Account & Statement Formats Flashcards
Describe te use of an Extrended Trial Balance
An extended trial balance is a worksheet for making the end of period adjustments, and showing the income and expense nominal ledger account and the nominal ledger accounts that make up the balance sheet
Describe the layout of an Extended Trial Balance
What is the Income & Expense account in the Extended Trial Balance ?
Is a temporary double entry account in the nominal ledger used to prepare the income statement and to determine the amount of profit or loss which needs to be transferred to the capital account in the balance sheet.
What ar ete steps for praparing an Extended Trial Balance ?
1 - Enter each account name and its balance and total the columns to ensure that total debits equal total credits.
2 -Enter the adjustments required
3 - Total the adjustments columns to make sure that the double entry is correct.
4 - Add up the entries on the horizontal line of each account and enter the balance into the I&E columns or the B/S columns as appropriate.
5 - Total the income and expense columns. The difference between the debit side and the credit side of the income and expense columns is the profit or loss for the period.
6 - Enter the profit (loss) for the period into the credit (debit) side of the B/S columns.
7 - Total the B/S columns.
What is te purpose of a trading account ?
Determin the cost of goods sold
Describe the layout of a Trading Account
Describe the layout of a Sole Trader Income Statement
Describe the layout of an Sole Trader Manufacturing Account
Describe the layout of a Sole Trader Income statement and explain why the Cost of Finished Goods Produced is higlighted and where this entry is obtained from
Describe the layout a Vertical Format Balance Sheet
Describe the Layout of a Net Asset Format Balance Sheet
What are the differences between the Vertical and Net Asset Balance Sheet formulas
In the net assets format, the current assets and current liabilities are arranged so as to show net current assets or working capital at a glance. The IAS 1 vertical format shows current assets and current liabilities separately.
l The net assets format shows net assets at a glance. The amount of net assets is equal to the amount of owner’s capital. The IAS 1 vertical format is more like a horizontal balance sheet arranged vertically, where total assets equal total capital plus total liabilities.
24 Unit 4
From trial balance to financial statements for sole traders
Activity 1.3
l Note that in the vertical format recommended by IAS 1 capital is shown before non-current liabilities. The logic is that capital is considered less liquid than non-current liabilities.
What is the role of the Inventory Control Account ?
What entries can be found in the RCA ?
Describe the layout of the RCA
Describe the layouit of the PCA
