Advanced Bookkeeping Flashcards
Accounting Equation
Assets - Liabilities = Capital
(Non-Current Assets + Current Assets) - (Non-Current Liabilities + Current Liabilities) = (Capital introduced +/- Profit/Loss - Drawings)
Calculate the Capital introduced figure
Opening Capital + Capital Introduced + Profit - Drawings = Closing Capital
£70,000 + ??? + £50,000 - £20,000 = £150,000
Capital Introduced = £50,000
£150,000 + £20,000 - £70,000 - £50,000 = £50,000
Is Discounts Allowed Credit or Debit in the extended trial balance
Type of expense, a debit to the SoPL
Is Discounts Received Credit or Debit in the extended trial balance
Type of Income, a credit to the SoPL
What is shown in the statement of profit or loss
Income and expenses
Income - expenses = Profit or loss
What is shown in the statement of financial position
Assets and liabilities
Assets - Liabilities = Capital
What is an accrued expense
An expense which has been incurred in an accounting period but has not been paid for at the end of it
What is an Accrued income
Income which has been earned in an accounting period but has not yet been received at the end of it
What is a prepaid expense
An expense which has been paid for in an accounting period but relates to a later accounting period
What is a prepaid income
Income which has been paid in an accounting period but relates to the next accounting period
What side of the expense account is an accrued expense recorded on
Credit
What side of the income account is a accrued income recorded on
Debit
What side of the expense account is a prepaid expense recorded on
Debit
What side of the income account is a prepaid income recorded on
Credit
What side of the income expense account is a prepaid income (Reversal) recorded on
Debit
What side of the expense account is a accrued expense (Reversal) recorded on
Debit
What does IAS 16 apply to
Accounting of Property, Plant and Equipment
What does IAS 2 Apply to
Inventory
What does IAS 1 Apply to
Financial Statements
What is the diminishing balance method
A fixed percentage that is charged in each period based on the original cost minus the depreciation.
Original Value * (percentage) = Depreciation
Depreciation - Original Value = Carrying value of the asset
What is the straight line method
Equal amount for reduction in value of an asset that is charged in each period
Original Cost - Residual Value (expected value in its disposal)
divided by
useful life
= Depreciable amount
Name all ethical principles
Integrity Objectivity Professional competence and due care Confidentiality Professional behaviour
Error of principle
Entered to the wrong type of account
Error of commission
Entered in the wrong account
Error of original entry
Wrong value entered in accounts
Error of omission
Something was missing from the accounts
Reversal of entries
Debit and Credit entries are reversed
Compensating error
Errors that balance each other out
