Qn 1 – Final Accounts one approach

1. Qn 1 – Final Accountsone approach Gabrielle Moran 11th September 2010

2. Prior to Final Accounts • Double Entry including accruals/prepayments to simple P&L and Balance Sheet • Incomplete records • Control Accounts – Subsidiary Books • Depreciation and Disposal • Correction of Errors • Bank Reconciliations

3. Double Entry • Two aspects to all transactions • Matching of Debits and Credits

4. Double Entry

5. Summary of possible entries

7. 4 Questions to ask Thus with every transaction you come across you need to decide: • What are the two accounts involved? • Which type of account is each one? • Does the transaction cause an increase or decrease in each account? • Therefore is it a Dr or Cr?

8. Double Entry • Assets and Liabilities – cash & credit, capital • Purchases, Sales and Returns • Revenue and expenses • Drawings – cash, stock, expenses, f. assets • Debtors & Creditors – discount, interest, bad debts • Simple final accounts – two sided

9. Bringing it all together At the end of the financial year the Revenue and Expense Accounts are brought together in the FINAL ACCOUNTS to ascertain the firm’s profit for the year. Asset and Liability Accounts are listed in the BALANCE SHEET to ascertain the firm’s worth on a particular date (usually the last day of the financial year).

10. Transfer to final accounts Record the following transactions in the appropriate accounts of An Other, balance the accounts and prepare final accounts and Bal Sheet, 1. Owner invested €45,000 in a Business Bank alc. 2. Paid rent by cheque €800. 3. Purchased goods on credit from S. Collins €8,400. 4. Sold goods on credit to J. Reilly €9,600. 5. Sold goods for cash €2,500. 6. Purchased goods by cash €2,000. 7. Paid rent by cash €600. 8. Paid S. Collins by cheque €2000. 9. Returned goods to S. Collins €700. 10. Cash sales lodged €5,650. 11. J. Reilly returned goods €200. 12. Paid wages by cheque €650. 13. J. Reilly paid €5,000 by cheque. 14. Received rent €400 cash.

11. Final Accounts – D Entry

12. Moving towards “normality” • Split Trading from P & L • Trial Balance • Vertical Approach

13. Subsidiary Books • Source documents • List • Reduce entries in accounts in nominal ledger

16. 1 Debit matching 6 Credits

17. Recording Transactions

18. Sequence • Prepayments & Accruals • Bad Debts Provision • Simple Incomplete – ord level • Control Accounts – Subsidiary Books • Depreciation and Disposal • Bank Reconciliations • Final Accounts – ord level building adjustments

19. Adding adjustments to ord Qns • Writing off some closing stock • Goods on sale or return • Bad debts recovered • Adjusting BDP • Building extension to premises – own labour and materials • Built in accruals and prepayments

20. Adjustments • Hardest Part is sorting the English • Read a Little Talk a Little • Use Dr Cr grid • Make out the accounts

21. Read a little, Talk a little • Students put in pairs/triads • Students read an adjustment silently • Then they stop and ask each other questions such as: • What information have we got here? • What did you get from that? • What sense do you make of it? • Both team-mates share / integrate their understanding of the material and using Dr/Cr grid work out a possible solution

22. Full Honours Question • Read carefully – marking anything hidden in Trial Balance • Start with adjustment 1 – prepare T a/cs • Marking off Trial Balance

23. Amber Ltd. Qn 1 2007

25. (24800 + 7200) / 5 = 6400

26. 4

27. Amber Ltd. Qn 1 2007

28. Amber Ltd. Qn 1 2007

29. Full Honours Question • Read carefully – marking anything hidden in Trial Balance • Start with adjustment 1 – prepare T a/cs • Marking off Trial Balance • When adjustments are done -- Trial Balance looks like this

30. Amber Ltd. Qn 1 2007

32. Full Honours Question • Read carefully – marking anything hidden in Trial Balance • Start with adjustment 1 – prepare T a/cs • Marking off Trial Balance • Complete each working

33. Full Honours Question • Read carefully – marking anything hidden in Trial Balance • Start with adjustment 1 – prepare T a/cs • Marking off Trial Balance • Complete each working • Mark figures you will need P & L figs Bal St figs

34. (24800 + 7200) / 5 = 6400

35. 4

36. Full Honours Question • Read carefully – marking anything hidden in Trial Balance • Start with adjustment 1 – prepare T a/cs • Mark off Trial Balance • Complete each working P & L figs Bal St figs • Enter figures in accounts calculating as you go

37. Exam Approach • Read carefully – marking anything hidden in Trial Balance • Start with adjustment 1 – LIST • Marking off Trial Balance • Complete each working P & L figs Bal St figs

38. Exam Approach contd • Prepare Template Accounts Template Trading Profit and Loss a.doc

39. Exam Approach • Prepare Template Accounts • Enter figures from workings in appropriate place to P & L to Bal St

40. Exam Approach • Prepare Template Accounts • Enter figures from workings in appropriate place to P & L to Bal St • Enter remaining figures from Trial Balance not struck out

41. Exam Approach • Prepare Template Accounts • Enter figures from workings in appropriate place to P & L to Bal St • Enter remaining figures from Trial Balance not struck out • Perform calculations (or not!!)