Financial Statments Flashcards
Bank loans and Interest
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)
Bank loans and Interest
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)
Is land and buildings depreciated ?
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.
Journal Entries: Closing Inventory
Standard adjustment: Debit Inventory (SFP) Credit Inventory (SPL)
Journal Entries: Land
If land is revalued at a higher amount:
Debit land cost
Credit Revaluation reserve
Journal Entries: Depreciation
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)
Journal Entries: Plant and Equipment
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
Journal Entries: Trade Receivables (Irrecoverable/bad debt)
Keep in mind the figure (May not be in millions just thousands)
Debit: Admin Expenses - Irrecoverable debt (SPL)
Credit: Trade receivables (SFP)
Journal Entries: Distribution Costs ( Owing )
If it is owing then it will be accruing
Debit: Distribution costs - Accrual (SPL)
Credit: Accruals (SFP)
Journal Entries: Bank Interest
If it has not all been paid you need to accrue
Debit: Interest (SPL)
Credit: Interest payable (SFP)
Journal Entries: Taxation
Taxation is accrued for as we have not yet paid for it
Debit: Taxation (SPL)
Credit Taxation Payable (SFP)
Journal Entries: Credit Sales (Entered incorrectly)
If entered incorrectly (Too much )
Debit: Revenue
Credit: Trade and other Receivables
Journal Entries: Advanced Payment for Rent of a Warehouse
If It is for Disribution Warehouse
Debit: Prepayment (SFP)
Credit: Distribution Costs (SPL)
Journal Entries: Invoices Received by another company
If received from another company
Debit: Admin Expensees (SPL)
Credit Accruals (SFP)
Journal Entries: Rights Issue
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
Journal Entries: Inventory Change
If an item in inventory is no longer there
Debit: Inventory adjustment (SPL)
Credit: Inventory Adjustment (SFP)
Profit and Loss Accounts: Revenue Formula
Revenue:
Sales
+/- Adjustments (Returns Inwards)
Profit and Loss Accounts: Cost of Sales Formula
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)
Profit and Loss Accounts: Distribution costs formula
Distribution Costs + Any depreciation charges and any accruals whether +/- such as prepayments
Profit and Loss Accounts: Admin Expenses formula
Admin Expenses + any depreciation and accruals and bad debts
Profit and Loss Accounts: Finance Costs formula
= Any Interest paid + Interest Accrued
Profit and Loss Accounts: Revaluation Formula
= Revalued amount - Carrying value
Profit and Loss Account Proforma Part 1
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
Statement in Changes of Equity: Proforma
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.
Statement of Financial Position: Property plant and equipment
PPE =Land Cost + Revaluation + Buildings cost + p&e cost - Buildings Accumulated depreciation- P&E Accumulated Depreciation - Buildings Depreciation - P&e depreciation.
Statement of Financial Position: Trade and other Receivables
Trade and other receivables- TB
Adjustments for sales
Prepayments
Irrecoverable debt
Statement of financial position: Trade and other payables
Trade and other payables - TB Accruals - TB Accruals distribution costs Accruals interest Accruals agency
Statement of financial position: Non current assets
PPE
Statement of financial position: Current assets
Inventories
Trade receivables
Cash and cash equivalents
Statement of financial position: Equity and Liabilities
Share Capital
Share premium
Revaluation Reserve
Retained earnings
Statement of financial position: Non current liabilities
Bank loans
Statement of financial position: Current liabilities
Trade and other payables
Tax payable
