Financial Statments

Question 1

Bank loans and Interest

Answer 1

If there is a bank loan this means there is interest needed to be paid on the bank loan. Usually not all of the interest has been paid and there for you will need to accrue for this.
E.g. 5% bank loan repayable 20X9 = 20,000
Interest = 500
There needs to be an accrual of 500 (5% x 20000 =1000)

Question 2

Bank loans and Interest

Answer 2

If there is a bank loan this means there is interest needed to be paid on the bank loan. Usually not all of the interest has been paid and there for you will need to accrue for this.
E.g. 5% bank loan repayable 20X9 = 20,000
Interest = 500
There needs to be an accrual of 500 (5% x 20000 =1000)

Question 3

Is land and buildings depreciated ?

Answer 3

Land is NOT depreciated, Buildings ARE depreciated

If they are presented together and there is depreciation then you will need to isolate land from buildings.

Question 4

Journal Entries: Closing Inventory

Answer 4

Standard adjustment: 
Debit Inventory (SFP) 
Credit Inventory (SPL)

Question 5

Journal Entries: Land

Answer 5

If land is revalued at a higher amount:
Debit land cost
Credit Revaluation reserve

Question 6

Journal Entries: Depreciation

Answer 6

If Buildings has a depreciation ( Remember you may have to seperate the land from buildings):
Debit Buildings Admin expense (SPL) (In question it will tell you where to debit the expense to)
Credit Buildings Accumulated Depriciation (SFP)

Question 7

Journal Entries: Plant and Equipment

Answer 7

If Plant and Equipment has depreciated:
Debit: Plant and Equipment COS (SPL) , Plant and Equipment Distribution costs (SPL), Plant and Equipment Admin Expenses (SPL)
Credit: Plant and Equipment Accumulated depreciation (SFP)
Note: You may be told to split the costs between different areas e.g. COS, Admin expenses and Distribution costs

Question 8

Journal Entries: Trade Receivables (Irrecoverable/bad debt)

Answer 8

Keep in mind the figure (May not be in millions just thousands)
Debit: Admin Expenses - Irrecoverable debt (SPL)
Credit: Trade receivables (SFP)

Question 9

Journal Entries: Distribution Costs ( Owing )

Answer 9

If it is owing then it will be accruing
Debit: Distribution costs - Accrual (SPL)
Credit: Accruals (SFP)

Question 10

Journal Entries: Bank Interest

Answer 10

If it has not all been paid you need to accrue
Debit: Interest (SPL)
Credit: Interest payable (SFP)

Question 11

Journal Entries: Taxation

Answer 11

Taxation is accrued for as we have not yet paid for it
Debit: Taxation (SPL)
Credit Taxation Payable (SFP)

Question 12

Journal Entries: Credit Sales (Entered incorrectly)

Answer 12

If entered incorrectly (Too much )
Debit: Revenue
Credit: Trade and other Receivables

Question 13

Journal Entries: Advanced Payment for Rent of a Warehouse

Answer 13

If It is for Disribution Warehouse
Debit: Prepayment (SFP)
Credit: Distribution Costs (SPL)

Question 14

Journal Entries: Invoices Received by another company

Answer 14

If received from another company
Debit: Admin Expensees (SPL)
Credit Accruals (SFP)

Question 15

Journal Entries: Rights Issue

Answer 15

If the company made rights issue to existing shareholders and the shares were fully paid
Debit: Cash and cash equivalent
Credit; Share capital and Share premium

Question 16

Journal Entries: Inventory Change

Answer 16

If an item in inventory is no longer there
Debit: Inventory adjustment (SPL)
Credit: Inventory Adjustment (SFP)

Question 17

Profit and Loss Accounts: Revenue Formula

Answer 17

Revenue:
Sales
+/- Adjustments (Returns Inwards)

Question 18

Profit and Loss Accounts: Cost of Sales Formula

Answer 18

Cost of Sales = Opening inventory + Purchases - Closing inventories
Also Include: Less Returns Outwards, Closing inventory adjustments. Plus Depreciation (COS is an expense so depreciation will increase this)

Question 19

Profit and Loss Accounts: Distribution costs formula

Answer 19

Distribution Costs + Any depreciation charges and any accruals whether +/- such as prepayments

Question 20

Profit and Loss Accounts: Admin Expenses formula

Answer 20

Admin Expenses + any depreciation and accruals and bad debts

Question 21

Profit and Loss Accounts: Finance Costs formula

Answer 21

= Any Interest paid + Interest Accrued

Question 22

Profit and Loss Accounts: Revaluation Formula

Answer 22

= Revalued amount - Carrying value

Question 23

Profit and Loss Account Proforma Part 1

Answer 23

Once you have calculated all of the profit and loss figures you need to compute them into the tables given:
Revenue=xxx
COS=xxx
Gross Profit=xxx
Distribution Costs=xxx
Admin Expenses=xxx
Profit from Operations=xxx
Finance costs=xxx
Profit before tax=xxx
Tax=xxx
Profit from the period from continuing operations=xxx
Any other comprehensive income for the year
e.g Gain on revaluation of the land=xxx
Total Comprehensive income for the year= XXX

Question 24

Statement in Changes of Equity: Proforma

Answer 24

First line is always Start of the period and all the figures for this are on the trial balance.
Second line is the Total comprehensive income. And if there are Issues of share capital and dividends these go after. And then finally finish with Balance at year end.

Question 25

Statement of Financial Position: Property plant and equipment

Answer 25

PPE =Land Cost + Revaluation + Buildings cost + p&e cost - Buildings Accumulated depreciation- P&E Accumulated Depreciation - Buildings Depreciation - P&e depreciation.

Question 26

Statement of Financial Position: Trade and other Receivables

Answer 26

Trade and other receivables- TB
Adjustments for sales
Prepayments
Irrecoverable debt

Question 27

Statement of financial position: Trade and other payables

Answer 27

Trade and other payables - TB
Accruals - TB 
Accruals distribution costs
Accruals interest
Accruals agency

Question 28

Statement of financial position: Non current assets

Answer 28

PPE

Question 29

Statement of financial position: Current assets

Answer 29

Inventories
Trade receivables
Cash and cash equivalents

Question 30

Statement of financial position: Equity and Liabilities

Answer 30

Share Capital
Share premium
Revaluation Reserve
Retained earnings

Question 31

Statement of financial position: Non current liabilities

Answer 31

Bank loans

Question 32

Statement of financial position: Current liabilities

Answer 32

Trade and other payables

Tax payable