Ac100 Highlights 624o6w

General business transactions Current year adjustments Prepaym ents & accruals Opening and Bad debt closing inventory Divi Fair Depreciation den Financing valu and disposal ds e Taxation

Owners introduce personal money into the business Owners introduce personal assets into the business Owners covers expenses with personal money Business incurs an expense and pays cash Business sells inventory for cash (perpetual inventory method) Business sells inventory for credit (perpetual inventory method) Business buys inventory for cash (perpetual inventory method) Business buys inventory for credit (perpetual inventory method) Business sells inventory for cash (periodic inventory method) Business sells inventory for credit (periodic inventory method) Business buys inventory for cash (periodic inventory method) Business buys inventory for credit (periodic inventory method) Business returns (paid) inventory to suppliers Business returns (credit) inventory to suppliers Business pays creditors Business receive money from debtors Sales returns (credit) Omission adjustment (e.g. a cash expense has been omitted) Expense adjustment (e.g. utility mistakenly charged to rent) Asset-to-expense adjustment (e.g. fuel costs from motorvehicles to fuel exp) Misreporting adjustment (e.g. misreporting of credit sales) Misallocation adjustment (e.g. business/private misallocation ie. Under-drawn) Stock omitted in final stock count (only adjust difference) Amount owed by debtors offset amount owed to creditors Business makes a prepayment (deduct period-liable from total sum paid) Reversing the prepayment (the prepaid benefit has been realized) Business incurs an accrued expense (accrue only payments liable in the future) Reversing the accrued expense (the accrued expense has been repaid) Writing off bad debts Providing for bad and doubtful debts (net increase in provision) Providing for bad and doubtful debts (a release of provision) Writing down inventory ing for cost of goods sold (COGS) via the periodic inventory method 1. Opening inventory 2. Zero opening inventory 3. Purchases 4. Zero purchases 5. Purchase returns/returns outwards 6. Zero purchase returns/returns outwards 7. Closing inventory ing for depreciation Disposal of depreciated assets 1. Receiving cash from sale of asset 2. Reducing assets by cost of asset sold ("zero asset") 3. Adjusting depreciation allowance by total accumulated depreciation 4. Zero disposal Upward revaluation of non-current assets (only include revalue gain) Impairment of non-current assets (only include impairment loss) Issuing ordinary shares at par value Issuing additional ordinary shares at Taking up a bank loan Repaying a bank loan Dividend paid during the year Dividend approved but not paid within the year ing for VAT payable 1. Output VAT (Credit sales) 2. Input VAT (Credit purchases) 3. VAT payable/overprovision ing for corporate tax payable 1. Opening tax payable balance 2. Zero opening tax payable 3. Including tax expenses for the year

s, pr op en er to ty ry an Pu /S d rc to eq ha ck uip se Tr s m ad (p en e er t re io (P ce di A PE llo c iv ) in ab w v an le en s/ Ba t ce or D nk eb y f o /c m to r as et rs b Pr h ho ad ep ba d) an ay la m nc d D en d e ep ou ts re b tf ci u O at lr th io ec er n ei as al va Co se lo b ts w st le an (e of s . c g. go (C e Sa on od au (C le s to o s, tr n s m a) ge ol tr ob In d a n te ) er (C ile re al O s ) st G an S) re Re d pa nt ad ym m ex in pe en W is t ns ag tr at es es iv e U (S til G ity & A pa ) Ta ym x en ex ts pe D ns ep e s re c ia Ba tio d n de ex bt pe Pr s ns ov w es rit is io te n n Pu fo off rc r ha ba se d Im an s re pa d tu do irm rn ub en G s a in tf t ul l o s/ de ss lo bt ss D iv o id n en di sp ds O os th al er ex O pe w ns ne es r's Sh ca ar pi e ta ca l Sh pi ta ar l e pr Re em ta iu in m ed Re ea va rn lu in at gs D io is n po re sa se l rv D ra e w in gs Tr ad e pa Lo ya an bl es s /C VA re di T to rs Co rp or at D e iv t ax id en pa ds Ac ya pa cr bl ua e ya ls bl Sa e le s In te re st in co m e

Expenses =

Equity +

Liabilities +

In v

Transaction

Pl an t

Type of transaction

Assets +

Dr Dr Dr Dr

Cr Dr

Cr Cr Dr Dr

Cr Cr Cr

Dr Dr

Dr

Cr Cr

Cr Cr Dr

Cr Cr

Dr Dr Dr

Cr Cr

Cr Cr

Dr Dr Dr

Cr Dr

Cr Cr

Dr Cr

Dr Cr

Dr

Cr

Dr

Cr

Dr Cr

Dr

Dr

Cr Cr

Dr Dr Cr

Cr Dr Dr Cr

Cr

Cr Dr

Dr Cr Dr

Dr Cr

Cr

Dr

BF Cr

Dr BF Cr

Dr BF Dr

Cr Cr

Dr Cr BF

Dr BF

Dr

Cr Dr Cr D/C

Cr Dr D/C Dr Cr Dr Dr Dr Cr Cr

Cr Dr Cr Cr

Cr Cr Dr

Dr Dr Dr

Cr

Dr Dr

Cr

D/C Dr

Cr Dr BF

Cr

BF D/C Cr

Revenue

Statement of financial position at

Non-current assets Land Equipment

Cost (£)

Acc.Dep (£)

NBV (£)

A A 2A

B B 2B

A-B A-B 2A-2B

Current assets Bank Prepayments Trade receivables Provision for doubtful debts Inventory

C D E (F) G C+D+E-F+G

Current liabilities Accruals Trade payables

H I H+I

Net current assets

C+D+E-F+G-H-I

Non-current liabilities Long-term loan Debentures

J K J+K

Net assets

2A-2B+C+D+E-F+G-H-I-J-K

Equity (PLC) Share capital (No. of ordinary shares x Par value) Share Revaluation reserve Revenue reserve (Retained profit + Previously retained profit)

L M N O 2A-2B+C+D+E-F+G-H-I-J-K

Equity (LLP) Capital Profit for the year (I/S) Drawings for the year

Equity (Sole trader) Owner's capital Drawings for the year Retained earnings/Profit for the year (I/S)

Partner 1 L O L+O (R) L+O-R

Partner 2 M P M+P (S) M+P-S

Partner 3 N Q N+Q (T) N+Q-T

Total L+M+N O+P+Q L+M+N+O+P+Q 2A-2B+C+D+E-F+G-H-I-J-K

L (M) N 2A-2B+C+D+E-F+G-H-I-J-K

Income statement for the year ended £ Sales revenue Cost of goods sold (COGS) Gross profit (GP) Other income (e.g. interest income)

£ A B A-B X

Sales, general & istrative (SG&A) Wages Directors' fees Rent Rates and insurance Heat and light Bad debt written off Increase/release in provision for bad debt Depreciation expense

C C C C C C +/- C C 7/8C

Operating profit (EBIT)

A-B-7/8C

Interest expense Disposal of assets

D E

Profit before tax

A-B-7/8C-D±E

Taxation

F

Profit after tax/Profits for the year

A-B-7/8C-D±E-F

Preference and ordinary dividends (PLC) Preference dividends Ordinary dividends Retained profit for the year

G H A-B-7/8C-D±E-F-G-H

Appropriation (LLP) Interest on capital Salaries Residual profit Total profit

Partner 1 G J M G+J+M

Partner 2 H K N H+K+N

Partner 3 I L O I+L+O

Total G+H+I J+K+L M+N+O A-B-7/8C-D±E-F

Cash flow statement for the year ended £ Cash flows from operating activities Profit before tax Depreciation expense Gains/loss on disposal Interest expense Interest received Increase/decrease Increase/decrease Increase/decrease Increase/decrease Increase/decrease Operating cash flows Interest paid* Tax paid**

inventory trade receivables prepayments trade payables accruals

A B -/+ C D (E) A+B±C+D-E -/+ F -/+ G -/+ H +/- I +/- J A+B±C+D-E±F±G±H±I±J (K) (L)

Net operating cash flows Cash flows from investing activities Purchase of new non-current assets*** Proceeds from disposal of non-current assets Interest received

£

A+B±C+D-E±F±G±H±I±J-K-L

(M) N O

Net investing cash flows Cash flows from financing activities Proceeds from issue of new share capital Increase/decrease long-term loans Increase/decrease short-term loans Dividends paid Net financing cash flows Net change in cash

O+N-L

P +/- Q +/- R (S) P±Q±R-S A+B±C+D-E±F±G±H±I±J-K-L+O+N-L+P±Q±R-S

Cash at beginning of period Cash at end of period

T A+B±C+D-E±F±G±H±I±J-K-L+O+N-L+P±Q±R-S+T

*Interest paid = Interest expense **Tax paid = Year 1 T/B + Tax expense - Year 2 T/B ***New NCA purchased = NBV NCA Year 2 + Dep exp + NBV disposed NCA - NBV NCA Year 1

VARIABLE (MARGINAL) COSTING INCOME REPORTING Year 1 £ Sales (price = A)

AX

Variable manufacturing costs Opening inventory Production VC (unit VC = B) Closing inventory Total manufacturing VC Contribution margin

0 BY B(Y-X) BY-B(Y-X) AX-B(Y-X)+BY

Fixed costs Manufacturing FC SG&A Total FC

C D C+D

Operating income/net profit

AX-B(Y-X)+BY-C-D

FULL (ABSORPTION) COSTING INCOME REPORTING Year 1

£ Sales (price = A) Manufacturing costs Opening inventory Production cost S=(C+BY)/Budgeted production volume Closing inventory Total manufacturing costs

AX

0

SY

S(Y-X) SY-S(Y-X)

Production-volume variance (if budgeted production volume is given) V=(Actual production Expected production)*(C/Budgeted production volume)

Gross profit at actual Fixed costs SG&A Operating income/net profit

±V

AX-SY+S(Y-X)±V

E AX-SY+S(Y-X)±V-E

OME REPORTING Year 2 £ A'W

B(Y-X) B'Z B'(Y-X+Z-W) B(Y-X)+B'Z-B'(Y-X+Z-W) A'W-B(Y-X)-B'Z+B'(Y-X+Z-W)

C' D' C'+D' A'W-B(Y-X)-B'Z+B'(Y-X+Z-W)-C'-D'

OME REPORTING Year 2

£ A'W

S(Y-X)

S'Z

S'(Y-X+Z-W) S(Y-X)+S'Z-S'(Y-X+Z-W)

±V'

A'W-S(Y-X)-S'Z+S'(Y-X+Z-W)

E' A'W-S(Y-X)-S'Z+S'(Y-X+Z-W)-E

Consolidated statement of financial position for at
Subsidiary company £

A B C A+B+C

Current assets Inventory Trade receivables Cash Cash in transit

D E F

D' E' F'

D+E+F

D'+E'+F'

Current liabilities Trade payables

G

Non current liabilities Debentures Long-term loans

H I

Net assets Shareholder's equity Ordinary share capital Share Retained earnings Non-controlling interests

J K L

ATE AFTER ACQUISITION>

iary company £

A' B'

CBS £

A+A'+RR B+B'±Dep 0 GW

A'+B'

D+D'-PUP E+E'±IB F+F'±IB IB

G'

G+G'±IB

H' I'

H+H' I+I'

J' K' L'

J K L+Adj=RE NCI