Accounting Flashcards
Ac - Certificate level 2025
Fundamental characteristics of conceptual framework
Relevance
- Predictable value + Confirmatory value
Faithful representation
- Complete
- Neutral
- Free from error
- Showing substance over form
Enhancing characteristics of conceptual framework
Comparability
Verifiability
Timeliness
Understandability
Record an accrual
Dr Expense
Cr Accrual
Exp Charge = Closing accrual + cash paid in period - opening Accrual
Record a prepayment
Dr prepayment
Cr expense
Exp Charge = Closing prepayment + Cash paid in year - opening prepayment
Accrued income
- Paid in arears
Given service/product but not received cash yet.
Dr Accrued income - Asset
Cr Income
Deferred income
- Paid in advance
Received cash but not given service/product
Dr Income
Cr Deferred income
Gross profit margin
Sales always 100%
Cost - 80%
Gross profit - 20%
eg where profit margin is 20%
Mark-up on cost
Sales - 120%
Cost always 100%
Gross profit - 20%
eg where mark-up is 20%
Record closing inventory
Lower of
- cost (FIFO or AVCO)
- Net realisable value
Dr inventory (SFP)
Cr Cost of sales (SPL)
Drawing inventory by owner
Dr drawings - cost
Cr …
Purchases
- Expense
Record depreciation
Dr Depreciation exp (SPL)
Cr Accumulated depreciation (SFP)
Disposal/part exchange
Eliminate cost (Dr disposal, Cr NCA cost)
Eliminate acc depn (Dr Acc Depn, Cr Disposals)
Record proceeds (Dr cash/ NCA Cost, Cr Disposal)
For Part ex (Dr NCA cost, Cr Cash)
Impairment, recoverable amount
Greater of
- Fair value less cost to sell
- Value in use
Impairment charge
Carrying amount - recoverable amount
Dr Impairment exp (SPL)
Cr Acc depn (SFP)
Increase in allowance for irrecoverable debt
(like a liability)
Dr Irrecoverable debt
Cr allowance for receivables
