AAT Level 3 Accounts Preparation

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.

Accounting Equation Assets = Capital + Liabilities

Accounting Equation Assets = Capital + Liabilities 1. Purchase of a Delivery Van for £10,000 funded by 20% personal capital invested and a bank loan for the balance

Accounting Equation Assets =Capital + Liabilities Van=Owner + Loan

Accounting Equation Assets = Capital + Liabilities Van= Owner + Loan £10,000= £ £8000

A production machine bought for £10,000 on credit Assets=Capital+Liabilities 1 10,000=2,000+8,000 2 Continuing from previous slide

Assets=Capital+Liabilities 1 10,000=2,000+8, ,000=+ Van10,000 Machine10, A production machine bought for £10,000 on credit

Assets=Capital+Liabilities 1 10,000=2,000+8, ,000=2, A production machine bought for £10,000 on credit

Assets=Capital+Liabilities 1 10,000=2,000+8, ,000=2,000+18, A production machine bought for £10,000 on credit

3. Stock is bought for £1,000 on credit Assets=Capital+Liabilities 1 10,000=2,000+8, ,000=2,000+18,000

Assets=Capital+Liabilities 1 10,000=2,000+8, ,000=2,000+18, ,000=+ 3. Stock is bought for £1,000 on credit

Assets=Capital+Liabilities 1 10,000=2,000+8, ,000=2,000+18, ,000=2, Stock is bought for £1,000 on credit

Assets=Capital+Liabilities 1 10,000=2,000+8, ,000=2,000+18, ,000=2,000+19, Stock is bought for £1,000 on credit

Accountng Equation Question 1 State the ‘accounting equation’ and explain the meaning of each of the terms used in the equation.

The Ledger Accounts Question 2 – Vera Entering transactions into the ledgers Balancing off the accounts (You will need to draw 10 ‘T’ accounts)

Calculating VAT Question 3 & 4

Complete Question 5 Post to the ledgers Balance off accounts Prepare a Trial Balance

The Trial Balance & the Journal Dealing with Errors

Errors! Which errors would affect the trial balance?

Error of Commission 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?

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

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?

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

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

Error Correction Opening Balances Payroll Bad Debt Write Off The Journal

The Journal - Layout DateRefDetails Dr £ Cr £

Question 6 Kelly 1

Question 7 Now your turn

Question 8 Errors and the Suspense Account

Question 9 Errors and the Suspense Account