BDA, Closing Entries, Depreciation

Question 1

Journal entry for:

unpaid expense end of year
e.g. wages - last pay day 29 June - so adjust for portion for current year and portion for next year

Answer 1

Wages not paid yet at end financial year

Dr Expense 
     Cr Accrual Expense 
(Accred Wages due but unpaid - x days)
Dr Accrued Expenses
    Cr Expenses
(Reversal BDA)
increase expense this year - Dr acct

Question 2

Journal entry for:

prepaid expense - paid for an expense in next year e.g insurance, rent

Answer 2

Dr Prepaid Expense
Cr Expense
(Adjustment for Prepayment - x months)

Put payment into Next year ) eg insurance

Note Asset account

Question 3

Journal entry for:

unpaid income- get it next year - earned but not received e.g. interest income, commission

Answer 3

Dr Revenue accrued 
      Cr Income  
(Revenue Accrued )
Dr Income Acct
   Cr REvenue accrued
(increase income Cr acct)

Question 4

Journal entry for:

Received payment in advance e.g. rent

Answer 4

Dr Income 
     Cr Revenue received in Advance (
(Adj. .revenue rec'd in Advance)
Dr Revenue rec'd in Advance
     CR Income
(reversal BDA)
Decrease Income - Cr acc)

Question 5

Profit & Loss Account

Temporary ledger

Revenue accounts are

Expenses accounts are

Answer 5

Profit & Loss Account

Temporary ledger

Revenue accounts are DEBITED P&L CREDITED

Expenses accounts are CREDITED P&L DEBITED

Question 6

Non Reversing entries - BDA

Answer 6

Dr Depreciation Expense
Cr Accumulated Depreciation
(Depreciation for a period)

Question 7

What is the exception for the rule where Asset that is minus

Answer 7

Accumulated Depreciation

Question 8

Perpetual Inventory Variance

Journal entry
- loss gear

• gained gear

Answer 8

loss gear
Dr COGS
   Cr Inventory
(Ad.j end of year to stocktake)
OR
gained gear
Dr Inventory
   Cr COGS
(Adj end of year to stocktake)

Question 9

what happens if we feel we will not get paid for A/c receivables
it reduces t a/c receivable and is a negative asset a/c

Answer 9

Provision (Allowance) for Doubtful Debts
all about a/c receivable

ia an negative asset account

Question 10

which account tis a pretend expense and balances provision for Doubtful debts

Answer 10

Doubtful Debts

Dr Doubtful
Cr Allowance for Doubtful Debs
(Allow for DD at x%(

Question 11

Journal entry for:

Bad Debts

Answer 11

Dr Bad Debt
Dr GST Paid
Cr A/C Receivable

Question 12

What are the 3 types of leave provisions and which a non current liability

Answer 12

Long Service Leave - Non Current Liability
(provision for Ling Service Leave

Current Liabilities
Annual Leave (Provision for annual leave)
Personal Leave (Provision for personal leave)

Question 13

Journal entry for:

Answer 13

Dr Long Service Leave Expense
Cr Long Service Leave

Dr Annual Leave Expense
Cr Provision for annual leave

Dr Personal Leave Expense
Cr Provision for personal leave

Question 14

Journal entry for

Standing Journal entries - PrePaid expense

Answer 14

when you pay
Dr Prepaid Expense (insurance)
Dr GST paid
    Cr  Bank
(Insurance premium paid)

Monthly
Dr Insurance expense
Cr Prepaid Insurance
(Record for the month)

Question 15

What are the steps for Closing Day Adjustments for perpetual accounts?

Answer 15

1. Dr Sales
    Cr  Trading
(Close Sales to Trading)
2. Dr Trading
    Cr COGS
(Close COGS to Trading)
3.  Dr Trading
   Cr P&L
(Transfer Gross Profit to P&L) 
4. Dr Other Income
    Cr P&L
(Transfer Other Income to to P&L)
5. Dr P&L
    Cr Expenses (as a list)
(Closing Expenses to P&L)
6. Dr P&L
   Cr Capital
(Transfer Net Profit to Capital)
7. Dr Capital
   Cr Drawings
(Close Drawings to Capital)

Question 16

What do you add to non current asset to get the total cost of asset?

Estimated Useful Life
Value of asset at end of useful life
Residual Value = scrap value

Written down value (Carrying Amount)

GST is Not part

Answer 16

Total cost of asset:-
- Freight in
- installation( i.e Ready for use)
Capital cost of asset

Depreciable amount = cost - Estimated Residual Value

Fair value - Market Value
Impairment loss carrying amount exceeds its recoverable amount

Question 17

What are the methods of depreciation?

(Depreciation is book entry only - non cash transaction)

Dr Depreciation (Expense)
   Cr Accumulated Depreciation (BS-Negative Asset acct)

Answer 17

Straight line (or fixed Instalment ) Method

Diminishing Balance Method

Units of Production

Question 18

What is Straight line (or fixed Instalment ) Method?

Answer 18

Annual depreciation amount
= Depreciable Amount/ life in years
= Cost- Residual Value/ life in years

Question 19

What is Diminishing Balance Method?

Answer 19

Fixed percentage

Don’t use residual value - ignore

Question 20

What is Units of Production

Answer 20

Depreciation per unit

=cost - Residual Value/Life in units

Question 21

Accounting for Depreciation

Answer 21

Dr Depreciation
Cr Accumulated Depreciation (Asset)
(Depreciation expense as per Depreciation schedule)
dr Profit & Loss
Cr Depreciation
(Balance transfer and Depreciation account closed

Question 22

Accounting for Depreciation

Balance Sheet

Answer 22

Extract of Income Statement
Less: Operating Expenses
General & Administration
Depreciation xxx

Extract of Balance Sheet
Non Current Assets
Plant (at Cost) xxxxxx
les Accumulated Depreciation Plant xxx
xxx