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IPP > Business Accounts > Flashcards

Business Accounts Flashcards

1
Q

Profit calculation

A

Income - expenditure

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2
Q

What is a balance sheet

A

List of assets and liabilities

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3
Q

Calculation for net worth or value of business

A

Total assets - total liabilities

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4
Q

What are the final accounts

A

Balance sheet and profits &loss accounts after adjustments

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5
Q

What is the trial balance

A

Profit&loss account and balance sheet as the year progresses

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6
Q

Order of DR / CR

A

DR on left and CR on right

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7
Q

What is the drawings account

A

Record of cash withdrawals. Transfer this to capital account at end of accounting period

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8
Q

What is the cash account

A

Record of recipes in and payments out of the bank account

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9
Q

What are adjustments

A 
Accruals 
Outstanding bills
Work in progress 
Payments in advance 
Closing stock 
Bad and doubtful debts 
Depreciation
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10
Q

What is the accruals basis

A

Where income and expenditure are recorded in the period to which they relate, not the period in which payment or recipes happens

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11
Q

Where are adjustments reflected

A

Each adjustment is reflected on profit and loss account and balance sheet

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12
Q

How to adjust for work in progress

A

Show estimate value as income in profit/loss account

Show work in progress and work billed as separate items and then add together on profit/loss account

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13
Q

How to adjust for outstanding bills

A

Current liability on balance sheet
Increased expenses on profit/loss account
Add together outstanding bills and show as accruals

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14
Q

How to adjust for payments in advance

A

Reduce expenses on profit/loss account by amount of next years benefit
Show amount of advanced payment as current asset on balance sheet
Add together and show as pre-payments on balance sheet

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15
Q

How to adjust for closing stock

A

Show value of closing stock in trading account as a deduction from purchases in order to calculate cost of goods sold

Shown as current assets in balance sheet

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16
Q

How to adjust for bad debts

A

Write them off

Deduct amount of bad debt from debtors figure in balance sheet to reduce assets

Add as expense on profit/loss account labelled bad debts

17
Q

How to adjust for doubtful debts

A

Calculate value of debtors you think will never pay

List as item of expenses on profit/loss account and provision for doubtful debts

18
Q

How to adjust for depreciation of assets

A

Only at end of year
By same amount each year
Balance sheet shows purchase price of assets and depreciation deducted
Referred to as accumulated depreciation

19
Q

What does each partners separate accounts show

A

Capital contributed by P
Profit owed to P
Amount withdrawn from business by P

20
Q

What is an appropriation account

A

Shows allocation of net profits amount partners

21
Q

Types of assets and liabilities on balance sheet

A

Fixed assets
Current assets
Current liabilities
Long term liabilities

22
Q

What are fixed assets

A

Not for resale but to improve efficiency of business

23
Q

What are current assets

A

Short term assets such as cash and debtors

24
Q

What are current liabilities

A

Repayable in 12 months or less from the date of the balance sheet

25
Q

What are long term liabilities

A

Repayable more than 12 months from the date of the balance sheet

26
Q

What order are assets listed on balance sheet

A

Order of decreasing permanence

27
Q

Requirements for small company regimes of regulation and format of company accounts

A

Private company and two of:
Turnover less than 10.2m
Balance sheet less than 5.1m
Less than 50 employees

File balance sheet and auditors report with registrar

28
Q

Which two regimes may be followed when preparing accounts

A

IFRS or FRS 102

29
Q

Requirements for medium company regimes of regulation and format of company accounts

A

Two of the following:
Turn over less than 36m
Balance sheet less than 18m
Employed less than 250

30
Q

What account is the issue of shares recorded in

A

Composite share capital account

No separate account for each shareholder

31
Q

How are the issues of shares recorded in the accounts

A

Premium element is recorded separately i a share premium account and is shown separately from share capital on balance sheet

Different kinds of shares shown separately in balance sheet

32
Q

How to record D’s salary in accounts

A

It is an expense unlike Ps salary which is an allocation of profits

33
Q

How are dividends recorded in accounts

A

Recommended- only in notes

Once paid- allocation of profit in appropriation account like Ps

34
Q

What is the revenue reserve

A

Can be distributed to SH at any time through dividends

35
Q

Capital reserve

A

Not available for distribution

36
Q

Another name for retained profits

A

Profits and loss reserve on balance sheet. Appears after share capital

IPP (8 decks)

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