Y11 Accounting

 Income Statement for a Service Firm  Income Statement for a Trading Firm  A Balance Sheet  A Cash Budget  Perform Balance Day Adjustments

 Being able to classify accounts  Knowing the order and layout of each statement- memorise these layouts  Appropriate headings MUST be used  Writing a PPE note- know the headings and labels  Knowing how to write the title for each statement

 Any item on the left hand side of a Trial Balance is either: ◦ An expense (Distribution/Administration/Finance) ◦ Cost of Goods Sold (Opening inventory, Purchases, Freight in, Customs duty) ◦ An asset (Current, PPE, Intangible or Investment) ◦ Drawings ◦ OR a negative account of anything from the other side e.g. Sales Returns  Any item on the right hand side of a Trial Balance is either: ◦ Income (including other) ◦ Liability (Current and Non-current) ◦ Capital ◦ OR a negative account of anything from the other side e.g. Purchase Returns

 The inventory figure for the Current Asset section and Closing Capital is always given in the notes and starts with 31 st  Always classify the items in the trial balance and put a line through them when you have put them into the statements to ensure you have dealt with all items  If you cannot do a particular adjustment move on to the others. Always put an account and a figure if you have done the adjustment or not under a heading

 When classifying expenses ask the following questions: ◦ If the expense can be directly linked to selling the product it a distribution/selling expense e.g. Advertising ◦ If it is a necessary expense, but cannot be linked to selling the product it is an Administration Expense e.g. Accountancy fees ◦ If it is an Interest Expense it always goes under Finance Costs- The ONLY thing that goes under finance costs is Interest

 Office Wages = Administration  Sales Wages = Distribution Expense  Deprecation on Office Equipment = Administration  Depreciation on Delivery Van = Distribution  Office always implies Administration Cost

 Prepayments- Current Asset = Left  Accrued Income- Current Asset = Left  Accrued Expense- Current Liability = Right  Income in advance- Current Liability = Right

 If it says ‘invoices’ it means it is either Accounts Receivable or Accounts Payable and GST must be calculated  GST for any item purchased makes GST Payable go down or GST Receivable go up  GST for income makes GST Payable go up or GST Receivable go down

 It is states the word ‘owing’ it is either Accrued income or Accrued Expense

 One account name is always given to you in the question e.g. Invoice on hand for sales- Sales is the account name given  For any of the adjustments (Prepayment, Accrued Income, Accrued Expenses and Income in Advance, Depreciation expense) you will need to hand write these onto the Trial Balance

 When calculating depreciation there are only ever two accounts affected- Accumulated Depreciation and Depreciation expense- NEVER abbreviate

 Never include an item into the cash budget where ‘actual’ cash is not changing hands e.g. Depreciation, Drawings of inventory, Invoices, any Liabilities or Assets.  Always circle if there is a surplus or a deficit