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Many businesses sell their goods and services on credit, and once a credit saletakes place it is recorded in the sales day book and then debited to the sales ledgercontrol account and credited to the sales account in compliance with the doubleentry principle and accruals concept. Credit sales give rise to the risk of one … Read More
Cash Sales These occur when a customer buys items or services and pays immediately, at thepoint of sale. These occur frequently as seen in high street stores, whereindividuals go into stores to buy items and pay immediately by cash, cheque, debitor credit card at the till and are issued a receipt printed by a till … Read More
The accounts department carries out several different tasks and activities with the aimof keeping accurate records of the company’s operations in monetary terms. It has tokeep records of all the business operations which is used to prepare the statutoryfinancial statements, which will be made up of the statement of profit or loss and thestatement of … Read More
Year of Cessation The year of cessation is the year a business stops trading and closes down itsoperations. At such point, any taxable profits not yet subjected to tax will have to besubjected to tax in the tax year the business ceases to trade. Once the business has been trading over several years, the current … Read More
Year of commencement With knowledge of the current year basis period, you will find that if a businesscommences trade in June 2018 and prepares accounts to 31 May 2019, its first yearof assessment will have to be 2019/20, which is the tax year the end of the 12 monthsfalls into, despite the fact that it … Read More
Current year The basic rule is that an individual’s taxable profit assessed in each tax year will bebased on the profits for the 12 months accounting period ending in that tax year. Thisis known as the current year basis. This applies to individuals who havebeen in trade for several years past. An individual in business … Read More
Welcome to first in a series of blog posts about basis periods, found in the AAT Level 4 Business Tax module. 1 – Introduction The basis period is the accounting period within which an individual’s income or profitswill be subjected to tax. Every individual tax payer pays their taxes based on a tax year. The … Read More
Accounting Equation: ASSETS – LIABILITIES = CAPITAL QUESTION: Anushka began a sole trade business on 1 January 20X1. During the first month of trading, the following transactions took place: She started the business with £5,000 of cashShe took out a loan from the bank of £10,000She purchased a van for £12,000 cashShe purchased 100 units … Read More
FRS 18 sets out two main qualitative characteristics (relevance & reliability) and fourenhancing qualitative characteristics that information in the financial statements shouldpossess in order for the content of the financial statements to be useful to its users.When an accounting policy is to be selected, its appropriateness to the businessshould also be considered against these qualities. … Read More
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