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The boxes on the VAT return show the following information: Box 1 VAT due in this period on sales and other outputs This contains the VAT charged on all sales and receipts for the period of the VAT return less any VAT on sales returns. This represents the total output tax. This total should be … 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
EOQ is the most economic re-order quantity of inventory which helps the business both ensure that the business is not holding too much inventory (which ties down working capital) and that they don’t keep so little inventory, which can interrupt the production process. These two situations can prove to be costly to the business and … 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
Accrued income is a sundry income amount outstanding and yet to be received by the end of an accounting period, so has not been entered into the ledger accounts. In accounting for accrued income, the effect that needs to occur will be to increase the relevant income in an attempt to account for the total … Read More
