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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
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
WHAT ARE THE FINANCIAL STATEMENTS IN ACCOUNTS? Transcending from the trial balance, the financial statements will need to be prepared using the closing balances derived from the trial balance. The two main financial statements are the: · Statement of profit or loss (profit or loss account) and the · Statement of financial position (balance … Read More
Capital and Revenue expenses Capital expenditure occurs when a business spends money in purchasing non-current assets for the business operations or when it spends money in adding value or improving an existing non-current asset. This will include delivery and legal costs in acquiring the non-current assets. Non-current assets are items owned by the business which … Read More
Non-Current Asset Register Non-current assets can turn out to be large amounts of expenditure in some businesses and these will require some control measures being put in place to ensure the costs are being monitored. In setting controls in place, many businesses maintain a non-current assets register in addition to the general ledger entries. The … Read More
A basic test on prepaid income: You are working on the accounting records of a business for the year ended 31 March 20X7. You are looking at the rent income for the year and this includes receipts for the following periods: Apr 20X6 – Mar 20X7 £5,040 Apr 20X6 – Jun 20X7 £5,625 Identify … Read More
A basic test on accrued income: You are working on the accounting records of a business for the year ended 31 March 20X7. You are looking at the rent income for the year and this includes receipts for the following periods: Apr 20X6 – Jan 20X7 £5,900 Apr 20X6 – May 20X7 £6,720 Identify … Read More
A basic test on prepayments: You are working on the accounting records of a business for the year ended 31 March 20X7. You are looking at the rent expense for the year and this includes payments for the following periods: Apr 20X6 – May 20X7- Office 1 £5,040 Apr 20X6 – Jan 20X7- Office 2 … Read More
A basic test on accruals: You are working on the accounting records of a business for the year ended 31 March 20X7. You are looking at the rent expense for the year and this includes payments for the following periods: Apr 20X6 – May 20X7- Office 1 £5,040 Apr 20X6 – Jan 20X7- Office 2 … Read More
Prepaid income is an amount received in advance for a sundry income which relates to an accounting period after the year end. In accounting for prepaid income, the effect that needs to occur will be to reduce the overpayment in income in an attempt to account for only the income earned in that accounting … Read More
