on sale
- Ignore any trade in allowance
- Ignore doubtful debts
41
Accrued expenses adjustment
- ‘Interest on loan is due'
- Use interest rate x loan to find interest on loan expense due per year
- Make interest on loan = to this amount
- Make difference = accrued expenses
42
Prepayments adjustment
'An advertising campaign lasting from 1 January 2017 to 30 April 2017' cost $1,932 including GST and was paid for on 1 January 2017.'
- Calculate how many months difference between the start date and end date
(Indicates how many months in advance the prepayment amount is for)
- Divide amount by 1.15 to get GST exclusive amount
- Calculate the amount by dividing GST exclusive amount by the number of months
