AAT Level 3 Accounts Preparation

Accounts Preparation - Summary AAT Level 3 Accounts Preparation - Summary ACPR is the first of the two Level 3 financial accounting units. Covering accounting principles and concepts, accounting for non-current assets and advanced bookkeeping, it takes the student from Level 2 foundation knowledge and skills and prepares them for further development in FSTP where they will be preparing financial statements for sole traders and partnerships.

Session 1 - Objectives Learning objectives: At the end of this sesson you will be able to: Understand the basic principles of accounting including the accounting equation. Account for transactions in ledger accounts as part of the general ledger. Balance off ledger accounts in order to prepare an initial trial balance.

Entering transactions into the ledgers Balancing off the accounts The Ledger Accounts Question 2 – Vera Entering transactions into the ledgers Balancing off the accounts (You will need to draw 10 ‘T’ accounts!) Do on the board as a class – and include drafting a Trial Balance Extension is questions 3 & 4 – do for homework if not finished in class

Complete Question 5 Post to the ledgers Balance off accounts Prepare a Trial Balance Flip charts for T accounts? Each student responsble for their own account?

The Trial Balance & the Journal Dealing with Errors

Which errors would affect the trial balance?

Error of Commission Example Correct type of account has been used BUT the wrong account in that ledger Example A sales invoice for customer A is debited to customer B account in the Sales Ledger

Omission?

The transactions has been omitted from the accounts completely Error of Omission The transactions has been omitted from the accounts completely Example A payment for cash purchases has not been entered in the Cash book OR the Purchases account

The transactions has been posted to the wrong TYPE of account Error of Principle The transactions has been posted to the wrong TYPE of account Example A payment for a new computer has been posted to the computer maintenance account rather than the Computer asset account.

Reversal?

Debits and Credits are the wrong way round Error of Reversal Debits and Credits are the wrong way round Example A payment for telephone costs has been credited to the Telephone account.

Error of Original Entry Transaction amount is entered incorrectly Example A payment for the telephone costs of £750 have been posted as £570

The errors cancel each other out Compensating Error The errors cancel each other out

Six Types of Error Error of Commission Error of Omission Error of Principle Compensating Error Error of Original Entry Complete Reversal of Entries

The Journal Opening Balances Error Correction Bad Debt Write Off Payroll

The Journal - Layout Date Ref Details Dr £ Cr

Question 6 – Kelly 1 Account names Dr £ Cr   Work through as a class – Need 7 T Accounts on the small whiteboard &

Question 7 Now your turn Read through question as a class

Question 7 Answer Account names Dr £ Cr Irrecoverable debts 548.60 VAT   VAT 109.72 Receivables a/c 658.32 Drawings 659 Motor Expenses Discount allowed 84 Sales ledger control / receivables

Errors and the Suspense Account Question 8 Errors and the Suspense Account Demo this as a class

Errors and the Suspense Account Question 9 Errors and the Suspense Account Class to do

Destination of the Trial Balance Question 10 Destination of the Trial Balance Use hand-out blank to write up on the board