Module 3 Flashcards
Depreciation journal entry
Dr P+L depreciation expense
Cr Accumulated depreciation (plant and equip)
Capitalisation journal entry (bought something for 2000)
Dr Fixed Asset (e.g equipment) 2000
Cr Bank 2000
Other names for trade debtors?
Trade receivables
Sales ledger control account
Other names for trade creditors?
Trade payables
Purchase ledger control account
Definition of depreciation?
Economic consumption of value
Buy a motor vehicle on credit journal entry?
Dr Motor vehicle- asset
Cr trade payables
What are the two methods of depreciation?
Reducing balance
Straight line
Depreciable expense?
Aim to account for what estimate will get back in so many years
Depreciation is an example of what concept?
Accruals
What don’t you factor in the reducing balance method?
Scrap
Straight line method is
Depreciation the same every year
Reducing balance method is?
Depreciation is smaller every year
How is VAT accounted for with regards to net and gross?
Net 100%
VAT 20%
Gross 120%
Accrual is a what in the balance sheet?
Liability
You owe money
Accrued expense
Had work done/received goods but not been paid yet, e.g invoiced after year end
Accrued income is what in balance sheet?
Asset
Someone owes you money, asset for use, done work but not been paid yet
Prepaid expense (prepayment) is what in balance sheet?
Asset
So debit
Deferred income is what in balance sheet?
Liability
Credit
Prepaid to me
We’ve been paid but not done the work, obligation to do so
Cost of sales calculated how?
Opening inventory + purchases - closing inventory
If you have accruals and prepayments in the trial balance where are they from?
Last year
What to do with accruals and prepayments in trial balance?
Last years
Reverse opening accrual/prepayment
Process what’s actually paid
Calculate year end accrual or prepayment
Accrued income goes where in balance sheet?
Asset
Debit
Asset for use, done work but not been paid yet
Suspense accounts can’t be
In final account
Need to be fixed first
How to correct something posted in wrong side by error?
Times it by 2 to fix
Contra entry is
If someone buys off you in credit but is also a supplier
Contra entry impact?
Always has the impact of reducing receivables and payable
Journal entry for disposal with profit and depreciation
Dr bank (proceeds, sold for)
Dr depreciation
Cr cost
Cr profit/loss
